Stride Rite Reports Third Quarter Results
LEXINGTON, Mass.--(BUSINESS WIRE)--Sept. 21, 2000--The Stride Rite Corporation (NYSE:SRR) today reported lower sales and earnings for the third quarter of its 2000 fiscal year. The actual results were within the range expected in the Company's earlier comments on the third quarter performance.
Net sales for the third quarter of fiscal 2000 decreased 7% to $144.8 million from $156 million in the comparable period of fiscal 1999. Earnings per share on a diluted basis were $.18 in the third quarter of fiscal 2000, finishing 18% below the earnings of $.22 per share in the third quarter of 1999. The 1999 third quarter results included a one-time charge of $.04 per share related to a restructuring of the Company's administrative staff. On an operating basis, earnings per share in the third quarter of 2000 were below last year by 31%. Net income for the third quarter of fiscal 2000 totaled $7.8 million, a 23% decrease from the net income reported for the third quarter of fiscal 1999.
For the first nine months of fiscal 2000, net sales were 4% lower than the similar period in fiscal 1999, $453 million in 2000 compared to $470.4 million in 1999. On a diluted basis, earnings per share totaled $.59 per share for the nine-month period of fiscal 2000, an increase of 5% above the earnings of $.56 per share in the nine months of fiscal 1999. Excluding the impact of the one-time charge in fiscal 1999, earnings in the nine month period were down slightly, $.59 in 2000 compared to $.60 in 1999. Net income for the nine month period was $25.9 million in fiscal 2000 compared to $26 million in the first nine months of fiscal 1999.
Sales of the Stride Rite Children's Group increased 1% during the third quarter of fiscal 2000 as a 10% sales increase at company-owned retail stores offset a 7% decrease in sales of the Stride Rite brand to independent retailers. Sales at comparable company-owned retail stores increased 2.3% during the third quarter with the results benefiting from the later fiscal calendar in 2000, which shifted an important week in the back-to-school season into the third fiscal quarter. On a calendar adjusted basis, comparable store sales in the third quarter were 2% below last year. Sales of the Keds brand decreased 12% in the third quarter of 2000 to bring the nine-month results to a 4% sales decline from 1999. The Keds business was hurt by weak sales trends in the department store sector and the product transition to replace the basic Ready to Wear program. The performance of the Sperry brand was also soft in the third quarter of 2000 with lower reorders and sales down 10% from the last year's level. The Tommy Hilfiger footwear business, which is also heavily dependent on the department store sector, saw sales decline 8% from year ago levels during the third quarter fiscal quarter.
David M. Chamberlain, Stride Rite's Chairman and CEO, commented, "We were disappointed by the sales performance of our brands during the third quarter. The sluggish retail sales trends of our key customers did not produce the reorders that we expected over the past three months. The sales shortfall in the third quarter required additional reserves for inventory markdowns which further hurt the Company's profit performance. We believe that we are making progress in strengthening the brands' product lines as we approach Spring 2001 selling season. Our balance sheet, at the end of the quarter, continues to be strong with $54 million of cash and investments, lower levels of accounts receivable and inventories and no debt. In fiscal 2000, the Company has repurchased 2.8 million shares under our on-going share repurchase program. At the current valuation, we continue to believe that this is an effective way of returning capital to shareholders."
A summary of sales and net income for the third quarter and first nine months is provided below. A more detailed balance sheet and income statement follows this release.
(in thousands)
For the Quarter Ended For the Nine Months Ended
Sept. 1, August 27, Sept. 1, August 27,
2000 1999 2000 1999
Net sales $144,760 $155,952 $452,956 $470,390
Net income 7,782 10,113(1) 25,878 26,025(1)
Net income per
share of
common stock:
Diluted $.18 $.22(1) $.59 $.56(1)
Basic .18 .22(1) .60 .56(1)
Shares used in per share computations:
Diluted 43,167 46,644 43,582 46,761
Basic 43,004 46,440 43,402 46,418
(1)Income for the third quarter and nine months of fiscal 1999
included a nonrecurring pre-tax charge of $3.2 million, or $.04 per
share after tax, related to a restructuring of the Company's
administrative staff.
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, Grasshoppers and Street Hot. Information about the Company is available on our website
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www.strideritecorp.com. The Company will provide an on line web simulcast of its third quarter conference call. The live broadcast of Stride Rite's quarterly conference call will be available on the Company's website and at www.streetevents.com, beginning at 10:AM EDT on September 21, 2000. An on line replay will follow shortly after the call and will continue through October 5, 2000. Information about the Company's brands and product lines is available at www.striderite.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.
The Stride Rite Corporation
Summarized Financial Information
for the periods ended September 1, 2000 and August 27, 1999
Statements of Income
(in thousands)
Third Quarter Nine Months
2000 1999 2000 1999
Net sales $144,760 $155,952 $452,956 $470,390
Cost of sales 92,700 98,157 288,135 296,846
Gross profit 52,060 57,795 164,821 173,544
Selling and
administrative expenses 40,242 39,501 124,361 129,362
Nonrecurring charges -- 3,254(1) -- 3,254(1)
Operating income 11,818 15,040 40,460 40,928
Other income, net 812 1,331 1,292 1,045
Income before income taxes 12,630 16,371 41,752 41,973
Provision for income taxes 4,848 6,258 15,874 15,948
Net income $ 7,782 $ 10,113 $ 25,878 $ 26,025
Balance Sheets
Assets: 2000 1999
Cash and short-term investments $ 42,762 $ 44,558
Accounts receivable 82,578 86,166
Inventories 78,766 98,578
Deferred income taxes 26,489 25,796
Other current assets 4,587 3,392
Total current assets 235,182 258,490
Property and equipment, net 75,326 65,865
Non-current fixed income investments 11,236 10,827
Other assets 10,024 12,848
Total assets $331,768 $348,030
Liabilities and Stockholders' Equity:
Current liabilities 70,096 77,977
Deferred income taxes 5,109 6,134
Stockholders' equity 256,563 263,919
Total liabilities and stockholders' equity $331,768 $348,030
(1)Income for the third quarter and nine months of fiscal 1999
includes a nonrecurring pre-tax charge of $3.2 million, or $.04 per
share after tax, related to a restructuring of the Company's
administrative staff.
--30--kc/bos*
CONTACT: The Stride Rite Corporation John M. Kelliher, Chief Financial Officer (617) 824-6028