ADIDAS PROFITS RISE: Adidas AG sales and profits were up for both the fourth quarter and full year, despite ongoing weakness at Reebok, the brand reported last Wednesday. But CEO Herbert Hainer signaled to investors to expect rough times ahead. In 2008, net profits for the Herzogenaurach, Germany-based company rose 16 percent to 642 million euros, or $944.6 million at average exchange rates. Earnings per diluted share rose 20 percent to 3.07 euros from 2.57 euros. Earnings for the fourth quarter, driven by lower marketing expenses and a lower tax rate, shot up 151 percent to 54 million euros, or $71.2 million. Strong sales growth from the Adidas brand offset declines at Reebok, which saw year-over-year sales drop 2 percent on a currency-neutral basis. For the company as a whole, full-year sales increased 5 percent to 10.79 billion euros, or $15.89 billion. For 2009, the company forecast low- to mid-single-digit declines in sales overall and in the Adidas brand. Reebok revenues were projected to remain level with the 2008 mark. Earnings per share for 2009 are also expected to fall. Christopher Svezia, an analyst with Susquehanna Financial Group, said the lack of traction in the U.S. in both the Reebok and Adidas brands, as well as the potential slowness in Europe in 2009, would continue to pressure earnings.
— JENNIFER ERNST BEAUDRY & ELLEN GROVES
KCP LOSS EXPANDS: Kenneth Cole Productions Inc. widened its fourth-quarter loss to $12 million, though the company remained hopeful recent changes would return it to profitability. “We have taken decisive actions to respond to marketplace realities while protecting our brands and laying the foundation for future growth,” CEO Jill Granoff said on a conference call with analysts Tuesday. The chief executive recapped several of the firm’s cost-cutting initiatives that have resulted in $20 million in annualized savings, including a 20 percent workforce reduction. Under the new consolidated management structure, one leader (slated to be named in the “near future”) will oversee all categories of its wholesale business. “Streamlining the wholesale organization will allow them to focus on one brand message,” said Sam Poser, an analyst for Sterne Agee. For the three months ended Dec. 31, the loss grew to $12 million, or 67 cents a diluted share, from $3.1 million, or 16 cents, in the year-ago quarter. Stripping out charges for asset impairment, investment write-downs and severance, the loss was 27 cents a share, 5 cents less than analysts’ consensus estimate. Total revenues fell 4.2 percent to $126.6 million from $132.1 million. For the year, the loss was $14.8 million, or 80 cents, against net income of $7.1 million, or 35 cents, in 2007. Total revenues fell 3.6 percent to $492.3 million from $510.7 million.
— MEGHAN CASS & VICKI M. YOUNG
MIXED COMPS: Retail sales continued to slide in February, but decreases moderated and many stores managed to surpass analysts’ expectations. Same-store sales results remained especially trying for better department stores, however, with Saks Inc. down 26 percent and Neiman Marcus Inc. off 20.9 percent. Nordstrom Inc. was down 15.4 percent for the month. Macy’s Inc.’s 8.5 percent decline was larger than had been anticipated, as was Dillard’s Inc.’s 13 percent contraction. However, decreases of 8.8 percent at J.C. Penney Co. Inc. and 1.6 percent at Kohl’s Corp. beat analysts’ views. The Bon-Ton Stores Inc. was off 8.5 percent and Stein Mart Inc. down 12.2 percent. Noting that lower gas prices freed up money for shopping, Wal-Mart Stores Inc. again set the pace for monthly advances with a 5.1 percent leap, while rival mass merchant Target Corp.’s 4.1 percent decline for the month was better than analysts had expected. Ross Stores Inc. managed a 1 percent increase in February, and its larger off-price rival, The TJX Companies Inc., reported that its comparable-store sales results were flat. Footwear firms weighed in with mixed results, as Bakers saw an increase of 12.8 percent in February, while Zumiez Inc. was down 13.4 percent.
— ARNOLD J. KARR