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Author: TMFTwitty Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 70  
Subject: Vans' Good Vibrations Date: 3/24/2004 4:17 PM
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http://www.fool.com/News/mft/2004/mft04032413.htm?ref=btp

Vans' Good Vibrations

By Dave Marino-Nachison
March 24, 2004
Shares of active shoe and apparel company Vans (Nasdaq: VANS) were ahead more than 5% in morning trading, following the company's release of fiscal third-quarter (ended Feb. 28) and nine-month financial results. The numbers revealed strong three-month revenue and same-store sales growth in its continuing operations, as well as a return to net profitability for the quarter.

When we last visited Vans in January, we saw a lot of the same things going on that the company reported today. Gross margins improved during the quarter, while inventory fell over the nine-month period -- a lower store count helped -- even as sales rose more than 7%. Same-store sales improved by more than 9% year over year in each of the last four completed quarters.

A company that was once an unpopular castoff dragged down by underperforming, money-losing skate parks has since been reborn, and managers are spouting optimistic numbers. Though the fourth quarter is still young, Vans is directing investors toward full-year revenue and earnings per share (EPS) (from its base business only) of between $340 million and $343 million, and between $0.80 and $0.82, respectively.

For fiscal 2005, meanwhile, Vans sees total revenues of between $360 million and $370 million and approximately $0.95 to $1 of EPS. That implies sales growth of perhaps 7% and EPS growth of 20%. This makes Van close to fully valued, as a company setting new 52-week highs and trading at 17 times the midpoint of projected 2004 EPS.

A rash of recent shareholder lawsuits alleging securities violations between 1999 and 2002 are a sore spot, but the "new Vans" -- competing as it does in a strong market segment highlighted by hot retailers like Pacific Sunwear (Nasdaq: PSUN) and Quiksilver (NYSE: ZQK) -- looks very much like one investors can be proud of.

Learn about evaluating companies with other Fools on the Foolish Collective discussion board.


Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.

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