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Vans Sees More Skate Park Opportunity

Trends: The shoemaker wants to replace failed mall tenants with more of its hit recreation centers.

March 09, 2001|From Dow Jones Newswires

Footwear maker Vans Inc., seeking to capitalize on its successful skateboard parks in such malls as the Block at Orange, is hoping to establish more of these facilities in place of closed cinemas and department stores.

The Santa Fe Springs company, which makes trendy boots, shoes and sneakers, struck pay dirt in late 1998 when it began building skateboard parks with shopping mall developers.

Now it is eyeing surplus real estate cropping up in malls as theater chains and some department stores jettison poorly performing units.

The company operates half a dozen skateboard parks, four in California. The parks, which take up 40,000 to 60,000 square feet, have been profitable for Vans and mall owners, who have pitched in $3 million to $5 million to help build each one.

Vans also plans to add more U.S. shoe stores and introduce new shoe lines.

And despite some concerns about the company's potential exposure to weak currency conditions in Europe, analysts expect it to continue to gain market share.

Vans has managed to avoid the struggles of other shoemakers, which have been forced to reduce surplus inventories and close stores in recent years.

The company's shares hit a 52-week high of $23.13 on Feb. 15, and closed Thursday at $20.13, up 6 cents, on Nasdaq.

In the last 12 months, the company earned $14 million on revenue of $305.7 million. For its fiscal year ending in May, analysts are expecting the company to earn $1 to $1.02 a share on revenue of $325 million to $330 million.

With total revenue for the parks now in the $18-million range, the company is weighing a move to step up skate park expansion in the United States, said Gary H. Schoenfeld, Vans president and chief executive.

Vans had announced plans to open about six parks in the next year in Europe, Japan and the United States, but its plans to expand overseas with skateboard parks could be shelved temporarily in favor of domestic expansion, he said.

The number of parks "could double within the next two to three years," he said.

In California, besides the Orange facility, the company operates skateboard parks in Ontario, Bakersfield and Milpitas. Out-of-state parks are in Houston and Prince William, Va.

"The skate parks are profit centers," said John J. Shanley, an analyst with Wells Fargo Van Kasper. "I know from talking with a couple of mall owners that they really want the skate parks because it drives more kids and their parents to the centers."

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