Vans, Inc. Reports Fourth Quarter and Fiscal Year End Sales
and Earnings
Business Wire - July 19, 1999 17:07
SANTA FE SPRINGS, Calif.--(BUSINESS WIRE)--July 19, 1999--Vans, Inc. (NASDAQ:VANS) today
announced financial results for the fourth quarter and fiscal year ended May 31, 1999.
Net sales for the current quarter increased 47.9% to $48.5 million, compared to $32.8 million for the
fourth quarter of fiscal 1998. Net income was $819,000, versus a net loss of $11.8 million in the same
period last year, which reflected a one-time restructuring charge and write-down of domestic inventory
of $11.9 million, after tax, in such period. Diluted earnings per share was $0.06 versus a loss of $0.89
per share in the fourth quarter of fiscal 1998.
Gary H. Schoenfeld, Vans' President and Chief Executive Officer commented, "Our solid results for
the quarter were fueled in particular by significant growth in Europe and Japan as well as continued
strength in our retail business. We achieved positive gains in all channels, posting double digit
increases in both our domestic wholesale and retail business and a triple digit increase in our
international business. Coming off a difficult last 18-24 months in the overall footwear environment, we
are very pleased with our sales and earnings results and reduced inventory levels, which coupled with
the strong sell-throughs we are currently experiencing bodes well for us as we head into back to
school and begin our new fiscal year."(a)
The Company also announced it signed a new $63.5 million unsecured credit facility. The $53.0 million
revolving portion extends through October 2002 and the $10.5 million term loan portion is payable in
equal installments commencing February 2001 and ending in May 2004. In addition to letter of credit
issuance and general working capital, the Company intends to use the credit facility for expansion and
possible future acquisitions. The new facility, arranged and agented by Bank of America, replaces the
Company's previous $30.0 million line of credit.
Mr. Schoenfeld commented, "This new facility will give us the flexibility to support our current growth
plans, particularly with respect to the opening of new skate parks, expansion in Europe and our VANS
Triple Crown and other retail stores."(a)
For the fourth quarter, total U.S. sales, including sales through Vans' U.S. retail stores, increased
15.4% to $30.4 million, versus $26.4 million for the same period a year ago. Total international sales
increased 180.1% to $18.1 million, versus $6.5 million for the same period last year. Overall sales
through the Company's 111-store retail chain ( as of May 31, 1999) increased 23.6% to $15.3 million in
the fourth quarter of fiscal 1999, from $12.4 million for the same period a year ago. Comparable store
sales for the fourth quarter were up 4.0% versus the same period last year, the eighteenth consecutive
quarter of such increase. U.S. wholesale sales in the fourth quarter increased 12.9% to $15.8 million,
versus $14.0 million a year ago.
During the quarter, the Company also launched a new electronic commerce initiative on its web site,
www.vans.com., to sell footwear over the Internet. The web site offers a limited selection of VANS
footwear for men and women, yet based upon initial results will be expanded to include additional
footwear SKU's, apparel and accessories. The site also features some of the latest e-commerce
functions such as a shoppers registration, an address book for guest shoppers, a list of retail store
locations, order status capabilities and other customer-related services. In addition to the ability to
view and purchase products, visitors to the Company's web site can learn about the Company's
history and get up-to-date information regarding team riders, upcoming events and contests, as well
as links to other web sites and key retailers.
Mr. Schoenfeld commented, "We are excited by our initial foray into e-commerce both as a way to
profitably showcase our brand as well as providing another means for direct communication with our
target consumers."
For the twelve months of fiscal 1999, net sales increased 17.6% to a record $205.1 million, compared
to $174.5 million for the same twelve months of fiscal 1998. Net income was $8.7 million for fiscal
1999, versus a loss of $2.7 million for the same period last year, which reflected the one-time charge
and write-down discussed above. Diluted earnings per share was $0.64 versus a loss of $0.20 in fiscal
1998.
