SANTA FE SPRINGS, Calif.–
–Q1 Sales Increase 17% to $118 million–
–Fully-Diluted EPS Increases to $0.61 versus $0.48 —
–Q1 Same Store Sales Increase 5.5% —
–One Million Share Repurchase Program Authorized–
Vans, Inc. (Nasdaq: VANS) today announced record financial results for the first fiscal quarter ended September 1, 2001.
Net sales for the quarter increased 17.4% to $118.0 million, compared to $100.6 million for the first quarter of fiscal 2001. Net income rose 60.4% to $11.3 million, versus net income of $7.1 million in the same period last year, and diluted earnings per share increased 27.1% to $0.61, versus diluted earnings per share of $0.48 in the first quarter of fiscal 2001 (net of the $0.03 cumulative effect of the change in accounting method related to SAB 101, as discussed in more detail in the Company’s year-end earnings release).
“While the tragedy of September 11 has adversely affected our business over the past two weeks and our outlook for the second quarter, we are very pleased to report our first quarter which reflects the biggest and most profitable quarter in our company’s history,” said Gary H. Schoenfeld, President and Chief Executive Officer of Vans. “First quarter sales of $118 million exceeded the Company’s total revenues for the year five years ago and net income of $11.3 million almost matched the full year’s income of $12.1 million in fiscal 2000 demonstrating the continued success of our brand strategy and strong connection with the youth market.”
For the first quarter, total U.S. sales, including sales through Vans’ U.S. retail stores, increased 19.3% to $86.8 million, versus $72.7 million for the same period a year ago. U.S. wholesale sales in the first quarter increased 13.8% to $53.2 million, versus $46.7 million a year ago. Sales through the Company’s U.S. retail stores increased 29.3% to $33.6 million in the first quarter of fiscal 2002, from $26.0 million for the same period a year ago. Comparable store sales for the first quarter were up 5.5% versus the same period last year, the twenty-seventh consecutive quarter of such increase. Total international sales in the first quarter increased 12.3% to $31.3 million, versus $27.9 million a year ago.
Gross margins for the quarter increased 300 basis points to 46.9% from 43.9% driven by better first margins, improved inventory management and increased full price retail and skatepark channel mix. Inventory decreased $2.7 million to $58.7 million from $61.4 million year-over-year. The Company’s balance sheet remains strong with $48 million in cash and shareholders’ equity of $211 million.
“We continued to significantly expand our gross margins during the quarter which reflects a number of factors including our improved sourcing capabilities and the increased importance of our brand at retail,” Mr. Schoenfeld stated. “In addition, we were very pleased to report our third straight quarter of year over year inventory declines, demonstrating our ability to continually improve the management of our supply chain.”
Mr. Schoenfeld continued, “Prior to two weeks ago, we believed that the Company remained on track to meet the First Call consensus earnings per share estimate of $1.20 for the year yet with the expectation of lowering our second quarter earnings guidance with a corresponding increase for the third quarter. Since September 11, we have experienced double-digit declines in our Vans retail stores, causing us to significantly reduce our near-term expectations both for our own retail as well as at-once business for U.S. wholesale. While it is impossible to predict the full impact of what has occurred, our thinking as of now is that we will be modestly profitable in the second quarter with total revenues flat to down approximately 5%.”(1)
“Looking ahead to the third quarter, at this point we are pleased with order trends both in the U.S. and internationally and remain comfortable with tthe current expectations for third quarter sales and EPS to increase approximately 15% and 30-35%, respectively, compared to our pre-SAB 101 sales and EPS of $83.3 million and $0.17 for the third quarter last year ($80.9 million and $0.13 after the effect of SAB 101),” Mr. Schoenfeld said. “For the year as a whole, our best sense is that fiscal 2002 diluted EPS are likely to approximate last year’s level on roughly a 10% increase in sales.”(1)
Vans also announced its Board of Directors authorized a new stock repurchase program for the Company to repurchase up to one million shares of its common stock.
Mr. Schoenfeld concluded, “Obviously the financial markets have already reacted to the likelihood of a slowdown in consumer spending and none of us are pleased with the anticipated near-term impact on our business and many others since the events of two weeks ago. Yet as evidenced by our record results in the first quarter, our brand and product continue to strengthen, our inventories remain in-line and our balance sheet is strong, and thus we remain focused on building upon our leadership position in the youth market and further capitalizing on what we have already established.”(1)
Vans, Inc. is a leading branded lifestyle company for the youth market. Vans reaches its 10 to 24 year-old target consumers through the sponsorship of Core Sports(TM), such as skateboarding, snowboarding, surfing and wakeboarding, and through major entertainment events and venues, such as the VANS Triple Crown(TM) Series, the VANS Warped Tour(R), the VANS World Amateur Skateboarding Championships(TM), nine VANS large-scale skateparks, and the VANS High Cascade Snowboard Camp(TM), located on Mt. Hood. The Company operates 148 retail stores in the U.S. and Europe, and designs, markets and distributes active-casual footwear, clothing and accessories, performance footwear for Core Sports(TM), snowboard boots, step-in snowboard boot bindings, and outerwear worldwide.