Vans Gets Bad News in Triplicate : Manufacturing: The Orange County shoemaker posts larger-than-expected loss, its president quits and its stock plunges.
The maker of the Vans brand of sneakers and casual shoes reported a larger-than-expected quarterly loss of $2.4 million Friday and said that its president has resigned.
The news sent Vans Inc.'s stock down $2.25 a share to close at $6.875 in NASDAQ trading. The price hit a peak last year of $25.75. Industry analysts tried to calm the market with projections of long-term health for the 27-year-old Orange-based company, which over the years has seen its fortunes soar and sink.
Richard P. Leeuwenburg, brought in five years ago by new owners to turn the company around, resigned as president and chief executive “to pursue personal interests.” He couldn’t be reached for comment but said in a prepared statement that he was sad to leave Vans and proud of what the company has achieved.
Walter E. Schoenfeld, elected vice chairman of the company earlier this year, will serve as the interim president. The company also hired Ed Bulen, a longtime May Co. executive, as vice president for its 76 retail stores, where sales dropped 16% for the latest quarter.
The change in leadership had been expected for some time, said David L. Rose of the Irvine investment bank L.H. Friend, Weinress & Frankson.
Analysts said Leeuwenburg, whose strength is in manufacturing and operations, created efficiencies at the plant and put the company on track toward its goal of turning around orders in a day and getting specialty shoes out to customers in 10 days. He also doubled the company’s revenue during his tenure.
But Vans now wants a chief executive well-versed in marketing, said Seth Feinstein, an analyst at Crowell, Weedon & Co. in Los Angeles. Executives told analysts Friday that “we’re looking for a superstar and won’t stop until we find one,” Feinstein said.
The company said the loss of 25 cents a share for its third fiscal quarter, which ended Feb. 28, was caused primarily by the lingering recession and costs associated with a January raid on its plant by federal Immigration and Naturalization Service agents. That raid wiped out 10% of Vans’ work force--230 employees.
The company said it set aside $400,000 for actual and anticipated costs of the raid, including attorney fees and the expense of training more than 70 new employees.
The recession has caused a buildup of inventory that will likely be sold below cost. Also, concerned that it will not be able to collect from certain customers, Vans wrote down inventory and accounts receivable by $1.3 million.
Vans, which went public in 1991, also is paying nearly $700,000 a quarter in interest on its debt.
The company’s $2.4-million loss for the latest quarter compared with a profit of $1.5 million, or 15 cents a share, for the same period a year earlier. Three-month sales fell 8% to $18.2 million from $19.7 million.
For the first nine months of its fiscal year, Vans posted a profit of $1.5 million, down more than half from $3.1 million earned for the same period a year earlier. Nine-month sales dropped to $63.9 million from $66.4 million.
“We will be profitable for the year,” said Winston E. Hickman, the company chief executive officer.
At a Newport Beach conference for investors last month, Leeuwenburg said that Vans has been clobbered by the long-lasting recession in Southern California, where it makes a third of its sales. Nearly all of its company-owned stores are in Southern California, though it sells its shoes at more than 6,100 stores, including Miller’s Outpost and Nordstrom.
“January was just ugly,” Leeuwenburg told investors then. “If we were going along the bottom, we found a hole to fall into.”
Vans was originally Van Doren Rubber Co., which was run by brothers Paul and James Van Doren and two other investors. Paul Van Doren retired in 1976, and his brother took control. Under James Van Doren, the company built plants and doubled its work force. It rose quickly to national prominence after its black-and-white checkerboard sneakers were featured prominently in the 1982 teen movie, “Fast Times at Ridgemont High.”
But the company had overextended itself, and heavy losses sent it into bankruptcy. Paul Van Doren resumed control and sought new investors, who bought the company in 1988 and installed him as chairman and Leeuwenburg as president. Van Doren eased himself out as Leeuwenburg became more familiar with the company’s operations.
Times staff writer Greg Johnson contributed to this report.