For the fiscal year ended May 31, 1999, total U.S. sales increased 18.6% to $147.6 million vs. $124.5
million for the fiscal year ended May 31, 1998. Total international sales increased 15.0% to $57.5
million, versus $50.0 million in fiscal 1998. Overall retail sales for the year increased 31.8% to $61.9
million versus $47.0 million in fiscal 1998. Comparable store sales for fiscal 1999 increased 11.1%.
U.S. wholesale sales in 1999 increased 13.0% to $87.5 million versus $77.5 million in fiscal year
ending May 31, 1998.
Gross margins for the quarter were 41.5% vs. 14.1% for fiscal 1998 (after the one-time charge and
write-down discussed above). For the full year, gross margins were 42.3% vs. 35.7% for fiscal 1998
(after the one-time charge and write-down).
U.S. inventory at the end of the fourth quarter (wholesale and retail) was reduced by $2.2 million from
the end of the third quarter, following a $5.7 million reduction in such inventory in the third quarter
versus the end of Q'2. On a year-over-year basis, the Company's $7.2 million increase in inventory
was attributed to $5.8 million of inventory as part of its European operations established during the
year, and approximately $1.4 million of inventory for 10 new stores in the U.S.
Mr. Schoenfeld concluded, "We are very encouraged about our business as we head into fiscal 2000.
Over the past twelve months we have implemented a number of important strategic initiatives ranging
from opening and operating skate parks, to expanding our wholesale and retail operations in Europe,
to commencing a three year T.V. agreement with ESPN to broadcast the VANS Triple Crown Series to
approximately 200 million homes worldwide, to the formation of joint ventures with Pacific Sunwear
and Sunglass Hut, to developing and rolling out our new VANS Triple Crown retail concept, and
launching a state-of -the-art e-commerce site. Each of these efforts provide varied, yet synergistic,
growth channels, as well as create a unique platform to further build Vans into a leading,
multi-dimensional, lifestyle company. We look forward to profitably leveraging the many opportunities
that lie ahead."(a)
Vans, Inc. is a leading lifestyle, retail and entertainment-based company. 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 Series, the VANS Warped Tour, the VANS World Amateur Skateboarding
Championships, and the world's largest VANS Skate Park. The Company operates 112 retail stores
as of July 19, 1999, and designs, markets and distributes active-casual footwear, clothing and
accessories, performance footwear for core sports,(TM) snowboard boots, Switch(TM) step-in
snowboard boot bindings, and outerwear worldwide. Vans' Internet address is www.vans.com.
(a)These sentences contain forward-looking statements about the Company's sales and earnings for
fiscal 2000. Actual sales and earnings results for the Company may vary significantly and could be
impacted by a number of important factors, including but not limited to: (i) the ongoing oversupply of
inventory throughout the footwear industry which is causing retailers to discount existing inventory and
curtail buying from footwear manufacturers; (ii) the occurrence of downward trends in the U.S.
economy, foreign economies and the footwear industry, or the occurrence of events that adversely
affect the world economy in general; (iii) changes in the fashion preferences of the Company's target
customers and the Company's ability to anticipate and respond to such changes; (iv) increasing
competition in all lines of the Company's business from both large, well-established companies with
significant financial resources and brand recognition, smaller niche competitors who market
exclusively to the Company's target customers; (v) the cancellation of orders which could alter
bookings numbers; (vi) the fluctuation of foreign currencies in relation to the U.S. dollar; (vii) whether
future skate parks opened by the Company will be as successful as the Company's first skate park;
and (viii) whether the VANS Triple Crown stores prove to be successful. Many of these factors, and
others, are discussed more extensively in the Company's Annual Report on Form 10-K for the year
ended May 31, 1998, which is filed with the Securities and Exchange Commission.
Vans, Inc.
