The weather-inflicted declines in sandals appear to have hit another key category this spring-canvas. Stride Rite reported fiscal second quarter numbers for its canvas product impacted the sales and profits for the company across all brands, nearly erasing the positive gains the company made in Q1.

The sales decline for Q1 narrowed the YTD gain to just 3.0%, while the 3.0% dip in net income cut the YTD profit gain to 5.0%.

SRR said Keds in particular had a “disappointing” spring, with sales of the brand down 10% for the quarter. Keds had been up 7% in the first quarter. Product sell-in was reportedly strong, but the weather hurt sell-through, impacting the fill-in business.

The same issue hit Stride Rite’s Q1 standout, Tommy Hilfiger Footwear. Sales were off here 6% for the quarter versus a 37% jump in Q1. YTD sales are still up 11%. CEO David Chamberlain said that retailers front-loaded the year at THFW and he felt the brand still had pretty good numbers at retail. He said he expected the Hilfiger brand to “have a solid year”.

Pro-Keds, which sits under the Hilfiger division, was hurt by the spring canvas.

In other related news, Stride Rite has extended its footwear license with Tommy Hilfiger through March of 2007. The deal was set to expire next year. The license will continue to cover the men’s, women’s and kid’s categories.

Surprisingly, the kid’s business saw the nice gains in sandals, primarily through the company’s retail stores. Total Stride Rite Children’s Group sales increased 4% for the second quarter, with company-owned stores jumping 14% to offset a 12% decline with independent retailers.

Chamberlain indicated that Department Stores and Independent accounts performed better than the company’s licensed partners. He also said the Hilfiger Kid’s business grew in Q2. Stride Rite same-store sales were up 9.0%.

Sperry Top-Sider sales increased 8.0% for the quarter.
The shift in sales to company–owned retail had a positive impact on margins, with gross profits jumping 220 basis points to 39.5%. the company also saw improvement in its go-in margins due to more favorable pricing with its factories. Less exposure in close-out prone obsolete inventory was also a contributor.

OTHER KEY METRICS:

  • DSO reduced to 40 days from 51 days
  • Cash on Hand is up 20.9% to $81.5 million
  • EPS gained from by 6.3% decrease in shares outstanding
  • Full year EPS forecasted in the 60 cents to 64 cents range