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Reebok Sales Fall 11%

But a gain swells earnings.
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Earnings rose 44% in



third quarter, as a gain from an asset sale offset an 11% decline in sales.

The sneaker and sportswear company earned $117.7 million, or $1.87 a share, in the quarter, compared with $81.8 million, or $1.34 a share, a year ago. Sales fell to $1.04 billion from $1.16 billion last year.

The latest quarter included an after-tax gain of $49 million from the sale of a business and $2.5 million of legal and other costs. Before those, analysts had been forecasting earnings of $1.32 a share on sales of $1.04 billion.

According to Reebok, retailers, particularly mall-based stores, have evinced short-term uncertainty because of the pending merger with Adidas, which was announced in the third quarter. With one in particular,

Foot Locker

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, Reebok has been working to reposition some of its business and help the retailer reduce inventory.

"This has had a more significant impact in the quarter than the company previously anticipated, and resulted in a decline in the company's sales to Footlocker during the quarter of $46 million as compared with the prior year's third quarter," it noted.

Reebok also reported "startup problems" in the consolidation of Hockey Co. warehouses in Canada into a single facility and "this has caused some difficulty in shipping the current orders." It also said, however, that the start of the NHL season has helped demand at Hockey Co.

Reebok expects to earn 55 cents to 65 cents a share in the fourth quarter. The Thomson First Call consensus is 60 cents a share.

The stock fell 0.7% to $57 early Monday.