The Stride Rite Corporation sales for the third quarter of fiscal 2004 were $140.4 million versus $139.7 million in the comparable period of fiscal 2003. Net income for the third quarter totaled $6.2 million or $.16 per diluted
share, as compared to net income of $6.4 million or $.16 per diluted share in last year's third quarter.
For the first nine months of fiscal 2004, net sales were $441.5
million, a decrease of 1% from the net sales of $446.4 million for the
same period in fiscal 2003. Fully diluted earnings per share were $.65
for the first nine months of fiscal 2004 versus $.66 in fiscal 2003.
Net income for the first nine months of fiscal 2004 totaled $25.6
million, a decrease of 3% from the $26.5 million reported in the
comparable period in 2003.
Third quarter sales of the Stride Rite Children's Group increased
5% compared to the third quarter of fiscal 2003. The Children's Group
company-owned retail stores recorded a sales increase of 5% for the
third quarter over the same period of fiscal 2003. Sales at comparable
Children's Group retail stores increased 1.3% in the third quarter
versus last year. Year-to-date comparable retail store sales are now
up 6.4% through three quarters. Sales by the Children's Group to
independent retailers increased 5% during the third quarter of fiscal
2004 as compared to the same period last year. At the end of the third
quarter of fiscal 2004, the Stride Rite Children's Group operated 243
stores, an increase of 6% from the prior year. Sales of Sperry
Top-Sider footwear increased 4% in the third quarter of fiscal 2004
versus the same period of fiscal 2003. Sales of Keds and Tommy
Hilfiger products decreased 10% and 5%, respectively, in the third
quarter from the comparable period in fiscal 2003. International sales
for the third quarter increased 18% versus the same period in 2003.
The Company's gross profit percentage of 36.5% in the third
quarter of fiscal 2004 decreased 1.2 percentage points as compared to
the same period last year, due primarily to the impact of promotional
product pricing and certain increased product costs. Operating
expenses in the third quarter of 2004 decreased 2% as compared to the
same period last year.
The quarter-end balance sheet remains strong. The Company's cash
balance of $85 million decreased by $11 million as compared to last
year. The Company repurchased approximately 847,000 shares of Company
stock at a cost of $8.8 million dollars in the quarter. Over the first
nine months of fiscal 2004, the Company has repurchased approximately
3 million shares of Company stock at a cost of $31.2 million dollars.
Accounts receivable is flat compared to last year. DSO was 43 days, an
increase of one day versus the same period last year. Inventories of
$81 million were up 18% compared to the same period of 2003 due
predominantly to the timing of product receipts. The Company has no
outstanding debt.
David M. Chamberlain, Stride Rite's Chairman and Chief Executive
Officer, commented, “We are pleased with the continuing progress in
our Stride Rite Children's Group. The third quarter retail store
comparable sales were solid, particularly when factoring in the later
Labor Day this year and the 7.9% comparative store increase last year
in the same quarter. The Children's Group wholesale business reflects
a positive sales trend versus last year. We believe our Children's
Group is well positioned to finish the year with strong results.
While Keds sales declined in the quarter, the core women's and
children's sales increased over the prior year. Lower sales to
promotional channels and less closeout product lowered the Keds sales
volume. This is consistent with our strategy to reduce Keds sales in
these areas. The major repositioning will begin in Spring 2005, with
Mischa Barton as the Keds brand representative. Our Sperry Top-Sider
division recorded its eleventh consecutive quarter of sales
improvement on the strength of the increased market penetration of its
men's business. We feel this positive trend will continue. The Tommy
Hilfiger sales were impacted in the quarter by lower men's product
sales than last year. The International sales increase was the result
of strong Tommy Hilfiger shipments.
The Company's fourth quarter results will be affected by the
overall economic climate and the success of the Fall product currently
at retail. For the year, sales are projected flat to slightly higher
versus a year ago with earnings in the range of $.65 – $.67 per
share.”
(in thousands, except per share amounts)
For the Quarter For the Nine Months
Ended Ended
-----------------------------------------
Aug 27, Aug 29, Aug 27, Aug 29,
2004 2003 2004 2003
-----------------------------------------
Net sales $140,382 $139,747 $441,525 $446,355
Net income 6,219 6,413 25,603 26,453
Net income per common share:
Diluted .16 .16 .65 .66
Basic .17 .16 .66 .67
Average common shares used in
pershare computations:
Diluted 38,159 40,243 39,311 39,992
Basic 37,467 39,456 38,508 39,415
The Stride Rite Corporation
Summarized Financial Information (Unaudited)
for the periods ended August 27, 2004 and August 29, 2003
Statements of Income
(In thousands) Third Quarter Nine Months
---------------------- -------------------
2004 2003 2004 2003
------------ --------- --------- ---------
Net sales $140,382 $139,747 $441,525 $446,355
Cost of sales 89,197 87,111 273,825 274,700
------------ --------- --------- ---------
Gross profit 51,185 52,636 167,700 171,655
Selling and administrative
expenses 41,831 42,592 127,760 130,970
------------ --------- --------- ---------
Operating income 9,354 10,044 39,940 40,685
Other income, net 134 83 874 1,353
------------ --------- --------- ---------
Income before income taxes 9,488 10,127 40,814 42,038
Provision for income taxes 3,269 3,714 15,211 15,585
------------ --------- --------- ---------
Net income $6,219 $6,413 $25,603 $26,453
============ ========= ========= =========
Balance Sheets
2004 2003
------------- ------------
Assets:
Cash and cash equivalents $84,906 $96,195
Accounts receivable 69,998 69,590
Inventories 80,604 68,557
Deferred income taxes 15,167 20,222
Other current assets 10,140 5,330
------------- ------------
Total current assets 260,815 259,894
Property and equipment, net 56,874 62,552
Other assets 12,582 15,022
------------- ------------
Total assets $330,271 $337,468
============= ============
Liabilities and Stockholders' Equity:
Current liabilities 55,902 52,459
Deferred income taxes and other liabilities 13,989 12,452
Stockholders' equity 260,380 272,557
------------- ------------
Total liabilities and stockholders'
equity $330,271 $337,468
============= ============
