Gander Mountain in Cold Environs

Gander Mountain Company (GMTN), headquartered in Minneapolis, Minnesota, is a specialty retailer that offers its outdoor lifestyle customers a broad range of hunting, fishing, and camping equipment and related accessories. The company's merchandise was originally offered to customers via a catalog operation, from 1960 until 1996, when the initial retail stores opened.

Gander Mountain released preliminary third quarter results that were in-line with our estimates. The company expects to report sales of $270 million and EPS of $0.03. We are slightly adjusting our estimates for 2008 and 2009. We continue to expect substantial improvement in the company's operating profit margins in the second half of 2008 and 2009. Even so, Gander Mountain Company's business is still struggling in this difficult retail environment.

To compete in this challenging environment, Gander Mountain is scaling back store-expansion plans, improving store-level productivity, and enhancing certain product lines. We maintain our Hold rating. Our target price is $1.50, which is 10x our fiscal 2010 EPS estimate.

Read the full analyst report on GMTN

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