NEW YORK — Powered by gross margin improvement and a one-time tax credit, Reebok International’s fourth-quarter profits increased 69.8 percent on a 15.6 percent boost in sales.
Branded apparel, which has been a disappointment in several quarters, is getting renewed focus in the company, Paul Fireman, Reebok’s chairman and chief executive , said during a conference call with analysts on Thursday.
“Although we have great opportunities in footwear, one of my top priorities is to expand our apparel business,” Fireman said. “I am committed to putting the necessary resources against this business to ensure that our apparel is effectively designed, developed and marketed in a very powerful way.”
Added Kenneth Watchmaker, executive vice president and chief financial officer: “We continue to view our U.S. branded apparel business as a long-term growth opportunity and are pleased that we are beginning to see some improved operating results from this category of products.”
Worldwide Reebok brand apparel sales grew to $366.2 million from $308.3 million in the quarter ended Dec. 31, with gains in both licensed and branded apparel, Watchmaker said.
Reebok’s overall profits for the three-month period increased to $47.7 million, or 78 cents a diluted share, from $28.1 million, or 44 cents. Excluding a one-time tax credit of $12 million, earnings were $35.7 million, or 59 cents, and were ahead of analysts’ expectations of 52 cents.
Sales jumped to $975 million, from $844 million, and were boosted by results from The Hockey Company, which Reebok acquired last June and contributed $59 million in sales in the quarter. Results were also helped by foreign currency exchange gains, and sales growth in the Asia-Pacific region.
Investors clearly liked the news, and sent the stock up $2.64, or 6.35 percent, to $44.24 Thursday on the New York Stock Exchange.
“We achieved our earnings growth this year through increased revenues and by accomplishing our previously stated goal of improving the operating margins for the company,” said Fireman, who is again overseeing the management of the Reebok brand after the resignation of president and chief operating officer Jay Margolis in October. “At the risk of sounding presumptuous, my return has had a positive impact on the organization. Having one clear leader has paved the way for us to have one clear vision….After three months I feel incredibly energized and I’m thrilled to be back at the helm.”
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Reebok, based in Canton, Mass., saw U.S. sales grow 9 percent in the quarter, while international sales surged 29 percent to $400 million. Sales of the company’s other brands, which include Rockport, the Greg Norman Collection and Ralph Lauren Footwear, were up 6 percent to $158 million.
The company continues to see strong results from its Rbk division, which houses its collaborations with entertainers and athletes. Nonetheless, earlier this month, entertainer Pharrell Williams ended his partnership with Rbk, citing creative differences.
“We are introducing Rbk products in multiple categories such as basketball, running, training, tennis and cleated for both the suburban and urban customer,” Fireman said.
The company also saw gains in its running products, which has been a key area of focus over the last year, as well as kids’.
Reebok plans to introduce a global advertising and marketing campaign for the Reebok brand starting in February, Fireman said Thursday.
For the year, earnings including the tax credit grew 22.4 percent to $192.4 million, or $3.05 a share, from $157.3 million, or $2.43. Sales gained 8.6 percent to $3.79 billion from $3.49 billion.
Separately, Reebok on Thursday kicked off its first year as title sponsor of the Boston Indoor Games with a press conference in that city featuring elite track and field athletes including Swedish heptathlete Carolina Kluft and Kevin Sullivan of Canada.