LaCrosse Footwear, Inc. reported consolidated net sales increased to $27.3 million, from $25.8 million in the fourth quarter of 2002, an increase of 5.8%. Consolidated net income increased to $1.1 million, or $0.19 per share, compared to consolidated net income of $0.8 million, or $0.14 per share, in the fourth quarter of the prior year, an increase of 35.3%. Gross margins improved to 31.1%, as compared to 28.2% in the fourth quarter of 2002, an improvement of 290 basis points.
Consolidated net income for the year 2003 increased to $2.6 million, or $0.44 per share, compared to a consolidated net loss of $5.1 million, or $0.87 per share, for the prior year. Gross margins were up 400 basis points over the previous year to 30.8% in 2003, from 26.8% in 2002 due to improvements in the Company's sourcing capabilities, lowered manufacturing variances, elimination of low-margin product categories and a reduction in sales of lower-margin products.
Operating expenses decreased by 14.5% in 2003 to $25.8 million in 2003, from $30.2 in 2002, due to consolidation of company functions from several facilities to locations in Portland, Oregon and La Crosse, Wisconsin and leveraging internal systems and operating efficiencies.
Net sales for the quarter ended December 31, 2003 increased $1.5 million, or 5.8%, to $27.3 million from $25.8 million from the same period in 2002.
Retail Channel: Net sales for the retail channel of the LaCrosse(R) brand improved 1.2%, and net sales for the Danner(R) brand improved 25.4% over the same period last year. The increase in sales for the LaCrosse brand was driven by stronger sales in the rubber boot categories. The increase for the Danner brand was primarily related to improved product offerings for the hunting and uniform markets.
Net sales for the Safety and Industrial channel of distribution declined by 11.0% from the fourth quarter of the previous year. The decrease was driven by a strategic reduction of lower-margin products, a reduction in the number of products being offered for sale in the private label and mass-merchant markets and the strategic elimination of low-margin accounts.
Gross profit for the quarter ended December 31, 2003 increased to $8.5 million, or 31.1% of net sales, from $7.3 million, or 28.2% of net sales, for the fourth quarter of 2002. Gross margins as a percent of net sales have improved due to an increase in sales of new, more profitable products, the elimination of lower-margin product lines and the strategic elimination of lower-margin accounts.
Operating expenses increased $0.5 million, or 7.6%, to $7.1 million for the quarter ended December 31, 2003 compared to $6.6 million for the same period a year ago. The increase in operating expenses for the quarter ended December 31, 2003 is due mainly to an increase in compensation-related costs of $0.2 million. In addition, during the fourth quarter of 2002, expenses were reduced by a curtailment gain of $0.4 million related to the postretirement plan.
Inventories as of December 31, 2003 have increased by $0.6 million compared to inventories at December 31, 2002. Trade accounts receivable declined by $1.9 million from the same period a year ago due to continued improved collections. Prepaid expenses and refundable income taxes declined by $3.0 million due primarily to the receipt of an income tax refund, a result of the tax provisions enacted as part of the Job Creation and Worker Assistance Act of 2002. Goodwill and other assets declined by $1.0 million primarily due to the redemption of cash surrender value of certain life insurance policies. Reduced receivables, prepaid expenses, refundable income taxes, and cash generated from net income over the past year contributed to the reduction of $5.3 million in notes payable and long-term debt from the end of 2002.
“We are very encouraged to see the improvements in profitability and other key financial measures for 2003. In addition, we are pleased with our successful transition from a traditional manufacturer to a brand and sourcing model,” said Joseph P. Schneider, President and CEO of LaCrosse Footwear, Inc. “Looking forward, we are encouraged by positive dealer responses to our Spring product lines and fulfilling the GSA delivery order to the U.S. military. We continue to be focused on growing the Company through innovative product, compelling marketing and superior customer support,” he said.
