Stride Rite (NYSE:SRR)
Historical Stock Chart
From Jul 2019 to Jul 2024
The Stride Rite Corporation (NYSE: SRR) today reported
record 2005 sales on increased fourth quarter and fiscal year 2005 net
sales. Net sales for the fourth quarter and full year of fiscal 2005
were $131.7 million and $588.2 million, increases of 13% and 5%,
respectively, compared to the same periods in the prior year. Fiscal
2005 contained 52 weeks compared to the 53 weeks in 2004, which had
one extra week in the fourth quarter. The fourth quarter of 2005 also
included $23.2 million of Saucony net sales for the 11 weeks
subsequent to the September 16, 2005 acquisition date.
The fourth quarter net loss totaled $3.1 million or $.08 per
diluted share, a decrease compared to the net income of $51 thousand
or $.00 per diluted share in the fourth quarter of 2004. Net income
for the 2005 fiscal year totaled $24.6 million, a decrease of 4% from
the $25.7 million reported in the comparable period in 2004. The
fiscal 2005 diluted earnings per share of $.66 were flat versus last
year.
The fourth quarter includes a pre-tax expense of $5.4 million
related to the write-up of inventory purchased in the Saucony
acquisition as required by GAAP accounting rules. In addition, the
current quarter includes pre-tax acquisition related integration
expenses of $800 thousand.
Excluding acquisition related integration costs and the inventory
write-up, net income would have been $0.5 million and $28.6 million
for the fourth quarter and the year, respectively, while diluted
earnings per share would have been $.01 and $.77 for the fourth
quarter and the year, respectively. See the section entitled "Non-GAAP
Pro Forma Financial Measures" and the "Reconciliation of Non-GAAP
Measures" provided in this release for additional description of these
Non-GAAP Measures.
David Chamberlain, Chairman and CEO of Stride Rite, commented that
2005 was a significant year for Stride Rite. "With the purchase of
Saucony, we added a highly-respected $150 million brand in performance
running. We see growth opportunities for Saucony in running,
international and children's. We expect that 2006 will be a year of
transition for Saucony as we set the platform for 2007."
"Children's Group had a third year of record performance driven by
strong retail performance and store growth. We expect to add 33 new
doors in 2006 for a total of 316 doors, including 14 existing Saucony
doors."
"Sperry Top-Sider enjoyed a fourth year of increased sales and
significant profit growth. Our products are strong, and we expect
continued growth in all retail channels as well as in the women's
area."
"International had strong sales and record profit, helped in part
by Tommy Hilfiger. With Saucony, we double our international business
presence and add significantly to sales in Europe - an area of focus
for us."
"Keds had a challenging year as we repositioned the brand back to
its 1916 heritage as 'America's sneaker' with Mischa Barton as
spokesperson. We believe we have effectively accomplished our
marketing strategy, as Footwear News recently named Keds 'The
Marketing Brand of the Year'. Success in 2006 will depend upon the
retail performance of our products."
"Our Tommy Hilfiger business was impacted predominantly by
softness in men's sales. The pending sale of Tommy Hilfiger Corp. to
Apax Partners, with their objective of focusing on the higher-end
business, is a positive announcement."
"We enter 2006 with sound strategies in place and strong
management teams. We anticipate a solid year of progress and growth."
Mr. Chamberlain continued, "Assuming reasonable retail and
economic conditions in 2006, we are projecting sales growth of 23% to
27% and earnings per share of $.82 - $.88, including a full year of
Saucony financial results. Included in the projected earnings is the
annual impact related to the expensing of stock options, which is
projected at approximately $.05 per diluted share. In addition, these
projections include the cost of sales impact related to the write-up
of inventory purchased in the Saucony acquisition, which is estimated
to reduce earnings per diluted share by $.05. Acquisition related
integration costs of approximately $2 million or $.03 per share are
also included in the earnings projections."
