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Outdoor financials: Stride Rite Q3 profit rises on strong sales, plus Wolverine, Wellman, Deckers

Stride Rite's Q3 profit rises on strong sales, Wolverine stock rises on upgrade, Wellman looks to restructure fiber operations, and Deckers appoints new board member.

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Stride Rite’s Q3 profit rises on strong sales
Stride Rite Corp. (NYSE: SRR), parent of Saucony and Hind, reported a 10.4 percent increase in third-quarter profit, aided by higher sales.

For the quarter, net income rose to $8.5 million, or $0.23 per share, from $7.7 million, or $0.21 per share, last year. Excluding stock option and acquisition expenses, profit would have been $8.9 million, or $0.24 per share, in the latest quarter. Revenue rose 21 percent to $177.5 million from $146.2 million in the year-earlier period. Sales in stores open at least one year rose 4.1 percent at the Stride Rite retail chain.

Saucony net sales, which include Hind’s numbers, were $21.1 million for the third quarter. The results reflect a refocused emphasis on technical in-line product and less promotional business, the company said.

“Saucony continues to enjoy success in the specialty run business. New strong technical product, an updated originals line and a separate children’s line have been developed for spring 2007,” David Chamberlain, Stride Rite’s chairman and CEO, said in a statement.

Sperry Top-Sider net sales increased 15 percent for the third quarter on strong sales of men’s and women’s products, particularly in the marine and family shoe retail channels.

International net sales increased 119 percent for the third quarter compared to fiscal 2005, due primarily to the addition of Saucony international sales. The company said that the international market offers a significant opportunity for growth and it’s investing in its infrastructure in Europe.

Stride Rite reaffirmed full-year earnings guidance of $0.82 to $0.88 per share, excluding the impact of a lower tax rate. The outlook includes $0.05 of stock options expense, $0.04 of sales impact related to the Saucony acquisition, and integration costs of $3.2 million, or $0.05 cents per share.

Wolverine stock rises on upgrade
During the day’s trading on Sept. 29, Wolverine World Wide (NYSE: WWW) shares gained as much as $1.91, after a Prudential Equity Group analyst upgraded the footwear company, expecting a strong earnings report next week.

Shares of Merrell’s parent company reached a high of $29.48 over the previous day on the New York Stock Exchange, eventually closing at $28.31.

Prudential analyst Lizabeth Dunn wrote in a client note: “We expect a solid report and guidance for next year in line with or above consensus, which implies an acceleration in earnings per share growth. New launches should provide added sales in 2007 and Merrell (brand) continues to drive topline growth as well.”

Dunn rated Wolverine to “overweight” from “neutral” and increased its price target to $31 from $26.

She said margins for Wolverine continue to improve on sales of higher-priced Merrell and Hush Puppies shoes. Stock option expense, investment spending and antidumping duties weighed on earnings so far this year, but those factors should draw back in 2007, she added.

Wellman looks to restructure fiber operations
Wellman (NYSE: WLM) said it is exploring strategic alternatives for its European fiber and polyethylene terephthalate resin businesses and restructuring its U.S. fiber operations. The changes are intended to improve its operating results, reduce working capital and lower overall debt, it added.

Wellman will consolidate all of its U.S. fiber production to its Palmetto plant, located in Darlington, S.C., and close the fiber capacity located at its Johnsonville, S.C., facility. The company said it expects to sell its Material Recycling Division (MRD) which converts post-consumer PET bottles to flake and certain equipment used to produce Wellstrand (a specialty coarse denier fiber), both located at its Johnsonville facility.

The company added that it is exploring strategic alternatives for its European fiber and PET resin businesses. CEO and Chairman Thomas Duff said in a statement, “We are reviewing the performance of these businesses and exploring strategic alternatives with the goal of improving our overall corporate value.”

The moves are expected to result in a $30 million to $35 million charge in the third quarter.

Deckers appoints new board member
Deckers Outdoor Corp. (Nasdaq: DECK), parent of Teva, Ugg and Simple, has appointed Maureen Conners to its board of directors. Conners is president of Conners Consulting, which has worked with companies such as Johnson & Johnson, Ralph Lauren Footwear, Bausch and Lomb, Rockport, Polaroid and, providing a range of services including marketing and strategic planning, new product and new business development, and global brand building. She has held senior level marketing positions with several leading consumer companies, including Mattel, Levi Strauss and Gillette.

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