LaCrosse Footwear, Inc. reported net sales for the first quarter ended March 29, 2003 decreased $2.9 million, or 12.9%, to $19.9 million from $22.8 million for the same period in 2002. The net loss for the quarter was $0.6 million, or $0.11 per share, compared to a loss of $3.0 million, or $0.52 per share in the first quarter of the prior year. Last year’s amount included a charge to goodwill impairment of $1.0 million.
Gross margins improved to 30.1%, as compared to 25.9% in the first quarter of 2002 and operating expenses decreased 26.3% to $6.3 million from $8.6 million in the comparable quarter last year. Inventories decreased to $23.8 million from $32.7 million from a year ago, a decrease of 27.2%.
Sales in the Retail Channel declined largely due to a continued soft economy and the further reduction of our retail brand product offerings. Over the past year, the Company has eliminated and discontinued several less profitable LaCrosse(R) brand retail products. Sales of LaCrosse retail brand products decreased 24.9%. During the same period, Danner(R) brand products increased 8.8%. Danner’s net sales increase is primarily related to improved product offerings for niche hunting, occupational
and uniform/duty markets, and continued strong acceptance of the Danner brand in the retail channel.
Sales in the industrial channel of LaCrosse and Rainfair(R) brand products declined 22.4% largely attributable to the continued soft economy and a reduction in the number of products being offered for sale, particularly in the private label and mass-merchant channels.
Gross profit for the quarter ended March 29, 2003 increased to $6.0 million, or 30.1% of net sales, up from $5.9 million, or 25.9% of net sales, for the first quarter of 2002. Gross margin improvement was largely the result of a focus on higher margin footwear and the elimination of lower margin products in the LaCrosse retail channel.
Operating expenses decreased $2.3 million, or 26.3%, to $6.3 million for the quarter ended March 29, 2003 compared to $8.6 million for the same period a year ago. The decrease was driven by reduced sales volume and back-office consolidation of the Retail and Industrial operations in Portland, Oregon. Included in the results for the quarter ended March 30, 2002 was a charge of $1.6 million related to the relocation of the corporate headquarters to Portland, Oregon, from La Crosse, Wisconsin.
Inventories as of March 29, 2003 have declined by $8.9 million as compared to the same period last year as a result of a focused inventory reduction plan and improved inventory management. Trade accounts receivable declined by $4.2 million from the same period a year ago due to improved collection practices and reduced sales. The combination of the reduction in receivables and inventories led to the reduction in notes payable of $7.8 million and long-term debt reduction of $2.2 million from the same period a year ago.
“On balance, we were disappointed with our top line sales for the quarter but pleased that the restructuring efforts we completed in the prior year have given us both the tools and structure to manage our operating costs effectively,” said Joseph P. Schneider, President and CEO of LaCrosse Footwear, Inc. “Margins are up; expenses, inventories and debt are down. That said, we clearly recognize that returning to growth is key to our long term success and were encouraged by our customer’s positive reception to the Fall 2003 product lines. Im optimistic that the Company will continue its positive trend through the efforts of our exceptional employees and strong relationships with key channel partners,” he added.
SELECTED FINANCIAL DATA (Amounts in thousands, except per share amounts) Condensed Consolidated Statements of Three Months Ended Operations (Unaudited) March 29, March 30, 2003 2002 Net sales $19,874 $22,821 Cost of goods sold 13,888 16,915 Gross profit 5,986 5,906 Operating expenses 6,329 8,583 Operating loss (343) (2,677) Non-operating expenses, net 306 306 Loss before income taxes (649) (2,983) Income tax benefit -- 1,000 Net loss before cumulative effect of accounting change (649) (1,983) Cumulative effect of change in accounting principle - goodwill -- (1,028) Net loss $(649) $(3,011)