LaCrosse Footwear’s Q4 Earnings Soar on 23% Sales Gain

LaCrosse Footwear reported net sales of $52.1 million in the fourth quarter, up 23% from $42.5 million in the fourth quarter of 2009. Net income rose 73.9% to $4.0 million or 60 cents a share, from $2.3 million or 36 cents, a year ago.

For the full year 2010, net sales were $150.5 million, up 8% from $139.2 million in 2009. Income was $6.9 million or $1.04 per diluted share, up 25% from $5.5 million or 86 cents per diluted share in 2009.

Sales to the work market were $31.2 million for the fourth quarter and $94.7 million for the full year of 2010, up 24% and 7%, respectively, from the same periods of 2009. The increase in work sales primarily reflects growth in sales to various areas of the U.S. government as well as in specialized work footwear categories. Sales to the outdoor market were $20.9 million for the fourth quarter and $55.8 million for the full year of 2010, up 21% and 9%, respectively, from the same periods of 2009. The increase in outdoor sales reflects stronger demand in the hunting and rugged outdoor categories.

Gross margins were 39.3% of net sales for the fourth quarter and the full year of 2010, up from 38.4% and 38.9%, respectively, in the same periods of 2009. The year-over-year increase in gross margins primarily reflects a reduction in the volume of close-out sales.

During 2010, the Company reduced operating expenses to 31.7% of net sales, down from 32.7% in 2009, despite increased investments in product development and marketing activities. The improved operating leverage was a result of growth in the company's sales volumes, as well as leveraging the company's 2009 investments in its Midwest distribution center and sales organizations in the U.S. and Europe.

The company continued to maintain a strong balance sheet. At the end of 2010, LaCrosse had cash and cash equivalents of $4.3 million. During 2010, the Company made capital investments of $10.6 million which included investments in its new domestic Danner factory and new flagship Danner factory store. The company also distributed dividends of $9.6 million to shareholders during 2010. The company's investments in inventories grew to $40.1 million at the end of 2010, up from $27.0 at the end of 2009, primarily driven by a planned increase in inventory of core products intended to improve availability for at-once demand.

“Our strong sales and earnings growth in the fourth quarter of 2010 demonstrates why our business is best evaluated on an annual basis,”� said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “After being adversely impacted by supply constraints and the uncertain timing of customer orders during the second and third quarters, our strong performance in the fourth quarter resulted in record annual revenue.

“Looking at the full year, we saw increased demand across all of our channels and across our core work and outdoor markets, reflecting an improving economic environment and the success of our innovative new footwear. During the fourth quarter, our customers' response to our next-generation Pronghorn hunting boot helped drive our significant outdoor sales growth. Moreover, the improved business conditions among our wholesale channel partners contributed strongly to our growth and their outlook is increasingly positive.

“During 2010, we continued to take important steps to improve the long-term efficiency and strength of our business. While continuing to leverage the benefits of our Midwest distribution center and our dedicated in-house sales team, we seamlessly expanded our domestic manufacturing operations, opened our new flagship Danner factory store, intensified our focus on core products and strengthened our position with a number of our major retailer partners.”�

“As we move into 2011, our relationships with major retailers continue to strengthen and our newest products have been very well received. We plan to continue to introduce innovative new products and further enhance our sales and marketing efforts to broaden awareness and demand for our brands. While we expect to see continued quarter-to-quarter fluctuations in our business, we believe LaCrosse is well-positioned to continue to capture market share over the long term.”

Based on the company's financial position, the Board of Directors today announced the approval of a quarterly dividend of $0.125 per share of common stock. The first quarter dividend will be paid on March 18, 2011 to shareholders of record as of the close of business on February 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.