REEBOK 4TH QUARTER BEATS PLAN
Byline: Evan Clark
NEW YORK — Reebok International Ltd. said its fourth-quarter earnings came in ahead of Wall Street expectations and that it also expects to beat analysts’ 2001 estimates.
The Canton, Mass.-based athletic apparel and footwear maker reported that net income for the quarter rose to $6.2 million, or 11 cents a diluted share, compared with a loss of $14.7 million a year ago. Analysts polled by First Call/Thompson had expected the company to post earnings of 7 cents for the quarter.
The year-ago results include an aftertax charge of $15.1 million for the settlement of litigation.
Sales for the quarter ended Dec. 31 fell by a fraction of a percent, to $622.5 million from $622.8 million.
Reebok felt the prick of deflated foreign currencies, particularly the euro and British pound, against the strong U.S. dollar. Excluding this effect, the company said its sales for the quarter would have increased 4.3 percent.
Looking ahead, Reebok said the largest variable in its 2001 earnings will likely be the effect of foreign currency translation.
On a conference call Thursday, Kenneth Watchmaker, executive vice president, chief financial officer and treasurer, said Reebok expects its earnings to be up each quarter in 2001. Overall, he said the company’s income for the year should come in at $1.60 to $1.75 a diluted share, up 15 to 25 percent from 2000.
Net income for 2000 increased seven-fold, to $80.9 million, or $1.40 a diluted share, compared with $11 million, or 20 cents, in 1999. The 1999 results include an aftertax charge of $39.4 million related to a legal settlement and restructuring.
Sales for 2000 fell 1.2 percent, to $2.87 billion.
The company expects sales for 2001 to rise 5 to 7 percent, with much of the growth coming in the second half. That prediction excludes its new business with the National Football League.
As reported, the company recently signed a 10-year agreement with the NFL starting with the 2002 season to carry the Reebok trademark on all 32 professional football teams’ uniforms and equipment. During the 2001 season, the company will outfit 20 teams and offer NFL and team apparel at retail.
The company expects its NFL business to post a slight loss or profit for the year.
For the quarter, Reebok-brand domestic apparel sales were up 1 percent, to $59.7 million. U.S. footwear sales for the brand were up 6.2 percent, to $192.2 million.
“While the overall domestic apparel market is still somewhat of a challenge,” Watchmaker said, “we do believe that the U.S. apparel business can be a long-term growth opportunity.”
On a comparable basis, worldwide sales for the Reebok brand fell 1.7 percent, to $489.4 million.
Paul Fireman, chairman and chief executive, noted in a statement that, when he reassumed the responsibilities of president of the Reebok brand in December 1999, one of his key goals was to improve the brand’s domestic performance.
“We needed to improve the overall style and fashionability of our products, increase product sell-throughs at retail and expand the sales and distribution of our MDX technology,” he said, contending that the company’s performance in these areas “exceeded my expectations.”
As reported, Fireman on Jan. 1 handed over the duties of president of the Reebok brand to David Perdue.
On the conference call, Fireman added: “We fully realize that Reebok is far from where it needs to be in terms of generating the level of consistency in both sales and earnings that will earn back the long-term confidence and respect of the retail and investment community.”
He said he believed that Reebok had the “momentum” to meet this goal.
Reebok shares gained $1.71 in New York Stock Exchange trading Thursday, to close at $28.95.
