Vans was bleeding red ink in fiscal Q2 regardless if they include the troubled skatepark business in their GAAP results or when look at their continuing “base business” that excludes the five skateparks that will close this year. The company appeared to be turning the corner in the first quarter and has raised guidance for the back half and full fiscal year. The company will keep two West Coast and one East Coast park and will continue to report in both GAAP and “base business” terms for the remainder of fiscal 2004.

In base business terms, Vans saw net sales increase 10.4% to $63.4 million compared to $57.4 million for the year-ago quarter. Comparable store sales at company-owned retail increased 15.2% versus the same period last year, with apparel comping up “considerably higher” than 20% and footwear comping up in the 10% range. Girl’s and Kid’s is driving the comp store gains, while Men’s has been “flat”.

Total U.S. base business sales for the quarter, which includes Vans' U.S. retail stores, were up 17.1% to $45.8 million versus $39.1 million for the same period a year ago. U.S. retail stores sales for the base business increased 10.5% to $21.9 million from $19.8 million in the same period a year ago.

The wholesale businesses are the same for both the GAAP and base business numbers.

Unlike most of the other companies reporting International sales numbers, Vans actually saw offsetting issues in their reported numbers. The currency benefit seen in the European business — estimated at about 15% in Euros and 6% to 7% in the U.K. — was impacted by the fact that Vans sells to its European distributors in Portugal, Spain, Italy and Eastern Europe in dollars and they have not hedged against the activity. The differential comes when the dollar weakens as sales in Q1 become receivables in Q2.

Europe is estimated to be two-thirds to three-quarters of the International business. France is the largest market, followed by the U.K. The other issue affecting the International business is the weaker Mexican Peso.

The net loss for the base business was $4.1 million, or 23 cents per diluted share, in Q2 versus a net loss of $2.8 million, or 16 cents per diluted share, in the year-ago period.

Footwear bookings in the U.S. are up “in the 10% range” or more, with the girl’s business driving most of the increase. CEO Gary Schoenfeld said they feel they are “making good progress” on the men’s business.

VANS raised its guidance for the fiscal Q3 and full year. Full year diluted EPS for the base business is now seen in the 56 cents to 60 cents range, or 34 cents to 42 cents on a GAAP basis. Full year GAAP revenues are seen in the $336 million to $341 million range, up 1.8% to 3.3% from fiscal 2003.