reported very solid third-quarter results that surpassed expectations thanks to gains in almost every sector of it business.
The company earned $63 million, or 96 cents a share, on revenue of about $1 billion compared with $53 million, or 81 cents a share, on sales of about $900 million in the year-ago period. As with many companies this earnings season, Reebok was helped by favorable exchange rates, but sales were still up 10% vs. last year when factoring out this variable.
The big gains came in sales of Reebok brand footwear and apparel. Reebok branded products represent about 90% of the company's business and the gains were worldwide with sales up 17% vs. the year ago period. In the United States, sales were up 22% vs. the year ago period, while the rest of the world (mainly Europe) posted an 11% gain.
On top of these gains, future quarters look very good. Although the company released no new earnings and revenue guidance, it said that the October through March Reebok brand backlog is up 7% vs. the year-ago period, factoring out currency fluctuations. In its main new distribution channel, which the company described as "the athletic specialty, sporting goods and better department stores," the backlog is up 12%. Sales in its U.S. Reebok branded apparel business shot up 31% and now account for 20% of the company's overall revenue.
If there are any areas of concern for Reebok, they come from the non-Reebok branded product lines and their expense structure. Its Rockport brand, which represents almost the entire remaining 10% of its business, posted an 8% revenue drop vs. the year-ago period. Management did not address this issue in its release, instead focusing on defending its 45% increase in advertising expenditures, claiming that the marketing efforts were directly responsible for creating its enviable backlog.
The company seems to be doing a good job managing its balance sheet with flat inventories despite the substantial sales growth and receivables growing at a slightly slower rate than revenue when adjusted for the exchange rate anomaly.
The stock is currently trading up 86 cents, or 2.31% in early trading and is up 20% for the year.