Sales growth mixed. Overall, our covered companies grew the topline by an average median rate of 11.4% during calendar 3Q, a respectable level given what is still a relatively difficult macro environment. Ten of 17 companies exceeded consensus revenue expectations, but results varied widely depending on company size and channel position. For example, the fastest growth continued to be concentrated in younger, brand-oriented companies like SKUL, BDE, CROX and UA, which collectively averaged 37.8% revenue growth during calendar 3Q.
The introduction of new and innovative products remains a consistent growth driver for virtually all Active Lifestyle companies, especially among brands/vendors. More established players like NKE, VFC and COLM posted solid double-digit revenue growth aided by strong demand for new products by wholesale customers, growth in direct-to-consumer sales, as well as acquisitions in one case. Retailers continued to report more modest sales gains, reflecting spotty overall traffic trends; however, uneven traffic is typically being more than offset by higher average ticket.
Margin trends favored retailers during 3Q. The median year-over-year change in gross profit margin (GPM) was down 40bp for our covered companies; however, there was a meaningful divergence between retailers and vendors. For the three retailers that reported results, the GPM trend was positive by a ratio of 2- to-1, with increases averaging 170bp compared to a year ago.
We believe this largely reflects retailers continuing to maximize inventory productivity including reducing markdown exposure to mitigate risk related to the soft macro environment. Vendors were more likely to show GPM compression during 3Q as 8 of 13 reporting companies showed an average decline 164bp for the quarter. The average increase for the five other reporting vendors was 130bp. Rising input costs continued to be a factor pressuring vendor margins and many of the declines had been anticipated.
Another quarter of impressive EPS growth. So far this reporting season our Active Lifestyle coverage universe median EPS growth rate is up 24.3% year-over-year. Twelve of 17 companies exceeded consensus EPS expectations. The combination of double-digit topline growth, price increases and operating expense leverage proved more than enough to offset gross margin headwinds.
Thematically, the primary EPS growth drivers remain 1) product innovation fueling strong consumer interest in the athletic and outdoor categories, 2) brand vendor international and direct- to-consumer growth, 3) price increases yielding modest net pricing gains, and 4) tight operating expense management. High-quality companies such as NKE, UA, and VFC have thrived in all of these categories. EPS growth remains challenging for companies attempting to revitalize their business amidst a tough economic environment, including ELY and BGFV, both of which posted earnings declines.
Outlook: Of the companies we follow that have reported, five (COLM, NKE, SKUL, UA and VFC) formally raised full year guidance while HBI was the only company to lower guidance (lowered revenue guidance; narrowed EPS guidance). There were some instances where the increase to full year guidance was partially offset by reductions to 4Q EPS—CAB and COLM are examples. In addition, both ELY and JAH provided details on their 4Q expectations which were below consensus. Initial 2012 commentary was limited, but in general not materially different from current expectations that can be described as cautiously optimistic. All in, earnings revisions were mixed as strong 3Q performance was offset by limited forward visibility given economic uncertainty, tight retailer inventory management and product cost pressures which will persist through 1H12.
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