FINANCIAL HIGHLIGHTS:
-- Net sales for the fourth quarter and year ended December 2,
2005 and December 3, 2004 are summarized in the tables as
follows:
-0-
*T
The Stride Rite Corporation
Net Sales (in thousands)
For the Quarters Ended December 2, 2005 and December 3, 2004
Fourth Quarter
--------------------
Percent
2005 2004 Change
---------- --------- --------
(Unaudited)
Stride Rite Children's Group - Wholesale $16,678 $19,996 (17)%
Stride Rite Children's Group - Retail 45,720 44,715 2%
---------- --------- --------
Stride Rite Children's Group - Combined 62,398 64,711 (4)%
Keds 13,659 17,615 (22)%
Sperry Top-Sider 13,221 12,610 5%
Tommy Hilfiger Adult 14,303 18,402 (22)%
International 7,032 5,680 24%
Saucony 23,181 - 100%
Intercompany Eliminations (2,099) (2,219) (5)%
---------- --------- --------
Total $131,695 $116,799 13%
========== ========= ========
The Stride Rite Corporation
Net Sales (in thousands)
For the Years Ended December 2, 2005 and December 3, 2004
Twelve Months
--------------------
Percent
2005 2004 Change
---------- --------- --------
(Unaudited)
Stride Rite Children's Group - Wholesale $90,926 $96,468 (6)%
Stride Rite Children's Group - Retail 175,335 157,208 12%
---------- --------- --------
Stride Rite Children's Group - Combined 266,261 253,676 5%
Keds 126,030 136,322 (8)%
Sperry Top-Sider 73,817 58,882 25%
Tommy Hilfiger Adult 75,560 92,307 (18)%
International 33,919 27,125 25%
Saucony 23,181 - 100%
Intercompany Eliminations (10,604) (9,988) 6%
---------- --------- --------
Total $588,164 $558,324 5%
========== ========= ========
*T
-- Stride Net sales of the Stride Rite Children's Group-Retail
division increased 2% and 12% in the fourth quarter and for
the year, respectively, versus the prior year. Sales at
comparable Children's Group retail stores (open 52 weeks in
each fiscal year) increased 4.4% for the fourth quarter of
2005 and 5.2% for the full year. At the end of fiscal 2005,
the Stride Rite Children's Group-Retail operated 271 stores.
This is a net increase of 20 stores, or 8% from the end of
last year.
-- Stride Rite Children's Group-Wholesale net sales decreased 17%
for the quarter and 6% for the year, respectively, as compared
to the prior year. This decrease was primarily attributable to
decreased sales of first quality product, mainly in the Tommy
Hilfiger and Munchkin children's product lines as well as
overall decreases in the department store business and
promotional product sales.
-- Net sales of Tommy Hilfiger men's and women's products for the
fourth quarter and the year decreased 22% and 18%,
respectively, primarily due to a reduction in the men's
business across various channels of distribution. Saucony net
sales were $23.2 million for the 11 week period subsequent to
the September 16, 2005 acquisition date. Sperry Top-Sider net
sales increased 5% and 25% for the fourth quarter and full
year, respectively, on strong sales of men's boat shoes and
the overall women's product line. Net sales in the Keds
division decreased 22% and 8% for the fourth quarter and the
full year, respectively, as the sales growth in premium
channels could not offset decreases in the moderate and value
retail sales channels. International net sales increased 24%
in the quarter and 25% for the fiscal year, respectively, on
higher sales of Tommy Hilfiger in Latin America, Keds footwear
in Europe and Asia, and Sperry Top-Sider in Europe and South
Africa.
-- Excluding the inventory write-up, the gross profit percentage
increased 1.7 percentage points to 39.8% for the year. Keds,
Stride Rite Children's Group-Retail and Sperry Top-Sider all
had strong gross profit percentage improvements versus last
year.
-- Operating expenses increased 12% and 11% for the fourth
quarter and the year, respectively. As planned, the major
operating cost increases related to higher advertising costs
and the Stride Rite Children's Group-Retail store expansion.
Also contributing to the increase were 11 weeks of Saucony
expenses, as well as integration costs and certain other
acquisition related costs.
-- Accounts receivable increased 33% compared to last year on a
13% quarterly sales increase. DSO was 39 days, an increase of
2 days versus the same period last year. The increase was due
to the addition of Saucony which generally has offered
somewhat longer credit terms to retailers.
