Stride Rite's Operating Earnings Up 33% for 1999 Fiscal Year
LEXINGTON, Mass.--(BUSINESS WIRE)--Jan. 6, 2000--The Stride Rite Corporation (NYSE:SRR) today reported higher sales and improved earnings for the fourth quarter of its 1999 fiscal year.
Net sales for the fourth quarter of fiscal 1999 increased 4% to $102.3 million, marking the first time fourth quarter sales exceeded the $100 million level since fiscal 1993. Net income totaled $399,000 or $.01 per diluted share in the fourth quarter of fiscal 1999, a significant turnaround from the loss of $5.7 million or $.12 per diluted share in the comparable period of fiscal 1998. The 1998 fourth quarter loss had included an after-tax charge of $.07 per share related to the termination of a license to market footwear under Levi's brand.
For the 1999 fiscal year, net sales increased 6% to $572.7 million from $539.4 million in fiscal 1998. Net income, which included one-time items in each year, increased 26% to $26.4 million in 1999 from $21.1 million in 1998. On a diluted basis, earnings were $.57 per share in fiscal 1999, a 30% increase above the earnings of $.44 per diluted share in fiscal 1998. On an operating basis, earnings totaled $.61 per diluted share in 1999, 33% higher than fiscal 1998's operating earnings of $.46 per diluted share. The 1999 operating earnings amount excludes non-recurring charges of $.04 per share related to an August 1999 restructuring of the Company's administrative staff. Operating earnings in fiscal 1998 exclude the fourth quarter charge of $.07 per share related to the Levi's decision and a one-time gain of $.05 per share related to a sale of real estate in the second quarter of 1998.
In the fourth quarter of fiscal 1999, sales of the Stride Rite Children's Group were 3% higher than 1998 as performance was helped by new store openings and the fact that fiscal 1999 was a 53-week year. Sales at comparable, company-owned stores in the fourth quarter of 1999 were down 0.9% from the similar period of last year, when comparable store sales had increased 9.3%, the strongest quarterly performance of fiscal 1998. Comparable store sales for the full year in 1999 increased 3.7% from fiscal 1998. Keds division sales in the fourth quarter of 1999 finished 1% higher than the similar period in 1998, with the continuing success of "Keds Stretch" styles and the introduction of the "Keds City" product line offsetting sales decreases in other Keds products. The Keds' performance in the fourth quarter represented a rebound from third quarter trends, when sales of Keds products were off 20% from 1998. On the strength of the women's product line, the Tommy Hilfiger footwear business delivered a 24% sales increase during the fourth quarter of 1999. For the fiscal year, Tommy Hilfiger sales increased 51% from 1998 as the women's line, which was launched in the Fall season last year, had a full year of selling in 1999. Sales of the Sperry brand in 1999 increased 39% during the fourth quarter and 15% for the fiscal year with new products for the office and weekend casual market boosting sales for the Fall season.
David M. Chamberlain, Stride Rite's Chairman and CEO, commented, "The Company delivered a solid performance in the fourth quarter, which is generally the slowest period of the fiscal year due to the seasonality of our brands. Our gross profit performance in the fourth quarter improved by over two percentage points from 1998 and operating costs declined, despite the higher revenues in the 1999 quarter. We are going into fiscal 2000 in a very healthy position with receivable and inventory levels lower than last year and a cash and investments level of $68 million, even after repurchasing over two million shares of the Company's common stock in the fourth quarter under our on-going stock buyback program."
