To all:
News on VANS earnings.
Vans, Inc. Reports Record Second Quarter and Six Month Sales and
Earnings; Company Continues to See Domestic Sales Growth Accelerating in
Second Half
Wednesday, December 17, 1997 04:57 PM
> SANTA FE SPRINGS, Calif.--Vans, Inc. (Nasdaq:VANS) today announced record financial
results for the second fiscal quarter ended November 29, 1997.
Net sales for the quarter increased 19.1% to $44.2 million, compared to $37.1 million for the
second quarter of fiscal 1997. Net income rose 19.3% to $2.9 million, versus net income of $2.4
million in the same period last year. Earnings per share increased to $0.21 versus earnings per share
of $0.18 in the second quarter of 1997.
Net sales for the six months increased 21.1% to $98.2 million, compared to $81.1 million for the
same period last year. Net income rose 24.3% to $6.8 million, versus net income of $5.5 million in
the same period last year. Earnings per share for the six month period increased to $0.49 versus
earnings per share of $0.40 in the same period of 1997.
"We are pleased to report our tenth consecutive quarter of strong sales and earnings growth," stated
Gary H. Schoenfeld, President and Chief Executive Officer. "The VANS brand continues to
strengthen on a worldwide basis, evidenced by the excellent performance of our international and
retail channels. International sales for the first half of the year were up 58.0% over last year, and our
retail stores continue to exceed plan, posting comp store gains of better than 18% in the first half,
which we believe underscores the strength of the VANS brand in the domestic market. Domestic
wholesale sales for the first half were up approximately 1.0%, in-line with our expectations, and we
look forward to accelerating growth in the second half, as domestic bookings are currently more
than 25% ahead of last year."(1)
Vans' wholesale business in the second quarter increased 17.0% with the domestic wholesale
channel relatively flat at $19.3 million versus $19.7 million a year ago, and international sales
increasing by more than 50% to $14.7 million from $9.4 million a year ago. Sales through the
Company's 92-store retail chain in the second quarter increased 26.7% to $10.2 million, from $8.0
million for the same period a year ago. Comparable store sales for the second quarter again were
above plan, up 17.8% versus the same period last year.
Gross margins for the second quarter increased to 39.4% from 37.6% for the same period last
year. The Company attributed the increase to several factors including: greater sales of International
Collection footwear, compared to domestically manufactured shoes; better margins on this season's
snowboard boots; and higher capacity utilization during the quarter at the Company's Vista,
California factory, versus last year.
Commenting on the Asian marketplace and weakening Asian currencies, the Company noted that
more than 70% of its total production comes from South Korea, yet less than 15% of its total sales
are to Japan and the Pacific Rim. Mr. Schoenfeld added, "While the current situation may affect
sales to this region, including exports, overall we look forward to continued growth internationally
and the prospect of better pricing from our Korean manufacturers should the Korean won remain at
current levels."(1)
Mr. Schoenfeld concluded, "I believe our grass roots marketing efforts and focused distribution
strategy continue to build VANS into one of the premier brands with young people worldwide. As
we move into the second half of the fiscal year, we look forward to capitalizing on this brand
strength to produce further sales and earnings growth."(1)
Vans, Inc. is a branded manufacturer, wholesaler and retailer of active-casual footwear, clothing
and accessories and performance footwear for enthusiast sports. Products are sold through a
network of independent and national retailers, internationally through distributors for 80 countries
and Company subsidiaries in the United Kingdom, Mexico, Brazil and Argentina, and through 92
Company-owned stores and factory outlets. (1)These are forward-looking statements. Actual
domestic and international sales results may differ materially from those discussed in such statements
due to a number of important factors, including but not limited to: (i) 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; (ii) changes in the fashion preferences of
the Company's target customers and the Company's ability to anticipate and respond to such
changes; (iii) increasing competition in all lines of the Company's business from both large,
well-established companies with significant financial resources and brand recognition, and smaller
niche competitors who market exclusively to the Company's target customers; (iv) the cancellation
of orders which could alter bookings numbers; and (v) the fluctuation of foreign currencies in
relation to the U.S. dollar. These factors, and others, are discussed more extensively in the
Company's Annual Report on Form 10-K for the year ended May 31, 1997, which is filed with the
Securities and Exchange Commission.