-- Inventories of $116.1 million were up 32% compared to the end
of 2004. The increase was due primarily to the addition of
Saucony and included the inventory write-up as required by
GAAP purchase accounting rules. Excluding Saucony, the 2005
year-end inventory balance increased 3% compared to last year.
-- Cash and cash equivalents were $33 million at the end of the
fiscal year with $60 million in outstanding debt. The Company
borrowed $85 million in mid-September 2005 to fund the closing
of the acquisition of Saucony.
COMPANY OVERVIEW & CONFERENCE CALL INFORMATION:
The Stride Rite Corporation markets the leading brand of high
quality children's shoes in the United States. Other footwear products
for children and adults are marketed by the Company under well-known
brand names, including Keds, Sperry Top-Sider, Tommy Hilfiger,
Saucony, Grasshoppers, Munchkin, Spot-bilt and Hind. Apparel products
are marketed by the Company under the Saucony and Hind brand names.
Information about the Company is available on our website -
www.strideritecorp.com. The Company will provide a live webcast of its
fourth quarter conference call. The live broadcast of Stride Rite's
quarterly conference call will be available on the Company's website
and at www.streetevents.com, beginning at 10:00AM ET on January 12,
2006. An on-line replay will follow shortly after the call and will
continue through January 18, 2006. Information about the Company's
brands and product lines is available at www.striderite.com,
www.keds.com, www.sperrytopsider.com and www.saucony.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This announcement includes forward-looking statements which
reflect our current views with respect to the events or financial
performance discussed in the release, based on management's beliefs
and assumptions and information currently available. When used, the
words "believe", "anticipate", "estimate", "project", "should",
"expect", "appear" and similar expressions, which do not relate solely
to historical matters identify forward-looking statements. Such
statements are subject to risks, uncertainties and assumptions and are
not guarantees of future events or performance, which may be affected
by known and unknown risks, trends and uncertainties. Should one or
more of these risks or uncertainties materialize, or should our
assumptions prove incorrect, actual results may vary materially from
those anticipated, projected or implied. Factors that may cause such a
variance include, among others: the inability to fully realize the
anticipated benefits from the acquisition of Saucony; the challenges
of achieving the expected synergies with Saucony; the possibility of
incurring costs or difficulties related to the integration of the
businesses of Stride Rite and Saucony; the possible failure to retain
the Tommy Hilfiger footwear license; the opening of new stores may be
delayed; the volume of anticipated sales may decline; revenues from
new product lines may fall below expectations; the launch of new
product lines may be delayed; new retail concepts may not achieve
expected results; general retail sales trends may be below
expectations; current license agreements may be terminated; consumer
fashion trends may shift to footwear styling not currently included in
our product lines; our retail customers, including large department
stores, may continue to
consolidate or restructure operations resulting in unexpected
store closings; and additional factors discussed from time to time in
our filings with the Securities and Exchange Commission. We expressly
disclaim any responsibility to update forward-looking statements.
NON-GAAP PRO FORMA FINANCIAL MEASURES:
This release contains certain non-GAAP financial measures. In
particular, Stride Rite provides historic and anticipated net income
and diluted earnings per share excluding certain cash and non-cash
charges, which are non-GAAP financial measures. These results are
included as a complement to results provided in accordance with GAAP
because management believes these non-GAAP financial measures help
indicate underlying trends in Stride Rite's business and provide
useful information to both management and investors by excluding
certain items that are not indicative of Stride Rite's core operating
results. These measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for or superior to GAAP results. The non-GAAP information
provided by Stride Rite may be different from the non-GAAP information
provided by other companies.
