Reebok Third-Quarter Profit Rises
Tuesday, October 11th 2005, 11:11 AM CDT
BOSTON (AP) _ Reebok International Ltd. said Monday its third-quarter profit rose about 40 percent despite declining sales heading into the athletic shoe and apparel maker's planned $3.8 billion sale to Adidas-Salomon AG.
Canton-based Reebok reported net income of $117.7 million, or $1.87 per share, for the July-September period compared with a profit of $81.8 million, or $1.34 per share, in last year's third quarter. Sales fell nearly 11 percent to $1.04 billion from $1.16 billion a year ago.
The result was clouded by several one-time expenses and gains, including a $49 million gain from the sale of Reebok's Ralph Lauren Footwear business and a sales decline because of inventory reduction efforts by a major Reebok customer, Footlocker Inc. Reebok said the inventory move by Footlocker cut Reebok's sales by $46 million.
Reebok did not report a profit figure excluding such one-time items. Analysts surveyed by Thomson Financial, who typically exclude one-time items in making their estimates, expected a profit of $1.32 per share and sales of $1.15 billion.
Paul Fireman, Reebok's chairman and chief executive, said the Aug. 3 announcement of Adidas' plans to buy Reebok for $3.8 billion ``created in the short-term some retailer uncertainty with respect to the company, and that this impacted the company's sales and order intake in the quarter.''
The nation's second-largest athletic shoemaker behind Beaverton, Ore.-based Nike Inc. said sales of its Reebok-branded products declined to $912 million in the third quarter from $1 billion in last year's comparable quarter.
For the fourth quarter, Reebok said it expects to post a profit of 55 cents to 65 cents per share. Analysts surveyed by Thomson Financial expect a fourth-quarter profit of 63 cents.
Reebok's stock price jumped 30 percent to $56.99 in one day after Adidas announced plans to buy Reebok to double its U.S. business and narrow the gap held by world market leader Nike. The German company said it received U.S. antitrust clearance on Oct. 4, and Adidas plans to complete the acquisition in the first half of 2006. The deal still requires European antitrust and Reebok shareholder approval.