Condensed Consolidated Financial Summary
Fourth Quarter and Twelve Months Fiscal Year 1999
(Dollars in thousands, except per share amounts)
Statements of Operations
Three Months Ended Twelve Months Ended
May 31, May 31, May 31, May 31,
1999 1998 1999 1998
---- ---- ---- ----
Net sales $ 48,548 $32,829 $ 205,127 $ 174,498
Cost of goods sold 28,391 28,199 118,458 112,198
-------- -------- --------- ---------
Gross profit 20,157 4,630 86,669 62,300
Gross profit
percent 41.5% 14.1% 42.3% 35.7%
Operating Expenses
and Income:
Selling and
distribution 13,757 8,123 46,920 34,268
Marketing, advertising
and promotion 4,586 4,489 20,685 17,138
General and
administrative 2,672 1,397 8,952 6,711
Other income (a) (2,844) (248) (6,000) (1,994)
Restructure cost(recovery) 0 8,212 (393) 8,212
Amortization of intangibles 339 240 1,287 933
Interest expense
(income), net 320 (86) 948 (218)
-------- -------- --------- ---------
18,830 22,127 72,399 65,050
-------- -------- --------- ---------
Expenses and other
items as a percent
of sales 38.8% 67.4% 35.3% 37.3%
Earnings(loss) before
income taxes 1,327 (17,497) 14,270 (2,750)
Income tax expense (benefit) 192 (5,662) 4,852 (510)
Minority share of
income 316 0 693 437
-------- -------- --------- ---------
Net earnings $ 819 $ (11,835) $ 8,725 $(2,677)
======== ======== ========= =========
Earnings per share information:
Basic:
Weighted average
Shares 13,236 13,315 13,290 13,284
Net earnings (loss)
per share $ 0.06 $ (0.89) $ 0.66 $ (0.20)
======== ======== ========= =========
Diluted:
Weighted average
Shares 13,746 13,315 13,667 13,284
Net earnings (loss)
Per share $ 0.06 $ (0.89) $ 0.64 $ (0.20)
======== ======== ========= =========
Footnote:
(a) Other income consists primarily of licensing royalties and
sublease income.
Vans, Inc.
Condensed Consolidated Financial Summary
Fiscal Year 1999
(In thousands)
Balance Sheets May 31, May 31,
1999 1998
---- ----
ASSETS:
Current assets
Cash $ 7,777 $ 16,780
Trade receivables 30,056 17,253
Inventories 37,025 29,841
Deferred income taxes 1,378 8,282
Other-Current assets 7,824 4,884
--------- ---------
Total current assets 84,060 77,040
Property, plant and
equipment, net 20,411 17,783
Intangible assets 23,127 18,500
Other assets 2,940 2,827
--------- ---------
Total assets $ 130,538 $ 116,150
========= =========
LIABILITIES:
Short-term borrowings $ 9,185 $ 5,515
Current liabilities 13,556 13,335
Restructure costs 730 6,413
Other long-term liabilities 10,894 3,872
--------- ---------
Total liabilities 34,365 29,135
Minority interest (a) 1,022 867
Stockholders' equity 95,151 86,148
--------- ---------
Total liabilities and
stockholders' equity $ 130,538 $ 116,150
========= ==========
Sales by Distribution Channel
Three Months Ended Twelve Months Ended
May 31, May 31, May 31, May 31,
1999 1998 1999 1998
U.S.:
Wholesale $ 15,754 $ 13,956 $87,546 $ 77,501
Retail 14,674 12,403 60,050 46,985
-------- -------- -------- ---------
Total U.S. 30,428 26,359 147,596 124,486
International 18,120 6,470 57,531 50,012
-------- -------- -------- ---------
Total Net Sales $ 48,548 $ 32,829 $ 205,127 $ 174,498
======== ======== ========= =========
Footnote:
(a) During the second quarter of fiscal 1999, the Company acquired an
additional 10% of the Common Stock of Global Accessories
Ltd.(Global) in exchange for Common Stock of the Company. This
transaction was effective as of September 30, 1998, bringing the
Company's ownership of Global to 70%. The remaining 30% of the
Global shares are expected to be acquired over the next three
years.
Certain amounts in the fiscal 1998 condensed consolidated
financial summary have been reclassified to the fiscal 1999
presentation.
Contact: At the Company:
Gary H. Schoenfeld
President and Chief Executive Officer
Vans, Inc.
562/565-8545
or
Investor Relations:
Chad A. Jacobs
Integrated Corporate Relations
203/222-9013 |