-0-
*T
The Stride Rite Corporation
Summarized Financial Information
for the periods ended December 2, 2005 and December 3, 2004
Statements of Income
(in thousands) Fourth Quarter Twelve Months
-------------- -------------
2005 2004 2005 2004
--------- --------- ---------- ----------
(Unaudited) (Unaudited)
Net sales $131,695 $116,799 $588,164 $558,324
Cost of sales 86,643 71,903 359,179 345,728
--------- --------- ---------- ----------
Gross profit 45,052 44,896 228,985 212,596
Selling and administrative
expenses 49,881 44,430 191,496 172,190
--------- --------- ---------- ----------
Operating income (loss) (4,829) 466 37,489 40,406
Other income (expense), net (541) (371) 524 503
--------- --------- ---------- ----------
Income (loss) before income
taxes (5,370) 95 38,013 40,909
Provision for (benefit
from) income taxes (2,309) 44 13,446 15,255
--------- --------- ---------- ----------
Net income (loss) $(3,061) $51 $24,567 $25,654
========= ========= ========== ==========
Earnings (loss) per share:
Diluted $(0.08) $0.00 $0.66 $0.66
Basic $(0.08) $0.00 $0.68 $0.68
Weighted average shares
outstanding:
Diluted 37,325 37,197 37,223 38,753
Basic 36,316 36,495 36,197 37,976
Balance Sheets
2005 2004
--------- ---------
Assets: (Unaudited)
Cash and cash equivalents $33,094 $20,005
Marketable securities - 70,850
Accounts receivable 63,368 47,730
Inventories 116,095 87,790
Deferred income taxes 12,637 13,123
Other current assets 31,689 15,681
--------- ---------
Total current assets 256,883 255,179
Property and equipment, net 51,367 54,246
Goodwill 56,729 908
Trademarks 58,590 1,690
Other assets 17,790 9,273
--------- ---------
Total assets $441,359 $321,296
========= =========
Liabilities and
Stockholders' Equity:
Current liabilities 73,022 57,739
Long-term debt 60,000 -
Deferred income taxes and
other liabilities 41,659 16,695
Stockholders' equity 266,678 246,862
--------- ---------
Total liabilities and
stockholders' equity $441,359 $321,296
========= =========
Reconciliation of Non-GAAP Measures
Unaudited Non-GAAP Pro Forma Statements of Income (in thousands)
For the Quarter Ended December 2, 2005
Reported Pro forma
Fourth Fourth
Quarter Pro forma Quarter
2005 Adjustments 2005
---------- ----------- ----------
Net sales $131,695 $131,695
Cost of sales 86,643 ($5,400)(a) 81,243
---------- ----------- ----------
Gross profit 45,052 5,400 50,452
Selling and administrative
expenses 49,880 (764)(b) 49,116
---------- ----------- ----------
Operating income (loss) (4,828) 6,164 1,336
Other income (expense), net (542) (542)
---------- ----------- ----------
Income (loss) before income taxes (5,370) 6,164 794
Provision for (benefit from)
income taxes (2,309) 2,648(c) 339
---------- ----------- ----------
Net income (loss) $(3,061) $3,516 $455
========== =========== ==========
Non-GAAP earnings (loss) per share:
Diluted $(0.08) $0.01
Basic $(0.08) $0.01
Weighted average shares outstanding:
Diluted 37,325 37,325
Basic 36,316 36,316
For the Year Ended December 2, 2005
Reported Pro forma
Twelve Twelve
Months Pro forma Months
2005 Adjustments 2005
---------- ----------- ----------
Net sales $588,164 $588,164
Cost of sales 359,179 ($5,400)(a) 353,779
---------- ----------- ----------
Gross profit 228,985 5,400 234,385
Selling and administrative
expenses 191,496 (881)(b) 190,615
---------- ----------- ----------
Operating income 37,489 6,281 43,770
Other income, net 524 524
---------- ----------- ----------
Income before income taxes 38,013 6,281 44,294
Provision for income taxes 13,446 2,222(c) 15,668
---------- ----------- ----------
Net income $24,567 $4,059 $28,626
========== =========== ==========
Non-GAAP earnings per share:
Diluted $0.66 $0.77
Basic $0.68 $0.79
Weighted average shares
outstanding:
Diluted 37,223 37,223
Basic 36,197 36,197
Pro forma adjustments:
(a) Relief of the inventory step-up (pre-tax)
(b) Saucony integration costs (pre-tax)
(c) Income tax effect at GAAP rate
*T