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Vans Stock Steps Up on Earnings Estimate

September 19, 2003|Leslie Earnest | Times Staff Writer

Investors boosted Vans Inc.'s stock 22% on Thursday after the company offered an upbeat earnings estimate for its core business of selling footwear and apparel geared toward skateboarding and related sports.

The company, based in Santa Fe Springs, said income from continuing operations in its fiscal first quarter ended Aug. 30 should be 73 cents to 76 cents a share for its base business, which excludes skate parks that are expected to be closed.

Vans, a pioneer in the skate shoe industry, ventured into the skate park business five years ago in what seemed like a savvy marketing move, opening about a dozen facilities. The parks initially boosted the brand's cachet among skateboarders but park revenues dwindled as free facilities began springing up and Vans started to shutter its parks. The company says it ultimately will keep only two parks open, including its first park at the Block at Orange shopping center in Orange County.

Vans had previously projected its core business would earn 58 cents a share in latest quarter.

About 11 cents of the expected profit is due to a tax rate that was lower in the first quarter, but is expected to be higher for the rest of the fiscal year.

Vans also said that per-share earnings from all continuing operations, including skate parks that are still open, should be 61 cents to 64 cents a share. That compares to earlier projections of 33 cents to 48 cents a share.

The company did not release guidance about its bottom-line profit for the quarter, which is expected to include charges related to the closure of two parks.

The guidance for the first quarter was released after the market closed Wednesday. On Thursday, Vans stock shot to a 52-week-high of $11.49 during Nasdaq trading, before closing at $11.08, up $1.98.

The company also struck other positive notes in its statement on Wednesday, saying it was pleased with its back-to-school business and that sales at Vans stores open at least a year, a key indicator of a retailer's health, jumped nearly 14%.

Vans also said that its products have been selling more quickly at other retailers, and that favorable exchange rates helped the profit margins of international sales.

"I think we're seeing the early signs that the wholesale business is starting to turn," said Jeffrey Van Sinderen of B. Riley & Co.

The company boosted projections for the year, saying earnings on base business, excluding skate parks, should be 47 cents to 52 cents, compared to its previous forecast of 35 to 40 cents. It will report earnings Thursday.

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