LaCrosse Footwear, Inc. continued its move to reposition the company away from higher volume/lower margin sales to a long-term strategy of delivering more innovative product to their retail channel, including the addition of more lifestyle product. Strong gains in the Retail channel were mostly offset by weakness in the Safety and Industrial channel.

The moves appear to be working, as BOOT posted a 133% increase in net income in Q3 to $2.1 million, or 36 cents a share, from net income of $0.9 million, or 15 cents per share in the year-ago period. Diluted EPS jumped 148% as net sales for the quarter rose 2.6% to $29.9 million, from $29.2 million in Q3 last year.

The company said that Rubber Boot categories drove the increase in the LaCrosse brand retail channel while gains at the Danner brand resulted mainly from “improved product offerings for the hunting and uniform markets”. Net sales for the LaCrosse brand retail channel improved 10.7%, and net sales for the Danner brand improved 7.1% over the same period last year.

The Safety and Industrial channel of distribution saw net sales decline by 24.5% from Q3 last year due primarily to a “strategic reduction in sales of lower-margin products”, especially for private label and mass market offerings. The company also pointed to the “strategic elimination of low-margin accounts”.

Overall gross margins improved 90 basis points to 31.4%, again due to increased sales of higher margin goods and the elimination of lower-margin product lines and customers. The cut in lower margin products included an increase of $500,000 in the reserve for slow-moving inventory, which decreased margins by 170 basis points for the quarter.

Inventories were essentially flat versus the year-ago period while trade accounts receivable declined by 6.5% from the quarter-end period a year ago due to “improved collection policies and practices”. Notes payable and long-term debt declined 18.1% to $21.7 million from $26.5 million from a year ago.

“We're encouraged to see sales growth for the company, which is being driven by innovative new products in the retail channel and the management team's continued focus on sales growth,” said Joe Schneider, president and CEO of LaCrosse Footwear, Inc.


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