Stride Rite Profits Leap

LEXINGTON, MA-Just days after completing the acquisition of Saucony Inc., the Stride Rite Corp. said its profit and sales for the third quarter fiscal 2005 increased. Net sales increased 4% to $146.2 million compared to $140.4 million for the same period last year. Net earnings totaled $7.7 million or 21 cents per diluted share, an increase of 24% compared to $6.2 million or 16 cents per diluted share in the third quarter 2004.

The company’s earnings will take a hit during the fourth quarter as a result of the Saucony acquisition, according to Stride Rite chairman and CEO David M. Chamberlain. The acquisition is expected to be dilutive to earnings by approximately 4 cents pershare, but will add to the company’s bottom line in 2006.

“Saucony expands Stride Rite’s portfolio of nationally recognized footwear brands,” Chamberlain said in an earnings release. The company markets such brands as Keds, Sperry Top-Sider, Tommy Hilfiger, Saucony, Grasshoppers, Munchkin, Spotbilt and Hind.

Currently, Stride Rite is working on integrating Saucony into the company, Chamberlain said during the company’s earnings conference call Tuesday. “The next two and a half months will be very busy ones as we work on bringing Saucony into our structure,” he noted. “We believe Saucony offers Stride Rite excellent long-term growth potential.”

However, Chamberlain admitted that Stride Rite is just now getting its arms around the company and its brand, which is very strong in the technical running arena, but slightly weaker in cross-over and fashion footwear. “We bought the brand because of its technical strength, but we see it as a broad brand and we really do want to grow it in a whole variety of channels,” he said.

Most of Stride Rite’s growth during the third quarter came from an increase in 53% increase in Sperry Top-Sider footwear sales. Sperry Top-Sider sales pushed sales Stride Rite Children’s Group up 9%, but sales were negatively impacted by sales of Keds andTommy Hilfiger products, which decreased 9% and 27%, respectively. International sales for the third quarter increased 33% versus the same period in 2004.

Stride Rite’s company-owned retail stores recorded a sales increase of 20% for the third quarter with a comp-store sales increase of 7.4%. At the end of the third quarter, the company operated 264 stores, an increase of 9% from the prior year.