VANS, INC.
Condensed Consolidated Financial Summary, Second Quarter, Fiscal
Year 1998
(In thousands except per share amounts)
Statements of Operations
Three Months Ended Six Months Ended
Nov 29, Nov 30, Nov 29, Nov 30,
1997 1996 1997 1996
Net Sales $ 44,203 $ 37,105 $ 98,158 $ 81,061
Cost of goods 26,793 23,141 58,980 49,546
Gross profit 17,410 13,964 39,178 31,515
Gross profit percentage 39.4% 37.6% 39.9% 38.9%
Expenses:
Selling and Distribution 8,285 6,711 17,284 13,887
Marketing, advertising
and promotion 3,426 2,535 8,761 6,481
General and administrative 1,780 1,490 3,489 3,024
Other income, net (a) (774) (889) (1,406) (1,327)
Goodwill amortization 229 191 458 382
Interest expense
(income), net (41) (10) (86) 80
12,905 10,028 28,500 22,527
Expenses as a percentage
of sales 29.2% 27.0% 29.0% 27.8%
Earnings before income taxes 4,505 3,936 10,678 8,988
Income tax expense 1,622 1,519 3,844 3,489
Net earnings $ 2,883 $ 2,417 $ 6,834 $ 5,499
Earnings per share information:
Weighted average shares 13,948 13,682 13,881 13,664
Earnings per share $ 0.21 $ 0.18 $ 0.49 $ 0.40
Footnotes:
(a) Other income consists primarily of licensing royalties and
sublease income, net of the minority interest in the earnings of
Global Accessories Limited, Vans Latinoamericana and Vans
Argentina.
VANS, INC
Condensed Consolidated Financial Summary, Second Quarter, Fiscal Year
1998
(In thousands of dollars)
Balance Sheets
November 29, 1997 November 30, 1996
ASSETS:
Current assets
Cash $ 7,916 $ 12,939
Trade receivables 31,394 24,086
Inventory 32,776 24,682
Other 3,000 1,850
Total current assets 75,086 63,557
Property, plant and
equipment - net 19,303 15,588
Intangible assets 18,277 18,317
Other 4,445 982
Total assets $ 117,111 $ 98,444
LIABILITIES:
Short-term borrowings $ 6,001 $ 2,899
Current liabilities 10,214 8,917
Restructuring costs -- 1,452
Other long-term liabilities 3,663 1,827
Total liabilities 19,878 15,095
Minority Interest (a) 695 584
Stockholders' equity 96,538 82,765
Total liabilities and
stockholders' equity $ 117,111 $ 98,444
Sales by Distribution Channel
Three Months Ended Six Months Ended
Nov 29, Nov 30, Nov 29, Nov 30,
1997 1996 1997 1996
Wholesale:
National $ 19,288 $ 19,685 $ 43,038 $ 42,735
International 14,733 9,386 32,189 20,368
Total Wholesale 34,021 29,071 75,227 63,103
Retail 10,182 8,034 22,931 17,958
Total Sales $ 44,203 $ 37,105 $ 98,158 $ 81,061
Footnotes:
(a) On November 20, 1996, the Company acquired 51% of the outstanding
Common Shares of Global Accessories Limited, the Company's
exclusive distributor for the United Kingdom, in a stock-for-
stock transaction. During the second quarter, the Company
acquired another 9% of the Global Shares in exchange for Common
Stock of the Company. The transaction was effective as of
September 30, 1997. The remaining 40% of Global Shares will be
acquired by the Company over the next four years.
CONTACT: VANS, INC.
Gary H. Schoenfeld
President and
Chief Executive Officer
562/565-8545
or
Morgen-Walke Associates
Christine DiSanto/Jim Cappuccio
Press: Miriam Adler/Erika Brown
212/850-5600 |
