The Stride Rite Corporation reported net sales for the fourth quarter of fiscal 2003 increased 6% to $103.8 million from $98.2 million in the comparable period of fiscal 2002. The Company incurred a net loss of $1.0 million or $.02 per diluted share in the fourth quarter of fiscal 2003, as compared to a net loss of $2.0 million or $.05 per diluted share in last year's fourth quarter.
For the full 2003 fiscal year, net sales totaled $550.1 million, a 3% increase from the sales level of $532.4 million achieved in fiscal 2002. Operating income for the 2003 fiscal year was $38.6 million, a 10% increase from the comparable period in 2002. Net income totaled
$25.5 million in fiscal 2003, a 6% increase from the net income of $24.1 million in fiscal 2002. On a diluted basis, earnings per share were $.64 in fiscal 2003, an increase of 10%, as compared to $.58 per share in fiscal 2002.
Net sales of the Stride Rite Children's Group increased 11% for the fourth quarter and 4% for the fiscal year as compared to the same periods of fiscal 2002. The increases were driven by the Stride Rite company-owned retail stores, which had increases of 8% and 10% for the
fourth quarter and fiscal year, respectively, compared to the same periods of fiscal 2002.
Net sales at comparable company-owned retail stores increased 4.8% in the fourth quarter and increased 4.7% for the full fiscal year. Stride Rite Children's Group sales to independent retailers increased 16% compared to the prior year's fourth quarter, but decreased 4% for the year.
Sales of the Keds brand in the fourth quarter of fiscal 2003 decreased 12% from the comparable period of fiscal 2002, and annual sales declined 3% compared to the prior fiscal
year.
Sales of the Sperry Top-Sider brand increased 4% in the fourth quarter and 9% for the fiscal year from the comparable periods in fiscal 2002.
Fiscal 2003 Tommy Hilfiger Footwear sales for the fourth quarter and the fiscal year increased 7% and 9%, respectively, compared to the same periods in the prior year.
International sales for the fourth quarter increased 22% compared to the same period in 2002, although the full year sales declined 5% compared to fiscal 2002.
The Company's gross profit percentage of 36.5% in the fourth quarter of fiscal 2003 improved 2.4 percentage points as compared to the same period last year. For the full year, the 2003 gross profit percentage of 38.1% improved 1.6 percentage points. Operating expenses
in the fourth quarter and full year of 2003 increased 9% and 7%, respectively, as compared to the prior year. The major operating cost increases for the quarter and year were related to the full effect of last year's retail store expansion, advertising and certain payroll
related costs. Net income for the full fiscal 2003 year was negatively impacted by a higher tax rate, which was partially offset by a lower share count in earnings per share.
The year-end balance sheet was solid with inventory 17% below last
year. Accounts receivable increased 6%, consistent with the fourth
quarter sales increase. DSO at 40 days was improved 1 day compared to
the prior year DSO of 41. The Company's end of year net cash position
of $103 million represented a $30 million increase over fiscal 2002
and the Company has no outstanding debt. The Company repurchased
293,800 and 717,900 shares of company stock in the fourth quarter and
full year of fiscal 2003, respectively.
David M. Chamberlain, Stride Rite's Chairman and Chief Executive
Officer, commented, “During 2003, we successfully executed our
strategies and improved our operating performance resulting in
increased sales and improved profit margins. I was particularly
pleased with the sales gains we achieved in our Stride Rite Children's
Group, Tommy Hilfiger Footwear and Sperry Top-Sider brands. We believe
this momentum should carry into the new fiscal year. Although Keds had
a difficult year, they made some progress particularly in the area of
inventory management. During fiscal 2003, as planned, we opened
relatively few new Stride Rite Children's Group company-owned retail
stores, but made progress in growing the sales of the new doors opened
in the prior years. This has strengthened the position of our Stride
Rite brand as the premium children's footwear brand with a high
quality distribution of our own retail stores, as well as licensed
partners, independent and department stores.”
Mr. Chamberlain continued, “During this past year, we strengthened
our balance sheet and improved cash flow. Our disciplined approach to
capital management resulted in lower inventories and improved DSO
throughout 2003. The 2003 fiscal year ended with a $30 million
increase in cash, after repurchasing over $7 million in Company stock
during 2003. As we enter this new fiscal year, we anticipate
continuing the momentum we experienced this past year, while working
through an improving, but still difficult retail environment. For
fiscal 2004, we believe our sales will grow in the range of 3% to 5%,
resulting in an earnings improvement of 8% to 12% compared to last
year.
A summary of net sales and net income for the fourth quarter
(unaudited) and fiscal year is provided below. A more detailed balance
sheet and income statement follows this release.
(in thousands, except per share amounts)
For the Quarter For the Fiscal Year
Ended Ended
Nov. 28, Nov. 29, Nov. 28, Nov. 29,
2003 2002 2003 2002
Net sales $103,769 $98,197 $550,124 $532,400
Net income (loss) (965) (2,035) 25,488 24,117
Net income (loss) per common
share:
Diluted (.02) (.05) .64 .58
Basic (.02) (.05) .65 .58
Average common shares used in
per share computations:
Diluted 39,314 40,024 40,063 41,713
Basic 39,314 40,024 39,389 41,315
The Stride Rite Corporation
Summarized Financial Information
for the periods ended November 28, 2003 and November 29, 2002
Statements of Income
(in thousands) Fourth Quarter Twelve Months
(Unaudited)
2003 2002 2003 2002
Net sales $103,769 $98,197 $550,124 $532,400
Cost of sales 65,914 64,739 340,614 337,951
Gross profit 37,855 33,458 209,510 194,449
Selling and administrative
expenses 39,897 36,672 170,867 159,429
Nonrecurring charges (income) - (75) - (75)
Operating income (loss) (2,042) (3,139) 38,643 35,095
Other income, net 238 232 1,591 330
Income (loss) before income
taxes (1,804) (2,907) 40,234 35,425
Provision for (benefit from)
income taxes (839) (872) 14,746 11,308
Net income (loss) $(965) $(2,035) $25,488 $24,117
