LaCrosse Footwear’s Outdoor Sales Inch Ahead 1 Percent

Net income vaulted 54.5 percent to $1.7 million or 25 cents per share, up from $1.1 million or 17 cents, a year ago, helped by a one-time benefit from a legal settlement. The benefit in the latest period came to approximately $800,000, or 7 cents per diluted share

For the first three quarters of 2011, net sales were $87.5 million, compared to $98.5 million in the same period of 2010. The company recently announced a new $15.4 million delivery order for the United States Marine Corps which it anticipates fulfilling during the fourth quarter of 2011 and the first quarter of 2012. Net income for the first three quarters reached $800,000, or 13 cents per diluted share, compared to $2.9 million, or 44 cents per diluted share, in the same period of 2010.

Sales to the work market were $16.1 million in the third quarter of 2011, down 14 percent from the same period of 2010, reflecting a reduction of contract orders from the U.S. military and the company's decision in 2010 to discontinue its work apparel products. Excluding its contract military and work apparel sales, the company's core work sales in the third quarter of 2011 increased 12 percent from the same period in 2010. Sales to the outdoor market were $19.2 million in the third quarter of 2011, up 1 percent from the same period of 2010. The increase in outdoor revenue was primarily driven by sales of hiking and cold weather products.

Gross margins for the third quarter of 2011 were 39.7 percent of net sales, up from 37.2 percent in the same period of 2010. The year-over-year increase in gross margins primarily reflects a favorable product mix, increased at-once demand, fewer closeout sales of discontinued work apparel products and more favorable sourcing partnerships in Asia. Excluding the net benefit from the legal settlement, operating expenses in the third quarter of 2011 were comparable to the same period in 2010.

The company's inventories were $58.0 million at the end of the third quarter of 2011, up from $34.7 million at the end of the same period in 2010. The year-over-year increase in inventory reflects low inventory levels in the third quarter of 2010 due to supply constraints and a strategic decision in 2011 to enhance the availability of core products in order to address future at-once demand and U.S. military delivery orders. In the fourth quarter, the Company has begun fulfilling the recent contract military order and seasonal at-once demand, and expects its inventory levels to decrease significantly.

“During the third quarter of 2011, we continued to see strong year-over-year sales growth in our core work business, as well as continued expansion of our direct and international channels,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “While our overall performance was impacted by the timing of military orders and a cautious retail spending environment in our wholesale channels, we have continued to maintain solid gross margins and profitability, as we control our operating expenses and gradually increase the flexibility of our operating model with new manufacturing partnerships in Asia.

“As we move into the fourth quarter, we're beginning to fulfill the largest single military delivery order in our company's history. While the contract military business remains competitive and unpredictable, we've established LaCrosse as a trusted partner to various branches of the U.S. military that can fulfill their time-sensitive needs for high-performance, all-terrain, all-weather boots.

“Despite consumer uncertainty in the retail spending environment, we continue to deepen our wholesale channel relationships, both in the U.S. and internationally, and we're very encouraged by the customer response to our wide range of innovative new products for Spring 2012. LaCrosse remains well-positioned to capture market share over the long term.”

Based on the company's financial outlook, the Board of Directors today announced the approval of a quarterly dividend of $0.125 per share of common stock. The fourth quarter dividend will be paid on December 18, 2011 to shareholders of record as of the close of business on November 22, 2011. The Board of Directors, while not declaring future dividends to be paid, has established a quarterly dividend policy reflecting its intent to declare and pay a quarterly dividend of $0.125 per share of common stock.