The Timberland Co. reported revenues in the third quarter were relatively flat at $421.8 million compared to the prior year but was up 1.7% on a constant dollar basis, reflecting strong growth in the boots business in Europe and SmartWool brand offset by declines in casual footwear and Timberland® brand apparel. Net earnings rose 23.1% to $37.8 million, or 68 cents a share, from $30.7 million, or 52 cents, a year ago.
Foreign exchange rate changes decreased revenue by approximately $9 million due to the strength of the U.S. dollar relative to the British Pound and the Euro versus last year.
By region, North America revenue increased 2.0% to $188.2 million, reflecting strong growth in the kids’ boot business and in the SmartWool brand. Europe revenue decreased 2.3% to $195.2 million but increased 3.3% on a constant dollar basis. European results reflect strong increases in the boots business across all categories which partially offset declines in the casual and apparel businesses. Asia revenue decreased 2.3% to $38.3 million, and decreased 9.1% on a constant dollar basis, driven by declines in casual footwear and apparel, partially offset by strengthening of the men’s and kids’ boots businesses.
Global footwear revenue increased 1.8% to $319.1 million, primarily due to strength in the boots business across all markets. Apparel and accessories revenue decreased 6.7% to $95.8 million, due to softness across all regions.
Global wholesale revenue was relatively flat at $342.2 million. Worldwide consumer direct revenue decreased 4.2% to $79.5 million, reflecting the adverse impact of foreign exchange and weakness in the North America outlet stores.
Operating income for the third quarter of 2009 was $58.5 million, compared to operating income of $53.2 million in the prior year period. In the quarter, foreign exchange rate changes decreased operating income by approximately $7 million.
In the third quarter of 2009, the effective tax rate was 38.2%. For the full-year 2009, the company anticipates that its effective tax rate will be approximately 28.5%.
In connection with its stock buyback program, the company repurchased approximately 755 thousand shares in the third quarter of 2009 at a cost of approximately $10 million.
The company ended the quarter with $112.9 million in cash and no debt. Inventory at quarter end was $201.7 million, down 7.8% versus 2008 third-quarter levels, reflecting the company’s continued focus on maintaining clean inventory levels. Accounts receivable increased 1.1% to $270.3 million, compared to the prior year.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, “I am optimistic about what I am seeing this fall. Our product is better than ever, our marketing is loud and distinct and our team is focused and energized by the progress we have made against our strategic initiatives. We are finding new and unique ways to link commerce and justice with products like our Earthkeepers line and with marketing initiatives like Timberland PRO’s “Stay On Your Feet” campaign, dedicated to supporting workers with the highest quality footwear for their trade and, in addition, helping them stay on their feet by providing online job search capabilities. Given the overall economic conditions, we have a lot to feel good about but realize we still have hard work ahead of us before the Timberland brand and enterprise has reached its full potential.”
|THE TIMBERLAND COMPANY|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(Amounts in Thousands, Except Per Share Data)|
|For the Quarter Ended||For the Nine Months Ended|
|October 2, 2009||September 26, 2008||October 2, 2009||September 26, 2008|
|Cost of goods sold||227,254||226,595||491,407||527,109|
|General and administrative||28,805||29,486||81,118||83,713|
|Impairment of intangible asset||–||–||925||–|
|Restructuring and related costs||(88)||185||(209)||1,054|
|Total operating expense||136,031||143,771||366,443||400,306|
|Interest income, net||(11)||336||490||1,680|
|Other income/(expense), net||2,626||(2,454)||3,629||2,929|
|Total other income/(expense), net||2,615||(2,118)||4,119||4,609|
|Income before provision for income taxes||61,096||51,122||44,385||51,118|
|Provision for income taxes|
|Earnings per share|
|Weighted-average shares outstanding|