Vans Reports Profit Off 52% in 1st Quarter

Shoemaker Vans Inc., which has been struggling to improve both its products and the financial performance of its indoor skate parks, said Wednesday that earnings plunged 52% in its fiscal first quarter as sales of its women’s shoes dropped 40%.

Still, the Santa Fe Springs-based company managed to beat Wall Street’s already lowered expectations by a nickel.

In the first quarter ended Aug. 31, profit was $5.4 million, or 30 cents a share, compared with $11.3 million, or 61 cents, in the same period last year. Analysts polled by Thomson First Call were expecting earnings of 25 cents a share.

Vans’ sales increased 5.5% to $124.6 million, from $118.1 million in the first quarter of last year. Sales at stores open at least a year, a key industry indicator, declined 4.9%.

Vans’ stock closed Wednesday at $6.31, up 11 cents, in Nasdaq trading. The stock has lost 50% of its value this year. The earnings report was released after the market closed.

Chief Executive Gary H. Schoenfeld said sales have fallen off this month after improving somewhat in August. Schoenfeld said this is baffling because the current month is being compared to September 2001, which was battered by the repercussions of the terrorist attacks.

“I’ll be honest, I’m a bit stumped,” Schoenfeld told analysts during a conference call. “I think there’s a lot of people that are more than a bit surprised that September isn’t stronger against the post-Sept. 11 comparisons, that people aren’t seeing gains.”

The key problem for Vans in the first quarter was the falling sales of its women’s shoes, Schoenfeld said. Vans expects new products will halt the sales slide in the second half of the fiscal year, he said.

A continued decline in attendance at its skate parks created additional difficulty for Vans, which is struggling with increasing competition from free public skate parks.

In California alone, about 200 public skate parks have been built since 1996, said Heidi Lemmon, executive director of Skate Park Assn. of the USA in Venice.Combined first-quarter losses at its skate parks was about $300,000, Vans said. For the remainder of the fiscal year, the company expects the parks will drain 10 cents to 15 cents from per-share earnings.

Vans began opening the parks four years ago, scoring points with skateboarders who began buying more of the company’s shoes. Vans now has 12 skate parks nationwide.

However, the company plans to close an under-performing park in Bakersfield within the next six months and is delaying the opening of a park in Sacramento.

“We’re not pleased with the trends we’re seeing,” Schoenfeld said.

He acknowledged that it is possible more parks could close but said the company has not analyzed that option. “It’s possible, but I think that’s premature and something I can’t speak to very specifically,” he said.

The last year has been a tough one for the 36-year-old company, which saw its annual sales drop in the fiscal year that ended May 31 for the first time in eight years.

Vans also stated for the first time its expectations for the rest of the fiscal year.

For the second quarter, the company said it expects to lose about 20 cents a share on sales of about $60 million to $65 million.

For the second half of the year, Vans expects income to range between a loss of 10 cents a share to a profit of 10 cents a share, and sales between $145 million and $155 million.

Vans operates 169 namesake stores in the U.S. and Europe. Its distribution network includes surf and skate shops, and large chains, such as Pacific Sunwear, Footlocker, J.C. Penney and Nordstrom.