Timberland matched analysts’ estimates for the second quarter, helped by strong sales of hiking boots and outdoor apparel, but sounded a cautionary tone about the company’s second half prospects.

Shares fell 16.1% last week, closing at $49.17 Friday.
Total sales growth benefited by the weaker dollar against foreign currencies, with constant dollar revenue growth increasing 5.3%. Total International sales jumped 25.8% to $82.6 million, growing to 39.0% of total sales. U.S. sales grew 2.6% to $129.2 million.

U.S. consumer direct revenues increased 0.8% for Q2 to $32.9 million. The 3.3% growth in U.S. wholesale revenue was led by growth in boots, PRO Line, women’s footwear and apparel. The gains were offset by lower casual footwear sales, due to fewer closeouts, and weaker kid’s and outdoor performance sales. Turns improved to 4.6x versus 4.0x in the year-ago period.

The gain in gross margin was attributed to a higher mix of International sales, less off-price sales and lower product costs. Back half margins are expected to improve 100 to 150 basis points, but are expected to be offset by higher operating expenses.

TBL said it is on track to deliver “solid” revenue and earnings gains in 2003, based on earnings so far this year. The company is planning flat sales growth in the U.S., “reflecting retailer caution” and mid single digit growth in Europe, including exchange rate benefits. Total International sales growth for the second half is expected in the double-digits. Analysts expect TBL to post EPS of $3.12 for 2003 on revenue of $1.32 billion.


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