Stride Rite had to look beyond its traditional base for growth in its fiscal third quarter, pointing to 6.0% growth in the Tommy Hilfiger Footwear business and a 10% gain in Sperry Top-Sider sales while the Children’s business grew just 1.0% for the period ended August 29, 2003. The Keds business was off 4.0% and was described as being in “a transition period”. International was flat to last year.

The company saw Hilfiger Footwear grow by $1.6 million in the quarter, primarily in expanded distribution in the family footwear channel, while the Children’s group added just $700,000 in sales, due in large part to a weak wholesale business that was off 14%.

Company-owned Children’s group retail was actually up 17% for the third quarter and comp store sales gained 7.9% for the period. The company saw the retail business develop a nice positive trend in mid-July and sees it continuing into the fall.

Children’s Group sales to department stores outpaced the business with licensed partners and trade accounts for the quarter, which the company attributes to “an absolute decline in numbers and doors”.

The Sperry growth was driven by new product launches, including a new Mako collection that is directed toward the upper end. SRR said they are getting Sperry tests in the outdoor channel, but aside from Bass Pro and Cabela’s, the gains have come in the form of 10 to 15 store tests. Women’s ‘brown shoe” collections have also contributed.
Operating profits had risen 10% for the quarter, but a 66% increase in income taxes pushed net income lower for the period. Gross margin improvement was seen as a key contributor to the gains in operating profit, with the company citing reduced product cost, improved inventory control and an increase in the company owned-retail business as key drivers here.

SRR is forecasting that earnings for the full year will be toward the upper end of its previous estimates. Fiscal 2003 diluted earnings per share are seen in the 62 cents to 64 cents range, up from the previous estimate of 60 cents to 64 cents per share.