Children's Group wholesale sales decreased 5% during the same period. Sales of the Sperry Top-Sider and International increased 17% and 12%, respectively, in the second quarter of fiscal 2005 from the comparable period of fiscal 2004. Sales of the Keds and Tommy Hilfiger Footwear brands decreased 15% and 14%, respectively, in the second quarter from the comparable period in fiscal 2004.
Gross profit was 40.8% of sales in the second quarter of fiscal 2005, an improvement of 2.3 percentage points over the same period last year, due principally to fewer Keds closeout sales and lower markdown allowances. Operating expenses in the second quarter of 2005 increased 5% compared to the prior year. As planned, the major operating cost increases for the quarter related to the Stride Rite Children's Group retail store expansion and higher advertising costs.
The quarter-end balance sheet was solid. Accounts receivable was down 8% from last year and days sales outstanding (DSO) was 42 days. Inventories increased 22% compared to last year, with the growth related predominantly to higher levels of in-line styles. Quarter-end net cash and marketable securities were $70 million and the Company has no outstanding debt.
David M. Chamberlain, Chairman and Chief Executive Officer, commented, "The quarterly sales were heavily impacted by the Keds transition to an upscale active lifestyle brand. Keds sales were down 15% for the quarter and 4% for the six-monthfor the six-month spring season, resulting primarily from our strategic decision to significantly reduce value channel and closeout business as we reposition the brand as higher-priced and aspirational, with improved styling.
marketing@alchempro.com
