NEW YORK — A hefty onetime charge and slipping apparel sales tied the laces on second-quarter results for Reebok International Ltd.
For the three months ended June 30, the Canton, Mass.-based sneaker and apparel giant saw earnings slide 15 percent to $21.8 million, or 35 cents a diluted share, compared with earnings of $25.6 million, or 41 cents, in the year-ago period.
Weighing on earnings was a $7.1 million charge relating to the early redemption of $250 million 4.25 percent convertible debentures. The charge translated into a hit of 11 cents on earnings per share.
Sales for the period inched up 1.4 percent to $813.6 million from $802.6 million. However, excluding positive effects of currency exchange, sales declined 1.3 percent.
The culprit in the declines has been apparel sales. Assuming a constant exchange rate, apparel sales sank 4.5 percent to $250.4 million, with sales in the U.S. market diving 17.9 percent to $89.6 million compared with $109.1 million in the year-ago period.
“The sales decline came from Reebok apparel and from the sales of our other footwear brands, Rockport and Ralph Lauren,” said Kenneth I. Watchmaker, chief financial officer, during the company conference call. Watchmaker went on to say that the decline could also be explained by the company’s decision to exit “unprofitable product groups and reposition the line.
“However, this has generally been a very difficult year for core branded apparel products,” said Watchmaker.
For the six-month period, earnings declined 5.4 percent to $62.9 million, or 98 cents a share, compared with earnings of $66.4 million, or $1.04 a share, in the year-ago period.
Sales increased 2.8 percent to $1.65 billion from $1.6 billion. On a constant-dollar basis, sales receded 1.1 percent.
From here, management said it is focusing efforts on performance footwear and sports licensing apparel. “We believe that one of our largest long-term growth opportunities for the company is in the performance category,” said Watchmaker.
— Ross Tucker