Collective Brands Inc.’s third-quarter profit surged on the strength of its wholesale unit and improved gross margin.
For the period ended Oct. 30, the Topeka, Kan.-based firm earned a net income of $47.6 million, 75 cents a share, compared to $36.9 million, or 57 cents, in the third quarter of 2009.
Net sales increased nearly 2 percent to $881.8 million, driven by a 27 percent surge in the Performance + Lifestyle Group wholesale segment, which saw sales growth in every brand — Sperry Top-Sider, Saucony, Keds and Stride Rite — across every distribution channel.
This was, however, partially offset by Collective Brands’ 2.7 percent comparable-store sales decline, and the firm’s still-struggling Payless domestic unit, where net sales fell 5 percent due to a 4.6 percent comparable-store sales decrease.
Gross margin was 37.3 percent, up from 36 percent in the previous corresponding quarter.
The firm beat the expectations of analysts, who were looking for earnings of 51 cents per share on revenue of $856.94 million, as polled by Yahoo Finance.
“Our business model is working well — offering customers great brands across multiple categories, price points, distribution channels and geographies, while leveraging shared platforms and capabilities,” said Matt Rubel, chairman, president and CEO of Collective Brands, in a statement.
“Payless’ sales and earnings again showed strong growth internationally, while the domestic business showed improvement from the second quarter,” he added.
Collective Brands ended the quarter with cash and cash equivalents of $358.3 million and long-term debt of $700.2 million.