SANTA FE SPRINGS, Calif–(BUSINESS WIRE)–July 18, 2002–Vans, Inc. (Nasdaq:VANS) today announced financial results for the fourth quarter and fiscal year ended May 31, 2002.
Net sales for the fourth quarter were $63.8 million compared to $85.2 million for the fourth quarter of fiscal 2002. The Company recognized a net loss of $14.9 million, or ($0.83) per diluted share for the quarter versus net income of $2.7 million, or $0.17 per diluted share in the same period a year ago. Net sales for fiscal 2002 were $332.4 million compared to net sales of $341.2 in fiscal 2001. For the year ended May 31, 2002, the Company recognized a net loss of $2.6 million or ($0.15) per diluted share, versus net income of $15.4 million, or $1.02 per diluted share for the year-ended May 31, 2001, before the cumulative effect of the accounting change recognized in the fourth quarter of fiscal 2001.
In the fourth quarter, the Company incurred after-tax impairment charges and other expenses of approximately $10.5 million, or ($0.59) per diluted share, of which roughly $9.7 million was non-cash. On May 23, 2002, the Company expected to incur impairment charges and other expenses of approximately $8.6 million principally tied to the Bakersfield and Denver skateparks and the write-down of certain inventory. Subsequent to May 23, but prior to reporting fiscal 2002 fourth quarter results, the Company incurred an additional $1.9 million of after-tax charges primarily related to the decision to close the Company’s operations in Argentina and Brazil, the write-down of assets for three former Triple Crown retail stores, the assessment of a retroactive customs’ duty in Europe, and an additional write-down of $0.3 million for inventory obsolescence.
Excluding the after-tax impairment charges and other expenses discussed above, the Company would have recognized a net loss from operations of $4.4 million, or ($0.24) per diluted share for the fourth quarter. Excluding all of the charges and expenses incurred in the fourth quarter, net income and earnings per share would have been $7.9 million or $0.44 per share, respectively, for the year ended May 31, 2002.
Gary H. Schoenfeld, President and Chief Executive Officer of Vans, stated, “As we previously indicated, fiscal 2002 turned out to be a very difficult year. Our men’s business for the year was up modestly over the prior year, but we experienced a significant decline in our women’s business particularly in the second half of the year. Within our retail division we experienced negative comps for the first time in seven years following 9/11 and the skateparks suffered a significant fall-off in skate revenues over this same period.”
“Internationally our business is strengthening in our two largest European markets and this past year was another year of solid growth for our brand in Japan,” Mr. Schoenfeld said. “Offsetting this has been the nearly 75% currency devaluation in Argentina and associated adverse effect on the Brazilian economy which led us to the decision to end our joint venture and pull out of these markets.”
Total U.S. sales for the fourth quarter, including sales through Vans’ U.S. retail stores, were $44.1 million, versus $62.2 million for the same period a year ago. Sales through the Company’s U.S. retail stores decreased 1.8% to $23.8 million in the quarter, from $24.3 million for the same period a year ago. Comparable store sales for the quarter declined 7.4% versus the same period last year. U.S. wholesale sales in the quarter declined 46.7% to $20.2 million, versus $38.0 million a year ago. Total international sales were $19.8 million, down 14.1% from $23.0 million a year ago.
Total U.S. sales for the year ended May 31, 2002, including Vans’ U.S. retail stores, were $235.1 million versus $243.0 million for the year ended May 31, 2001. Sales through the Company’s U.S. retail stores increased 7.3% to $110.9 from $103.3 million for the year. Comparable store sales for the year decllined 3.5%. U.S. wholesale sales for the year declined 11.1% to $124.2 million versus $139.6 million a year ago. Total international sales were $97.3 million, down 0.9% from $98.2 million a year ago.
Gross margins for the quarter were 40.8% versus 44.0% a year ago primarily as a result of the inventory write-down discussed above. Gross margins for the year ended May 31, 2002 were 45.8% versus 43.5% for the year ended May 31, 2001, an increase of 230 basis points, primarily due to retail channel mix. Inventory decreased $4.0 million to $48.8 million at May 31, 2002, from $52.8 million a year ago.
With regard to the first quarter of fiscal 2003, the Company stated that it remains comfortable with the First Call earnings per share consensus estimates of $0.26.(a) U.S. wholesale bookings remain at approximately $40 million, European sales continue to run ahead of last year while retail comp declines have continued at levels similar to the fourth quarter of fiscal 2002.(a)
Mr. Schoenfeld concluded, “We begin fiscal 2003 with both challenges and opportunities and a clear focus on product, retail execution and a further reduction of expenses. While obviously not pleased by the dramatic changes in our business over the past nine months, we continue to believe in the strength and authenticity that we have been able to develop with the VANS brand over the past several years. With our brand positioning well established in Core Sports(TM) and the California lifestyle, we now need to execute just as effectively with product and merchandising, and in conjunction, look to shift our marketing emphasis to tie more closely with launches of new product. Our team is focused on the task at hand and we are committed to taking the necessary steps to revitalize our business.”
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, 12 large-scale VANS skateparks, and the VANS High Cascade Snowboard Camp, (R) located on Mt. Hood. The Company operates 168 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. Vans’ Internet address is www.vans.com.