The Stride Rite Corporation (NYSE: SRR) today reported its fourth quarter and 2002 fiscal year results.
Net sales for the fourth quarter of fiscal 2002 increased 10% to $98.2 million from $89.0 million in the comparable period of fiscal 2001. The Company incurred a net loss of $2.0 million or $.05 per diluted share in the fourth quarter of fiscal 2002, as compared to a net loss of $6.0 million or $.14 per diluted share in last year's fourth quarter. The fiscal 2001 fourth quarter results included non-recurring costs related to the corporate restructuring, as well as inventory write-down charges related to the Company's exit from its leased department store business, which negatively impacted earnings by $.07 per share. Excluding these charges, the Company would have reported a $.07 loss per share in the fourth quarter of 2001.
For the full 2002 fiscal year, net sales totaled $532.4 million, a 1% increase from the sales level of $529.1 million achieved in fiscal 2001. Net income totaled $24.1 million in fiscal 2002, a 27% increase from the net income of $19.0 million in fiscal 2001. On a diluted basis, earnings were $.58 per share in fiscal 2002, as compared to $.45 per share in fiscal 2001. During the 2001 fiscal year the Company recorded non-recurring and other one-time, after-tax costs of $5.1 million or $.12 per share related to restructuring charges, the leased department store exit and executive termination costs. Excluding these 2001 charges, net income for fiscal 2002 would have been flat compared to last year and earnings would have been $.57 per diluted share for fiscal 2001.
Sales of the Keds brand in the fourth quarter of fiscal 2002 increased 6% from the comparable period of fiscal 2001, although annual sales declined 6% compared to the prior fiscal year. Sales of the Stride Rite Children's Group increased 4% for the fourth quarter and 1% for the full year as compared to the same period of fiscal 2001. This increase was driven by the company-owned retail stores, which had increases of 11% and 9% for the fourth quarter and fiscal year, respectively, compared to the same periods of fiscal 2001. Sales at comparable company-owned retail stores increased 1.0% in the fourth quarter and decreased 0.8% for the fiscal year. Stride Rite Children's Group sales to independent retailers declined 10% and 8% compared to the prior year's fourth quarter and fiscal year. Sales of the Sperry Top-Sider brand increased 35% in the fourth quarter and 10% for the fiscal year from the comparable periods in fiscal 2001. Fiscal 2002 Tommy Hilfiger Footwear sales for the fourth quarter and the full year increased 22% and 6% compared to the same periods in the prior year, respectively. International sales for the fourth quarter were flat compared to the same period in 2001 and increased 6% for the full year compared to fiscal 2001.
David M. Chamberlain, Stride Rite's Chairman and Chief Executive Officer, commented, ''During 2002, we continued to work on our strategies and improve our product lines. These efforts positively impacted the results for Tommy Hilfiger Footwear, Sperry Top-Sider and the International business. We believe this momentum will carry into the new fiscal year. Keds, as we previously reported, had a transition year in 2002. Our new management team revamped Keds design and developed a fresh updated Keds look, which is being delivered to retailers with new advertising beginning in 2003. During fiscal 2002, we opened 58 Stride Rite Children's Group company-owned retail stores, closed three under-performing retail stores and successfully exited the 46 children's leased department stores. The Stride Rite retail stores, when combined with our licensed partner's doors, allows Stride Rite to maintain a strong national specialty store presence. We will focus Stride Rite in 2003 on building the base of sales in our stores and key accounts, while selectively adding new stores. We also continue our work on Munchkin and KidSmart brands aimed at different customers and price points. In 2002, Stride Rite stores and customers felt the effects of the soft retail economy, particularly the poor Easter and back-to-school business, the key selling periods.''
Mr. Chamberlain continued, ''During this past year, we strengthened our balance sheet and improved cash flow. We managed our inventories down and improved DSO throughout 2002. The 2002 fiscal year ended with an $18 million increase in cash, net of short term borrowing, despite repurchasing over $20 million in Company stock during 2002. As we enter this new fiscal year, we hope to continue the momentum we experienced last quarter, while working through a difficult retail environment. For fiscal 2003, we believe our sales will continue to grow in the range of 3% to 5% and we are comfortable with the current First Call earnings projection of $.62 per share.''