Gross margin in the fourth quarter of 2013 is expected to be around 38.0% compared to 36.3% in the year-ago quarter. Although gross margin was up, several factors negatively impacted gross margin in the fourth quarter of 2013. These included unfavorable production and shipping variances, discontinued merchandise and inventory adjustments associated with older, discontinued winter seasonal product.
Gross margin for the full year of 2013 is expected to be around 38.2% compared to 38.2% in 2012. Gross profit in 2013 included a $1.5 million charge in the third quarter for a PIEPS product recall, of which $1.1 million was non-cash and included 100% of existing inventory. Excluding this charge, adjusted gross margin is estimated to be approximately 38.9% in 2013. There were certain factors that negatively impacted gross margin during 2013. These included production variances and inventory adjustments associated with product season changes, as well as the impact from discontinued merchandise.
"We expect 2014 to be driven by double-digit sales growth across all brands, with improved margins and accelerating profitability," continued Metcalf. "Inherent in these expectations is the fact that Black Diamond apparel and POC each represent our most significant opportunities for compounded, multi-channel growth. At this time, we see no need to access the capital markets to fund our growth. However, we have begun to explore strategic alternatives to monetize the value of untapped markets for our Gregory Mountain Products business. We have also retained an executive search firm to find a senior leadership candidate that will augment our capabilities in brand and general management, specifically in apparel, retail and e-commerce."
Management will provide complete fourth quarter and full year 2013 results in a press release and conference call, which will be announced at a later date.2014 Outlook Black Diamond expects fiscal year 2014 sales to range between $235 million to $240 million, which would represent an increase of approximately 16% to 18% from the expected 2013 sales. The Company also expects gross margin in fiscal year 2014 to range between 39.5% and 40.5%.
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