January 8, 1995 in Business

Sneaker Industry Back In Stride As Big Overseas Markets Perk Up But Some Footwear Makers Remain Caught In Sales Slump

Dow Jones News Service
 

Although hiking boots remain the streetwear of choice among fashion-conscious youth, certain styles of sneakers made comebacks, helping reignite the results of athletic footwear makers.

Overall, analysts see mixed fourthquarter results for the companies that make shoes.

Reebok International Ltd. will post an earnings-per-share increase of about 10 percent to 15 percent for the fourth quarter ended Dec. 31, analysts predict.

The leading sneaker maker, Nike Inc., last month reported a surprising 62 percent surge in net income on a 31 percent revenue gain in its second fiscal quarter, which ended Nov. 30.

Meanwhile, Timberland Co. is expected to report fourth-quarter earnings of 30 cents a share, less than half the 62 cents it reported in the yearago period, said Steven Frankel an analyst for Adams Harkness in Boston.

Rival Wolverine World Wide Inc. probably will post a 13 percent hike in earnings per share, analysts said.

The Reebok and Nike results reflect a pick up in the economy overseas where footwear sales until recently have been depressed, analysts add.

Reebok will post fourth-quarter earnings of 66 cents a share, up 11 percent from 59 cents in the year-ago period, predicts Jennifer Black Groves, an analyst at Black & Co. She estimates revenue climbed 19 percent to $718.9 million from $602.6 million last year.

Domestic orders of Reebokbranded footwear, the company’s largest sales category, climbed 27 percent to $338.4 million from $258.2 million in the year-ago fourth quarter, she estimated.

Groves said that while the gain appears substantial in comparison with the lackluster results of 1993, sales of Reebok brand shoes in the U.S. are estimated up only 3 percent over the fourth quarter of 1992. The company’s other brands, Rockport and Avia, both have seen sales improve over previous years, she said.

Timberland already has said warm weather depressed fourth-quarter sales. “But clearly the company is also suffering from its own mistakes,” Frankel said. Timberland overproduced shoes that turned out to be unpopular, and was caught short on other, trendier styles. “It was a mismatch between what Timberland produced and what the consumer wanted,” he said.

Wolverine, selling slightly lessexpensive shoes in department and discount stores, was closer to the mark in predicting trends.

Lee Backus, an analyst for Buckingham Research in New York, estimates the company will post fourthquarter earnings per share of 82 cents, up from 72 cents a year ago. Sales were $138 million, a 15 percent hike over the year-ago period’s $120 million, he figures.

Sales of its rugged outdoor boots grew 25 percent to 30 percent, Backus estimates. And with a new marketing campaign and more contemporary styling, Wolverine also lured more consumers to buy its Hush Puppies casual shoes.

One shoe that has slipped on the popularity chart is Keds, Stride Rite Corp.’s plain-vanilla sneaker.

Frankel estimates Stride Rite will post earnings per share of 5 cents, down 67 percent from 15 cents in the year-ago quarter. Revenue at the company, he predicts, fell 19 percent to $89.9 million from $111 million.

The company has been slowed by shipping problems at its new distribution center in Louisville, Ky., Frankel said. “Stride Rite is going through some growing pains and it’s going to take some time for the company to regain the confidence of some of their customers,” he said.

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