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| Breaking Headlines |  |
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| Vans' Core Business Rose 10% In Q3
MARCH 24, 2004 -- Gary Schoenfeld, president?ceo, stated, "Following an excellent holiday season, all three channels of our business, US Wholesale, Retail and International exceeded our revised plans both in terms of revenues and gross margins, resulting in total sales and earnings well above expectations." Net sales for the base business for the first nine months of fiscal 2004 increased 7.8% to $276.3 million, compared to $256.2 million. Net income for the base business was $17.0 million compared to a net loss of $900,000 in the same period last year, and diluted EPS for the base business was $0.93 versus a diluted loss per share of $0.05 in the prior year period. On a GAAP basis (including skateparks expected to be closed), Vans reported net sales for the quarter of $88.6 million, compared to $80.8 million, net income from continuing operations of $7.1 million versus a net loss of $7.2 million, and diluted EPS from continuing operations of $0.39, versus a diluted loss per share from continuing operations of $0.40 a year ago. Net sales for the first nine months of fiscal 2004 on a GAAP basis were $282.4 million, compared to $263.3 million for the same period last year, net income from continuing operations was $12.1 million versus a net loss of $5.0 million a year ago, and diluted EPS from continuing operations for the period were $0.66 versus a diluted loss per share from continuing operations of $0.28. "As evidenced by these results, the Vans brand continues to strengthen as a leader in action sports and youth lifestyle," Schoenfeld said. "The focus and creativity given to each segment of our product line is helping further drive the aspiration and affinity towards our brand and the growth of our overall business." For the base business, total US sales for the third quarter including sales through Vans' U.S. retail stores, were $54.7 US national sales in Q3 were $25.8 million versus $22.6 million a year ago. Comp-store sales for retail were up 14.4% in Q3. With eight fewer stores compared to a year ago, total US retail sales for the base business increased 11.0% to $28.9 million in Q3. Total international sales were $31.6 million versus $29.8 million a year ago. On a constant-dollar basis international sales would have been $27.8 million compared to last year. On a GAAP basis, total US sales in Q3 were $57.0 million versus $50.9 million. Similarly on a GAAP basis, total sales through Vans' US retail stores increased 9.8% to $31.2 million. Gross margins for the quarter increased 520 basis points to 52.5% vs. 47.3% a year ago. Inventory decreased $4.9 million to $45.2 million compared to $50.1 million a year ago and Vans's balance sheet remains strong with $64.5 million in cash and cash equivalents. Schoenfeld said, "We are very pleased with the overall strengthening of our business and in particular both wholesale and retail in the US. The channel segmentation of our products is helping fuel growth with core shops, our larger customers and our own retail stores resulting in a solid year for FY 2004 and a substantial increase in bookings for Back to School FY 2005. With the skatepark terminations having been resolved, we continue to make important progress operationally in several other areas including inventory management, leveraging of expenses and at-once deliveries." Vans stated that it has revised upward its guidance for fiscal year 2004. It now expects diluted EPS for the base business and on a GAAP basis to range from $0.80 to $0.82 and $0.62 to $0.64, respectively, for fiscal 2004. For Q4, it now expects a diluted loss per share from continuing operations for the base business and on a GAAP basis to range between $0.11 to $0.13, and $0.14 to $0.16, respectively. For FY 2005, based upon current bookings and market trends, Vans's guidance is for total revenues of $360-370 million and approximately $0.95 to $1.00 of EPS on a GAAP basis. It does not currently expect to differentiate its FY 2005 results between GAAP and base business. Schoenfeld concluded, "Over the past 12-18 months, we have enacted a number of initiatives to improve our business and enhance our operating platform for growth. To this point we have achieved four consecutive quarters of comp-store gains of 9% or above and have significantly expanded our gross and operating margins resulting in an increase in earnings for our base business to $17.0 million compared to a net loss of $900,000 one year ago. Our momentum remains strong, our balance sheet is solid and we look forward to further leveraging our unique heritage and global recognition as a leading youth market brand." |
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