A summary of sales and net income for the fourth quarter and the fiscal year is provided below. A more detailed balance sheet and income statement follows this release. -0-
(in thousands) For the Quarter Ended For the Year Ended Dec. 3, Nov. 27, Dec. 3, Nov. 27, 1999 1998 1999 1998 Net sales $ 102,306 $ 98,736 $ 572,696 $ 539,413 Net income (loss) 399 (5,711)(b) 26,424(a) 21,052(c) Net income (loss) per share of common stock: Diluted $ .01 $ (.12)(b) $ .57(a) $ .44(c) Basic .01 (.12)(b) .57(a) .45(c) Shares used in per share computations: Diluted 45,643 46,555 46,414 47,335 Basic 45,601 46,469 46,214 47,074
(a)Results for the 1999 fiscal year include nonrecurring pre-tax
charges of $3.2 million, or $.04 per share after tax, related to a
restructuring of the Company's administrative staff.
(b)Results for the 1998 fourth quarter included pre-tax charges of $5
million, or $.07 per share after tax, related to the closure of the
Company's Levi's footwear business.
(c)Results for the 1998 fiscal year included the $.07 per share
Levi's charge and a one-time, pre-tax gain of $3.9 million, or $.05
per share after tax, related to a real estate sale. *T
The Stride Rite Corporation markets the leading brand of high quality children's shoes in the United States. Other footwear products for children and adults are marketed by the Company under well-known brand names, including Keds, Sperry, Tommy Hilfiger, Nine West Kids, Grasshoppers and Street Hot. Information about the Company's brands is available on its websites - www.strideritecorp.com, www.keds.com, and www.sperrytopsider.com.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The words "expect", "estimate", and other similar expressions which do not relate solely to historical matters identify forward-looking statements. Undue reliance should not be placed on forward-looking statements because they involve known and unknown risks and uncertainties which may cause actual results to differ materially from anticipated, projected or implied future results. Factors that may cause such a difference include, among others: revenues from new product lines may fall below expectations; the launch of new product lines may be delayed; and additional factors discussed in the Company's reports filed with the Securities and Exchange Commission and the exhibits thereto. The Company disclaims any responsibility to update these statements. -0-
The Stride Rite Corporation Summarized Financial Information for the periods ended December 3, 1999 and November 27, 1998 Statements of Income (in thousands) Fourth Quarter Twelve Months 1999 1998 1999 1998 Net sales $ 102,306 $ 98,736 $ 572,696 $ 539,413 Cost of sales 65,262 68,767 362,108 348,587 Gross profit 37,044 29,969 210,588 190,826 Selling and administrative expenses 37,327 39,128 166,689 161,279 Nonrecurring charges -- -- 3,254 (a) -- Operating income (loss) (283) (9,159) 40,645 29,547 Other income, net 966 31 2,011 3,675 (c) Income (loss) before income taxes 683 (9,128) 42,656 33,222 Provision for (benefit from) income taxes 284 (3,417) 16,232 12,170 Net income (loss)$ 399 $ (5,711)(b) $26,424 (a) $21,052 (c) ========= ========= ========= ======= Balance Sheets Assets: 1999 1998 Cash and short-term investments $ 57,186 $ 42,427 Accounts receivable 47,478 56,475 Inventories 121,167 128,472 Other current assets 31,198 30,855 Total current assets 257,029 258,229 Property and equipment, net 67,425 58,350 Non-current fixed income investments 11,243 10,502 Other assets 10,495 8,415 Total assets $346,192 $335,496 Liabilities and Stockholders' Equity: Current liabilities 90,479 84,727 Deferred income taxes 5,218 6,042 Stockholders' equity 250,495 244,727 Total liabilities and stockholders' equity $346,192 $335,496 (a)Income for fiscal 1999 includes nonrecurring pre-tax charges of $3.2 million, or $.04 per share after tax, related to a restructuring of the Company's administrative staff. (b)Income for the fourth quarter of fiscal 1998 included pre-tax charges of $5 million, or $.07 per share after tax, related to the closure of the Company's Levi's footwear business. (c)Income for fiscal 1998 included the $.07 Levi's charge and a one-time, pre-tax gain of $3.9 million, or $.05 per share after tax, related to a real estate sale. *T CONTACT: The Stride Rite Corporation John M. Kelliher, Chief Financial Officer (617) 824-6028