First quarter sales improved slightly for LaCrosse Footwear, but earnings fell after two key retailers filed for bankruptcy during the period. Chapter 11 bankruptcy filings from Joes Sports & Outdoors, which resulted in a liquidation of assets, and Sportsmans Warehouse, which was shuttering or selling off a larger number of stores, compounded what was already a tough retail environment to welcome the front end of fiscal 2009. As a result, LaCrosse recorded its first quarterly net loss in five years.
The company reported a net loss of $0.7 million, or 11 cents per diluted share, compared to net income of $0.8 million, or 12 cents per diluted share, in the year-ago period. Still, earnings narrowly exceeded analysts preliminary predictions.
Margins for the footwear manufacturer fell 270 basis points to 37.9% of net sales from 40.7% of net sales in Q1 last year. In a conference call with analysts, management suggested that the decline in margins was due primarily to the impact of investments in the companys Portland factory, increased costs from re-sourcing products due to the closure of a third-party manufacturer, and an increase in markdown sales.
Consolidated revenues for the quarter ended March 28 were up 5.0% to $25.9 million from $24.7 million in the prior year period, but “significant investments in strengthening [the] foundation for long-term growth, including [the] Midwest distribution center,” drove earnings into the red for the quarter.
By division, sales to the Work market were boosted by growing demand from the military markets, increasing 6.0% to $19.0 million from $17.9 million in the year ago period. Sales to the Outdoor market, aided by strength in cold-weather products, were up slightly to $6.8 million from $6.7 million in the year ago period.
Management added that the companys bank credit line has been renewed for the next three years.
