LaCrosse Footwear said a double-digit decline in its Work business and capacity limitations at the company’s third party manufacturing partners in China cut its profits in half for the third quarter ended Sept. 25, although management said pending orders rolling over into Q4 should help compensate for the decline.
Total sales for the quarter declined 7.6% to $37.7 million from $40.8 million in the year-ago period, largely due to a 15.4% decrease in the Work segment. Management said sales to the Work market sank from $22.1million a year ago to $18.7 million due to a quarterly decline from U.S. Military orders, which tend to fluctuate heavily quarter to quarter.
Outside of the U.S. government channel, the company saw stronger year-over-year demand for its core work boots during the quarter.
Management added that during September, LaCrosse received a new $8.6 million order from the U.S. Army, $6.8 million of which will be shipped in Q4.
Sales to the Outdoor market were $19.0 million for the quarter, up 1.6% from $18.7 million in the comp period of 2009 on strong growth of hunting boots.
Gross margin for the third quarter of 2010 was 37.2% of net sales, down 140 basis points from 38.6% of sales in the same period of 2009. The company said the decline was primarily related to one-time costs related to the company’s transition into its new Portland factory.
Net income for the quarter was $1.1 million, or 17 cents per diluted share, compared to earnings of $2.2 million, or 35 cents per share, in the year-ago period.
As noted, sales in both LaCrosse business segments were “significantly impacted” by the supply of finished products caused by capacity limitations of manufacturing partners in China., which delayed a significant volume of orders until the fourth quarter. Management said the company has “taken steps to alleviate the supply constraints in coming periods.”
