LaCrosse Footwear is working on improving its model and injecting technology into work and industrial products and the results are showing some solid organic growth. Third quarter net sales were $32.8 million, up 6% from $31.0 million in the third quarter of 2005. Sales to the work market were $12.5 million for the third quarter, up 4% from $12.1 million in 2005. Sales to the outdoor market were $20.3 million for the third quarter of 2006, up 7% from $18.9 million for the same period in 2005.
LaCrosse recently was awarded a Marine cold weather boot contract that has the potential to bring in up to $6 million in revenue. The company has produced and delivered the contract minimum of $75,000, and is waiting on re-orders. LaCrosse also extended into performance socks during Q3. While these new sock lines represent only a small portion of BOOTs revenue, the early sales growth was “strong.”
Gross margin was 38.6% of net sales for Q3, up 190 basis points from 36.7% in the year-ago period. The margin improvement was a result of more value-added products introduced in recent years with higher margins, coupled with reduced sales discounts and allowances. Going forward improved margins will be incremental and will vary.
LaCrosse's total operating expenses were $8.7 million, or 26.5% of sales, up 260 basis points from $7.4 million, or 23.9% of sales in the same period of 2005. The increases were caused by product development, sales team development, increased commissions, increased incentive compensation, and LaCrosses new Asia office. Net income was $2.5 million, or 41 cents per diluted share in Q3, up 3% from $2.5 million or 40 cents per diluted share in Q3 last year.
