Vans, Inc. Reports Record Second Quarter

SANTA FE SPRINGS, Calif.–(BUSINESS WIRE)–Dec. 18, 2000–Vans, Inc. (Nasdaq:VANS) today announced record financial results for the second quarter of fiscal 2001 ended November 25, 2000.

Net sales for the quarter increased 24.6% to $73.2 million versus $58.8 million last year with net income up 10.5% to $2.9 million versus $2.7 million and diluted earnings per share of $0.20 versus $0.19, in line with consensus estimates. For the first six months of fiscal 2001, sales increased 22.7% to $173.9 million versus $141.7 million last year and net income increased 22.6% to $10.5 million versus $8.6 million with an 18.3% increase in diluted earnings per share to $0.71 compared to $0.60.

“We continue to be pleased with the performance and strengthening of the VANS brand on a global basis,” said Gary H. Schoenfeld, President and Chief Executive Officer of Vans. “Highlights during the quarter included particularly strong performance in our retail stores, very positive response to the direction and execution of both our Women’s and Outdoor categories, the successful opening of our sixth VANS skatepark in Houston, Texas, and being named Footwear News Company of the Year.”

Mr. Schoenfeld continued, “From a financial perspective, the 18% decline in the euro compared to the second quarter last year significantly masked the true strength of our business. On a constant dollar basis, the Company’s sales for the quarter would have been approximately $74.6 million, up 27%, with a similar growth rate in earnings per share to approximately $0.24 compared to $0.19 last year.”

For the second quarter, total U.S. sales, including sales through Vans’ U.S. retail stores, increased 28.4% to $52.1 million, versus $40.6 million for the same period a year ago. Sales through the Company’s U.S. retail stores increased 42.5% to $24.7 million in the second quarter of fiscal 2001, from $17.3 million for the same period a year ago. Comparable store sales for the second quarter were up 16.8% versus the same period last year, the twenty-fourth consecutive quarter of such increase. U.S. wholesale sales in the second quarter increased 17.9% to $27.4 million, versus $23.3 million a year ago. Total international sales were $21.1 million, up 16.2 % from $18.2 million a year ago. On a constant dollar basis, international sales would have been up 24%.

“Our retail stores substantially exceeded plan with a comp store gain of 16.8% and our wholesale business continues to perform well,” Mr. Schoenfeld said. “We believe the growth in our business reflects a number of factors including the leading position of our brand, the strengthening of our product merchandising, the updated image and remodeling of our stores, and the passion and energy of our people.”

Gross margins for the quarter were 43.6% vs. 44.5% with the comparative decline directly attributable to the fall of the euro. Inventory was $61.7 million at November 25, 2000, versus $49.4 million a year ago.

Both for the third quarter ending February 24, 2001, and the fiscal year ending May 31, 2001, the Company expects total sales to increase approximately 15% to 20% over the respective periods last year.(a) The Company also continues to be comfortable with the First Call consensus earnings per share estimates of $0.16 for the third quarter, up 33% year-over-year, driven by higher sales and gross margins, and $1.02 for the year, an increase of more than 20% year-over-year.(a) Inventories are projected to decline at the end of the third quarter of fiscal 2001 by $5 million to $7 million compared to the end of the second quarter.(b) The Company’s internal targets for fiscal 2002 reflect continued earnings per share growth of 20%.(a)

Mr. Schoenfeld concluded, “Our success as a company continues to be demonstrated in a number of different ways including: our retail stores with above-plan double-digit comps continuing into the first three weeks of this third quarter, Spring bookings for the U.S. up mmore than 20%, two more Vans Skate Parks under construction near Denver and Philadelphia, the growing prominence of the VANS Triple Crown Series,(TM) and the broadening of our footwear into Outdoor and our Women’s Skate and Cali(TM) categories.”(a)

“Similarly gratifying has been our continued ability to achieve near-term financial goals while pursuing these additional growth initiatives even during this period of unusually volatile European currencies,” Mr. Schoenfeld said. “We remain focused on building the premier sports and lifestyle company for the youth market and the opportunities that lie ahead.”