LaCrosse’s Outdoor Sales Rise 2% Despite Capacity Constraints

Lacrosse said its outdoor footwear sales reached $19.0 million in the third quarter ended Sept. 25, 2010, up 2.1% from the same quarter a year ago. For the first three quarters of 2010, sales to the outdoor market were $34.9 million, up 4% from $33.6 million for the same period in 2009. The growth in outdoor sales for the third quarter of 2010 reflects increased demand for hunting boots.

Sales to the work market were $18.7 million, down 16% from $22.1 million in the same period of 2009. For the first three quarters of 2010, sales to the work market were $63.6 million, up 1% from $63.0 million for the same period of 2009.

 

Work sales in the third quarter of 2010 were impacted by a quarterly decline in U.S. military orders, which fluctuate from quarter to quarter. During September, LaCrosse received a new $8.6 million order from the U.S. Army, of which $6.8 million will be shipped in the fourth quarter. Outside of the U.S. government channel, the company saw stronger year-over-year demand for its core work boots in the third quarter of 2010.

Net income was $1.1 million or 17 cents per diluted share in the third quarter of 2010, compared to $2.2 million or 35 cents per diluted share in the third quarter of 2009.

Both work and outdoor sales continued to be significantly impacted by the supply of finished products caused by capacity limitations of the company’s third-party manufacturing partners in China. LaCrosse had a significant volume of work and outdoor boot orders which it was unable to fulfill in the third quarter, but it expects to ship them early in the fourth quarter. The company has taken steps to alleviate the supply constraints in coming periods. 

Gross margin for the third quarter of 2010 was 37.2% of net sales, compared to 38.6% in the same period of 2009. The year-over-year decrease in gross margin is primarily due to one-time costs related to the company’s successful transition into its new Portland factory. Operating expenses were $12.0 million in the third quarter 2010, up modestly from $11.8 million in the third quarter of 2009.

At the end of the third quarter of 2010, LaCrosse had cash and cash equivalents of $3.6 million, up from $3.5 million at the end of the third quarter of 2009. During the first three quarters of 2010, the company has paid dividends of $8.8 million to its shareholders and made capital investments of $7.8 million primarily for its new factory facility and factory store.

“While quarterly fluctuations in our military business and the supply constraints in China continued to impact our business in the third quarter, we saw stronger demand for our core work and outdoor products,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “We remain confident that our business fundamentals are sound. We have continued to strengthen our customer relationships, penetrate further into a variety of niche work markets and see our new spring products being well received by our customers.

“The long-term trends across our multiple distribution channels look increasingly positive, with strong at-once demand from our wholesale channel partners and an improved consumer spending environment. Moving into the fourth quarter, we believe the supply chain constraints that impacted us in recent quarters are being mitigated and we have a large U.S. Army order to fulfill. We have completed major upgrades to our capital infrastructure for the year and we already see improved efficiencies from our new domestic factory and increased sales at our factory store. We’re excited about our opportunities for growth in the fourth quarter and beyond.”

LaCrosse Footwear, Inc.
Condensed Consolidated Statements of Income
(Amounts in thousands, except per share amounts)
(Unaudited)
		Quarter Ended							Three Quarters Ended
		September 25,				September 26,				September 25,				September 26,
			2010				2009				2010				2009
Net sales		$	37,682			$	40,761			$	98,462			$	96,647
Cost of goods sold			23,666				25,040				59,815				58,877
Gross profit			14,016				15,721				38,647				37,770
Operating expenses			11,962				11,815				33,667				32,912
Operating income			2,054				3,906				4,980				4,858
Non-operating expense, net			(51	)			(235	)			(106	)			(304	)
Income before income taxes			2,003				3,671				4,874				4,554
Income tax provision			857				1,450				1,965				1,367
Net income		$	1,146			$	2,221			$	2,909			$	3,187
Net income per common share:
Basic		$	0.18			$	0.35			$	0.45			$	0.51
Diluted		$	0.17			$	0.35			$	0.44			$	0.50