Vans Reports Record Fourth Quarter


Q4 Sales Increase 28%, Fiscal Year Sales Increase 23%

Q4 Earnings Per Share (pre-SAB 101) Increase 33% to $0.16 vs. $0.12 Last Year

Fiscal Year Earnings Per Share (pre-SAB 101) Increase 23% to $1.03 vs. $0.84 Last Year

Q4 Same Store Sales Increase 9.2%, Fiscal Year Same Store Sales Increase 12.7%

Vans, Inc. (Nasdaq: VANS) today announced record financial results for the fourth quarter and fiscal year ended May 31, 2001.

Net sales for the fourth quarter increased 27.5% to $85.2 million versus $66.8 million last year and net income increased 52.2% to $2.7 million versus $1.8 million. For fiscal 2001, total sales increased 23.0% to $341.2 million versus $277.3 million and net income before the cumulative effect of the accounting change discussed below increased 27.7% to $15.4 million versus $12.1 million.

“Our fourth quarter performance was a strong finish to fiscal 2001, marking another great year of better than 20% growth in sales and profits,” commented Gary H. Schoenfeld, President and Chief Executive Officer of Vans. “Over the past 12 months, we have significantly improved our product, expanded our retail presence, further enhanced our management team, added to our proprietary brand building initiatives and substantially increased our liquidity.”

Excluding the non-cash effect of accounting pronouncement Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements”

(“SAB 101”), which the Company adopted in the fourth quarter of fiscal 2001, fourth quarter diluted earnings per share increased 33.3% to $0.16 versus $0.12, and for the fiscal year diluted earnings per share before the cumulative effect of an accounting change increased 22.6% to $1.03 versus $0.84. As a result of SAB 101, the Company’s reported diluted earnings per share increased by an additional $0.01 to $0.17 for the fourth quarter, while decreasing by $0.01 to $1.02 for the fiscal year before the cumulative effect adjustment. Unrelated to the current year operations, the adoption of SAB 101 necessitated an additional non-cash charge of $441,000, net of tax, or $0.03 per share to the first quarter of fiscal 2001, representing the cumulative effect on prior years of adopting the new accounting method.

Mr. Schoenfeld continued, “Our financial highlights for the year included: a 23% increase in total sales led by domestic wholesale up 29% and same store sales up almost 13%; a 28% gain in net income; and roughly $60 million in cash on the balance sheet with a well-controlled 5% increase in inventory. On the product and merchandising front we made considerable progress in both our men’s and women’s footwear, and from a retail perspective, we opened a net seven new stores and three VANS large-scale skateparks to end the fiscal year with 134 stores and seven skatepark locations, respectively. In terms of brand building, we signed deals with NBC and Fox to telecast the VANS Triple Crown(TM) Series, entered into a distribution agreement with Sony Pictures Classics for the Vans-produced documentary Dogtown and Z-Boys to be released next Spring, augmented our already impressive athlete roster with Core Sports icons such as Jeremy McGrath and Cory Nastazio, and successfully launched our first Geoff Rowley shoe.”

“We were also very pleased that our accomplishments and achievements throughout fiscal 2001 did not go unnoticed. From the footwear industry, we received the Company of the Year Award from Footwear News and the Excellence in Design Award from Footwear+. Additionally, Dogtown and Z-Boys received the Documentary Audience Choice Award and the Documentary Directing Award at the Sundance Film Festival and Vans was also recognized with a listing in Forbes’ 200 Best Small Companies in America.”

For the fourth quarter, total U.S. sales, including sales through Vans’ U.S. retail stores, increased 33.0% to $62.2 million, versus $46.8 million for the same period a year ago. U.S. wholesale sales increased 41.8% to $38.0 million, versus $26.8 million a year ago. Sales through the Company’s U.S. retail stores increased 21.1% to $24.3 million in the fourth quarter of fiscal 2001, from $20.0 million for the same period a year ago. Comparable store sales for the fourth quarter were up 9.2% versus the same period last year, the twenty-sixth consecutive quarter of such increase. Total international sales rose 14.8% to $23.0 million compared to $20.0 million a year ago.

Gross margins for the quarter increased 130 basis points to 44.0% vs. 42.7% reflecting better first margins, improved inventory management and increased retail store and skatepark channel mix. Inventory was $52.8 million at May 31, 2001, a 5.4% increase over the prior year. The Company ended the fiscal year with $59.7 million in cash and $2.3 million in long-term debt.

Mr. Schoenfeld commented, “Our ability to expand fourth quarter sales by more than 27%, increase same store sales by more than 9% and grow net income by more than 52% is a testament to the ongoing strength of the VANS brand and our popularity among today’s youth market. Additionally, we were very pleased to achieve these results while managing to a less than $3.0 million increase in inventory.”

For the first quarter of fiscal 2002, ending August 25, 2001, the Company expects total sales to increase approximately 15% to 20% versus the corresponding period a year ago, and it continues to believe it will meet the First Call consensus diluted earnings per share estimate of $0.59 for the first quarter and $1.20 for the full fiscal year.(1)

Mr. Schoenfeld concluded, “Our Company’s continued achievements financially and in the marketplace demonstrate the increasing breadth of our business and the unique leadership position of our brand. We are mindful of the current uncertain retail and economic environment, yet we remain focused on capitalizing on the opportunities we have created and adding to our growth in sales, earnings and shareholder value.”(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, eight VANS large-scale skateparks, and the VANS High Cascade Snowboard Camp,(TM) located on Mt. Hood. The Company operates 144 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.