Timberland reported first quarter revenue increased 10.1 percent to $349.0 million, up 8.5 percent on a constant dollar basis. First-quarter net income declined 30.2 percent to $18.0 million, or 35 cents per share, compared with net income of $25.7 million, or 47 cents, for the same period of 2010.
Timberland reported first quarter revenue increased 10.1 percent to $349.0 million, up 8.5 percent on a constant dollar basis. First quarter net income declined 30.2 percent to $18.0 million, or 35 cents per share, compared with net income of $25.7 million, or 47 cents per diluted share, for the same period of 2010.
“Earthkeepers and Outdoor Adventure drove healthy growth this quarter, positive proof that we are on the path toward a stronger and healthier brand and business,” said Jeffrey B. Swartz, Timberland’s president and chief executive officer. “We are making intentional strategic investments as we seek to deliver another year of top line growth, operating margin expansion, and appropriate earnings per share growth. We are confident we have the right strategy and team in place to be the number one outdoor brand on Earth.”
First Quarter Results
Revenue increased 10.1 percent compared to the prior year period and was up 8.5 percent on a constant dollar basis, reflecting growth across North America, Europe, and Asia.
North America revenue increased 8.3 percent to $132.0 million compared to the prior year period, driven by growth across all brands, channels, and genders, including double digit growth in men’s footwear. Europe revenue increased 9.3 percent to $165.7 million, 8.3 percent on a constant dollar basis, led by strong performance in men’s and kids footwear at wholesale. Asia revenue increased 17.8 percent to $51.3 million compared to the prior year period, and increased 10.0 percent on a constant dollar basis, fueled by continued expansion in China, comparable store growth, and new store openings in Taiwan and Hong Kong. Asia’s strong performance was driven by double digit growth in retail apparel and accessories revenue.
Global footwear revenue increased 10.0 percent to $248.2 million from the first quarter of 2010, led by double digit growth in men’s and women’s footwear in North America and men’s and kids footwear in Europe. Apparel and accessories revenue increased 10.0 percent to $94.2 million, reflecting growth in every region.
Global wholesale revenue was up 8.6 percent to $252.0 million compared to the prior year period. North America and Europe led the favorable year over year comparison, delivering high single-digit wholesale revenue growth. Worldwide consumer direct revenue increased 14.0 percent to $97.0 million compared to the first quarter of 2010, with growth in all regions. The company ended the quarter with 229 company-owned stores, a net addition of eight stores compared to the first quarter of 2010, and a net addition of one store compared to the fourth quarter of 2010.
Operating income for the first quarter of 2011 was $27.9 million, down 29.2 percent compared to operating income of $39.4 million in the prior year period. Gross margin declined 300 basis points to 46.8 percent, with higher product costs more than offsetting the positive impacts of double digit revenue growth and product mix. The company expects higher product costs to continue through 2011; however, the company expects a positive impact from strategic price increases in the back half of the year.
In the first quarter of 2011, the effective tax rate was 39.1 percent compared to 34.3 percent in the first quarter of 2010.
The company ended the quarter with $265.3 million in cash and no debt. Accounts receivable increased 13.2 percent to $178.5 million compared to the prior year period, driven by revenue growth and the timing of sales. Inventory at quarter end was $186.9 million, an increase of 36.5 percent over a low level in the prior year quarter, driven by the outlook for the remainder of the year, higher product costs, and strategic purchases of core product.
THE TIMBERLAND COMPANY | ||||||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (Dollars in Thousands) | ||||||||||||
| April 1, 2011 | December 31, 2010 | April 2, 2010 | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and equivalents | $ | 265,271 | $ | 272,221 | $ | 238,540 | ||||||
| Accounts receivable, net | 178,492 | 188,336 | 157,615 | |||||||||
| Inventory | 186,862 | 180,068 | 136,941 | |||||||||
| Prepaid expense | 33,002 | 32,729 | 29,374 | |||||||||
| Prepaid income taxes | 27,898 | 25,083 | 14,389 | |||||||||
| Deferred income taxes | 21,195 | 22,562 | 24,448 | |||||||||
| Derivative assets | 5 | 29 | 5,444 | |||||||||
| Total current assets | 712,725 | 721,028 | 606,751 | |||||||||
| Property, plant and equipment, net | 70,705 | 68,043 | 66,245 | |||||||||
| Deferred income taxes | 10,395 | 15,594 | 15,379 | |||||||||
| Goodwill and intangible assets, net | 73,548 | 73,797 | 89,001 | |||||||||
| Other assets, net | 17,048 | 13,897 | 13,652 | |||||||||
| Total assets | $ | 884,421 | $ | 892,359 | $ | 791,028 | ||||||
| Liabilities and Stockholders�â¬ï¿½ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 67,493 | $ | 91,025 | $ | 44,265 | ||||||
| Accrued expense and other current liabilities | 91,325 | 128,051 | 88,422 | |||||||||
| Income taxes payable | 15,757 | 25,760 | 20,279 | |||||||||
| Deferred income taxes | – | – | 261 | |||||||||
| Derivative liabilities | 4,416 | 1,690 | 60 | |||||||||
| Total current liabilities | 178,991 | 246,526 | 153,287 | |||||||||
| Other long-term liabilities | 34,699 | 34,322 | 37,796 | |||||||||
| Stockholders�â¬ï¿½ equity | 670,731 | 611,511 | 599,945 | |||||||||
| Total liabilities and stockholders�â¬ï¿½ equity | $ | 884,421 | $ | 892,359 | $ | 791,028 | ||||||
| THE TIMBERLAND COMPANY | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (Amounts in Thousands, Except Per Share Data) | ||||||||||
| For the Quarter Ended | ||||||||||
| April 1, 2011 | April 2, 2010 | |||||||||
| Revenue | $ | 349,004 | $ | 317,042 | ||||||
| Cost of goods sold | 185,690 | 159,059 | ||||||||
| Gross profit | 163,314 | 157,983 | ||||||||
| Operating expense | ||||||||||
| Selling | 103,076 | 92,696 | ||||||||
| General and administrative | 32,353 | |||||||||
