Nautica Enterprises today reported sales and earnings for its second quarter and six-months ended August 31, 2002.
For the second quarter, the Company reported net earnings of $10.4 million, or $0.30 per diluted share, compared to $8.9 million, or $0.26 per diluted share in the prior-year period. In the prior-year period, the Company's financial results reflected charges related to its Nautica Europe business in the amount of approximately $6.2 million after-tax, or $0.18 per diluted share. Net sales for the second quarter were $182.2 million compared to $199.3 million in the second quarter of last year.
Harvey Sanders, Chairman, President and Chief Executive Officer of Nautica Enterprises, Inc., commented, “We are pleased to report that our financial results for the second quarter came in at the high-end of our previously announced expectations. Driving this performance was an improvement in gross margin, which was 43.9% versus 41.7% in the prior year period. This was largely attributable to better sourcing and product placement in our Nautica Men's Jeans, Nautica Furnishings and Nautica Children's businesses. Furthermore, inventory management improved across all businesses, especially in our Nautica Retail outlet division where gross margin improved 480 basis points.”
For the six-month period, net earnings before special charges were $9.9 million, or $0.29 per diluted share, compared to $12.1 million, or $0.35 per diluted share in the prior-year period. As previously reported, the Company incurred a special charge of $2.1 million on an after-tax basis, or $0.06 on a per share basis, in the first quarter of fiscal 2003 related to employee termination costs associated with the closing of the Rockland, Maine distribution center. Net sales were $308.1 million compared to $334.4 million in the same period last year.
The Rockefeller Plaza store in New York continues to perform below expectations. Based upon the current performance and anticipated future outlook of the store, and in accordance with SFAS 144, certain fixed assets at the Rockefeller Plaza store will be impaired. As a result, the Company expects to incur a special non-cash, after-tax charge in connection with this write-down of approximately $6.0 million to $6.5 million or $0.17 to $0.19 on an earnings per share basis. The charge will be taken in the third quarter of fiscal 2003.
Mr. Sanders added, “The Rockefeller Plaza store serves as an effective testing ground for new products. In the current difficult retail environment, however, it has continued to perform below our expectations. We are in the process of evaluating a number of options regarding our longer-term strategy for the store.”
For the full fiscal year, the Company expects to report earnings per diluted share in the range of $0.90 to $0.91, which is at the low-end of its previously announced guidance for the year. Full year guidance excludes special charges related to the Rockland, Maine distribution center ($0.06, which was taken in the first quarter), as well as the Rockefeller Plaza store ($0.17 to $0.19).