Congruent with a second quarter that saw strong military sales drive record margins, LaCrosse Footwear reported more of the same for third quarter, as the military business boosted the company’s Work business enough to compensate revenues lost from continued softness in the Outdoor business.


Overall revenues for LaCrosse Footwear crept up to $40.8 million from $40.3 million in Q3 last year, while net income fell 19.8% to $2.2 million, or 35 cents per diluted share, compared to $2.8 million, or 43 cents per diluted share in the year-ago period. Gross margins, impacted by a greater portion of revenues coming from military delivery orders, slipped 60 basis points to 38.6% of sales from 39.2% of sales in the year-ago period. Operating expenses were $11.8 million in the third quarter, up 5% from Q3 2008. BOOT attributed $300,000 of the $500,000 increase to its subsidiary Environmentally Neutral Outdoor, Inc. (END), and the timing of certain marketing programs.

 

 In August of this year, LaCrosse announced its plans to discontinue the END line as a stand-alone brand.


As noted, Work segment revenues boosted the top line for the period as strong military sales drove the segment up 13.8% to $22.1 million from $19.5 million a year ago.  Work segment sales represented 54% of total net sales for the quarter. In a conference call with analysts, LaCrosse President and CEO Joe Schneider said the company would continue to expand distribution of its footwear into various branches of the special forces, border patrol, secret service and other security units in addition to its existing markets within the U.S. Marine Corps and the U.S. Army. Last year, the company supplemented its Work business by focusing on the agricultural, transportation, mining, energy-related and public safety industries.


Regarding the Outdoor business, Schneider said LaCrosse “continue(s) to face a tough retail environment and…[is] certainly disappointed with overall performance…” Outdoor segment sales were $18.7 million for the third quarter, down 10.5% from $20.8 million in Q3 last year. The Outdoor segment, which consists of the hunting, winter recreation and rugged outdoor activities categories, accounted for 46% of total Q3 sales. Schneider maintained that certain outdoor segments “remain encouraging” as the company continues to establish relationships with major outdoor retailers. Schneider noted particular strength from LaCrosse’s hunting-specific scent suppression boot, which is new for Fall 2009. “We are not losing shelf or market share [in the outdoor market],” he attested.


At the end of the third quarter, LaCrosse had cash and cash equivalents of $3.5 million. The company said the $3.8 million year-over-year increase in inventory primarily reflects the growth in domestic production for the company’s expanded military business, as well as increased inventory for the planned build-up of certain core products for anticipated demand during the fall and winter seasons.
In related news, Luke E. Sims has resigned from the Board of Directors, effective October 28, 2009.