Management never said exactly during the call that next quarter should be a good quarter. I have pulled a couple of examples from the transcript where it seems they imply that it will be. They did say that part of the reason the inventory was higher was because they had asked suppliers to rush a little in anticipation of a need.
We are pleased that we continue to achieve significant gains in our international business despite the negative impact of foreign currency exchange rates in several key markets, including Brazil, Canada, Chile, and Russia. In the United States, we are now the number two athletic brand. We believe our continued growth speaks to the strength of our brand, despite a sluggish retail environment in the latter portion of the back-to-school season. The third quarter was our best yet in terms of sales and our year-over-year worldwide backlogs are up 20% at September 30, 2015, both clear indicators that our momentum will continue throughout the remainder of the year and into 2016.
Additionally in the third quarter, we began shipping into central Central Eastern Europe as a subsidiary after transitioning several distributors to a subsidiary that now oversees 14 countries. With headquarters in Budapest, we believe this new subsidiary will positively impact our operations in 2016.
We expect the momentum to continue into spring 2016 with the delivery of fresh styles, and we are encouraged by the early feedback from our key accounts during our on-going 2016 buy meetings in our corporate headquarters this month.
And here is a response to the inventory question.
I think it more reflects the fact that we didn’t get the extra turn. We’ve always said, we’d like to have the inventory on hand just in case there is an extra turn. Most of that inventory is certainly spoke for and will ship in October or early November for the excess for the stuff we brought in. And we will continue to build, as we historically do going to the end of the year because first quarter has turned out to be a significantly larger quarter for us.
I think part of it is the new stores. It’s our new operations around the world. We have to put inventory into South America more so than we were in the past. And we put inventory for Central Eastern Europe.
So we own more inventory, more stores; that’s part of it. And part is we didn’t get the extra turn in September. So although the inventory is spoken for, it was here early just in case it was necessary. And it really is spoken for.
And when asked again about inventory, mention is made of 2016:
I think we pushed some of our suppliers to get inventory in early because of our growth anticipated for 2016 and don’t want to push out our production cycle. So it’s stuff that’s spoken for. We’re trying to get in on a much quicker basis. So I don’t anticipate any real downturn in that.
And more on inventory:
And if he we’d have gotten an extra turn, it would have certainly looked the same as the top line. So I think it’s a timing issue. And we don’t see anything there right this minute that is of concern.
And finally a reference to inventory and and a look at the current quarter:
As we close September, as we get into the beginning of October, we had somewhere between 1.5 million pairs and 2 million pairs on the dock that were ready for shipment. We will ship all of those through October and early November. As a matter of fact, we’ve already shipped in excess of a few million pairs in the first week-and-a-half that were here. And we still have 2 million pairs on the dock. It looks like our shipping will start to pick up and hold up as we get to the end of October and early November. At least that’s what it looks like now.
And then for the final finally, when asked about Q1 the response was this:
Well, if you look at the year, the year has somewhere on the street of a 15% or so growth. I think we could grow that rate and then top of that rate. So I think it can grow significantly in the first quarter, certainly over the 15% rate. But a lot of things still have to break. I mean we’re too early to commit to any of that stuff. But it certainly is possible from where we stand.
Hope this all helps, but your best bet is to read the transcript.
Again, I didn’t find a problem with the answers on inventory build up.
In the end we will have to wait and see I suppose.