LS&CO net incomes improves due to operating sales for Q2

14 Jul '05

5 min read

Following a strong first quarter, our second-quarter performance in the United States paralleled U.S. retail trends. Sales were weaker in March and April, followed by improved results in May. Europe declined this quarter due, in part, to the region's weak retail environment, while Asia Pacific continued to deliver strong double-digit growth. With solid year-to-date results, I believe the company is well positioned going into the back half of the year.”

Second-Quarter 2005 Results
Gross profit increased $25 million to $437 million compared to $413 million in the second quarter of 2004. The gross margin improved 340 basis points to 46.4 percent of sales for the second quarter compared to 43.0 percent of sales in the same quarter last year.

The gross margin in the 2005 period benefited from sales of higher-margin premium products in Europe and Asia, a favorable mix of more profitable core products, lower sales allowances in the United States, lower product sourcing costs, lower inventory markdowns and stronger foreign currencies.

Selling, general and administrative (SG&A) expenses decreased $3 million or 1 percent to $302 million in the second quarter of 2005 from $305 million in same period of 2004. Lower SG&A expenses were primarily attributable to reduced staffing and administrative costs, reduced annual incentive compensation plan expenses, and the reversal of litigation and workers compensation reserves. These were partially offset by an increase in advertising and promotion expense and the impact of stronger foreign currencies.

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