Saucony, Inc. posted another stellar quarter in Q3, driven by very strong shipments of mid-priced Crossover and Originals product into the mall channel. While there was cause for celebration for the current quarter, Wall Street pushed shares lower for the week after the company reported that open orders for that product “did not meet” expectations at the end of the period.
Company chairman and CEO John Fisher said that they know where the shortfalls lie and plan updated product introductions for late spring or early summer next year. While much of the decline appeared to be due to a shift of the business to quick response fill-in this year versus the establishment of new stock levels at mall retailers last year, Fisher also said there was a “products problem” due to a “swing or cycle to those products.”
The fill-in component appear to hold water as the company realized about 38% of its business from at-once in the third quarter, about the same as Q3 last year, but clearly up from the 29% level for the YTD period.
Saucony brand Footwear sales grew almost 49% to $23.5 million in the U.S. in Q3 and made up about 75% of total Domestic sales in the quarter, up from roughly 70% of the business in Q3 last year. Management said unit sales increases were offset a bit by lower average selling prices due to the shift in sales to more Crossover and Originals product.
Crossover product sales in Q3 jumped nearly 116% to about $6.8 million, representing approximately 29% of U.S.
Saucony in Q3 this year versus 20% in the year-ago quarter. The Originals business grew approximately 83% to roughly $3.8 million and made up 16% of sales this year versus 13% of sales last year. Technical product still made up the majority of sales for Saucony in the U.S., growing about 22% to $12.9 million, or 55% of the U.S. market, but down significantly as a percentage from last years 67% share.
Looking ahead, Crossover product makes up about 25% of the Domestic Footwear backlog versus 28% last year and Originals came in at 11% versus 12% at quarter-end last year. Technical is again making up a bigger piece of the pie, comprising 64% of U.S. order backlog versus 60% at the same time last year.
Saucony brand International sales increased 18% to $10.7 million, due in large part to increased Footwear unit volume at the Canadian and Dutch subsidiaries.
Other Domestic sales, which includes HIND apparel and owned-retail, increased 16% to $7.8 million, due to another quarter of double-digit gains in sales and earnings at HIND and the positive comp store sales growth and new stores in the owned-retail business. Saucony has 19 outlet stores in the U.S. and two in Canada. The Other International business declined more than 14% to approximately $300,000 in sales.
