LaCrosse Footwear, Inc. saw slowing sales in the fourth 
quarter, leaving the company with 23% more inventory at the end of the year than a year earlier. But the company said subsequent cold weather had cleaned out most retailers' inventory and it did not foresee having to mark down product. The company said consolidated net sales grew just 3% to $32.7 million in the fourth quarter ended Dec. 31 as warm weather in October and November curbed demand.
Despite slower sales growth, the company drove net income and gross margins to record levels. Net income reached $2.4 million, or 38 cents per diluted share, in the fourth quarter, up 9% from $2.2 million, or 36 cents in the fourth quarter of 2006. For the full year 2007, net income was $7.3 million, or $1.15 per diluted share, up 15% from $6.3 million, or $1.02 per diluted share in 2006.
LaCrosse said sales to the outdoor market fell 2% in the fourth quarter, but grew 8% to $57.3 million during the year on increased penetration into the rugged outdoor boot markets. The company increased its gross margins during the quarter by 50 basis points to 40.1% of sales, attributable to price increases and fewer discounts, partially offset by increased close-out sales.
Operating expenses were flat for both the quarter and the year, although the company said it did boost spending on sales and marketing. The company also reported deterioration of its accounts receivables, which were 14% higher at year's end than at the end of 2006. Days sales outstanding, or DSOs, rose to 62 days in the fourth quarter from 56 days a year earlier.
Most of the company's excess inventory consists of “core hunting” boots that will not need to be marked down, said LaCrosse President and CEO Joe Schneider. Indeed, Schneider said “it's hard to find cold weather footwear right now in certain parts of the country, because there's nothing available.” LaCrosse raised prices 3% to 5% in early January and Schneider said the company has locked in pricing with Chinese manufacturers “halfway through the year.”
