EU Trade Commissioner Mandelsons decision to impose anti-dumping measures on certain footwear from China and Vietnam before April 7 could have profound effects on U.S. and European footwear companies. While the European sporting goods trade organization, FESI, was able to add safeguards for athletic footwear into the ECs provision, companies dealing in the Brown Shoe market had less success in their attempts to be exempt from the duties.
These provisional duties are expected to be effective for a six-month period beginning on April 7, 2006, and phased in over a period of five months, beginning at a rate of about 4% and ending at a 19.4% rate for China sourced footwear and at a 16.8% rate for Vietnam sourced footwear. These duties may become definitive on or before October 7, 2006.
The Timberland Companys preliminary estimate is that the implementation of such duties will likely reduce its 2006 operating profits in the range of $10 million. Wolverine World Wide will also see some impact, but not as significant. The company reaffirmed previous 2006 estimates with a revenue range of $1.11 billion to $1.13 billion and earnings per share of $1.34 to $1.40. These trade measures will have an impact resulting in a potential decrease in Wolverines earnings per share approximating four cents to five cents and WWW management now anticipates that 2006 earnings per share will be near the low end of that range.
