REEBOK APPAREL UP BUT PROFITS FALL 10%
NEW YORK — Apparel sales at Reebok International soared in the first quarter, but not enough to maintain its profits, which fell 10 percent as footwear volumes shrank.
Net income withered to $37.1 million, or 58 cents a diluted share, from $41.2 million, or 68 cents, in the year-ago period.
Still, results topped Wall Street’s expectations of 56 cents by 2 cents. Shares of the Canton, Mass.-based firm strengthened 20 cents, or 0.7 percent, to close Thursday at $28.65 on the New York Stock Exchange.
Sales for the period ended March 31 were off 4.4 percent to $736 million from $769.9 million a year ago.
U.S. apparel sales for the Reebok business skyrocketed 46.3 percent to $72 million, while the footwear business dipped 5.8 percent to $247 million. Apparel sales include the firm’s new sports licensing business and exclude the Greg Norman business.
On a conference call, Kenneth Watchmaker, chief financial officer, attributed the rise in apparel not only to the new sports licensing program, but Reebok branded apparel as well. “Several segments of Reebok branded apparel business are performing well. “Sales growth in Reebok branded apparel is coming from key strategic athletic and specialty goods retailers,” sales to which grew by 30 percent in the quarter, said Watchmaker.
Apparel sales outperformed the firm’s footwear business throughout the world and mounted a 6.9 percent gain to $214.1 million. Global footwear sales fell 8.4 percent to $521.9 million.
The closely watched backlog of open customer orders scheduled for delivery from this month through September ramped up 6.1 percent, excluding Reebok’s new sports licensing business, which kicked off operations in March. Including the new business, the firm’s backlog jumped 19 percent.
Reebok also has been heavily supporting its namesake brand with a 50 percent increase in domestic media spending in the first quarter.
Chairman and chief executive officer Paul Fireman reaffirmed Reebok’s bottom-line growth projections of 10 to 15 percent for the year. “We are beginning to see signs that economic conditions in the United States are improving and that the promotional activity, which characterized much of the U.S. retail last year, has begun to subside.”