The Timberland Company reported that global wholesale sales growth greatly outpaced that of direct-to-consumer sales in the fourth quarter ended Dec. 31, 2010, with strong performance of its men's footwear and SmartWool business in North America.
TBL reported net sales rose 26.7% to $491.1 million, compared to $387.8 million in the fourth quarter of 2009. Net income reached $42.1 million and diluted earnings per share of 82 cents, compared to net income of $22.3 million and diluted earnings per share of 40 cents for the same quarter a year ago.
For the full-year 2010, Timberland reported revenue of $1.43 billion, an increase of 11.2% over the prior year. 2010 net income was $96.6 million, an increase of 70.6% over the prior year. And diluted earnings per share were $1.82, an increase of 80.2% over the full-year 2009 diluted earnings per share of $1.01.
Highlights from the quarter included:
* Revenue increased 26.7% compared to the prior year period and was up 28.1% on a constant dollar basis, reflecting growth across North America, Europe, and Asia.
* North America revenue increased 16.8% to $252.0 million compared to the prior year period, as a result of improved wholesale sell-in, specifically men's footwear, and growth in SmartWool apparel and accessories.
* Europe revenue increased 32.3% to $169.6 million versus 2009 fourth-quarter levels, and increased 40.1% on a constant dollar basis. European results reflect growth across the region, led by Germany, Scandinavia, and the Benelux region, driven by strong performance in men's, women's and kids' footwear.
* Asia revenue increased 58.5% to $69.6 million compared to the prior year period, and increased 48.3% on a constant dollar basis, driven by growth across the region, led by Japan, Taiwan, and China, across men's, women's and kids' products.
* Global footwear revenue increased 31.2% to $358.8 million from the fourth quarter of 2009, driven by men's footwear and supported by strong growth in women's and kids' footwear in all three regions.
* Apparel and accessories revenue increased 16.6% to $125.1 million, reflecting growth in every region, led by strength in Timberland apparel sales in Asia.
* Global wholesale revenue was up 30.9% to $326.6 million compared to the prior year period, with double-digit growth across all segments.
* Worldwide consumer direct revenue increased 19.0% to $164.5 million compared to the fourth quarter of 2009, driven by solid comparable store sales growth in each of our global regions and the net addition of ten stores. Global retail comparable store sales increased 17.6% versus prior year period.
* Operating income for the fourth quarter of 2010 was $61.7 million compared to operating income of $37.2 million in the prior year period. The improvement was driven by increased revenue and was partially offset by higher selling and marketing expenses. The gross margin rate declined approximately 200 basis points to 48.6% as benefits from mix and fewer and more profitable close-out sales were offset by pressure from higher input costs and freight expenses.
* In the fourth quarter of 2010, the effective tax rate was 33.1% compared to 39.9% in the fourth quarter of 2009. The tax rate for the full-year 2010 was 31.6% compared to 30.4% in 2009.
* In connection with its stock buyback program, the company repurchased 402 thousand shares in the fourth quarter of 2010 at a cost of approximately $10 million.
* The company ended the quarter with $272.2 million in cash and no debt. Accounts receivable increased 26.2% to $188.3 million compared to the prior year period, in line with the revenue increase. Inventory at year end was $180.1 million, an increase of 13.6% compared to prior year levels.
“Our results this quarter are the culmination of disciplined focus on our operating model and targeted investments in our brand, ” said Jeffrey B. Swartz, Timberland's president and CEO. “As our progress in the North America business demonstrates, we have the right strategy and the right team in place to grow Timberland to be the number one outdoor brand on Earth. “
| THE TIMBERLAND COMPANY | |||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (Amounts in Thousands, Except Per Share Data) | |||||||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||
| December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | ||||||||||||
| Revenue | $ | 491,144 | $ | 387,760 | $ | 1,429,484 | $ | 1,285,876 | |||||||
| Cost of goods sold | 252,690 | 191,547 | 732,970 | 682,954 | |||||||||||
| Gross profit | 238,454 | 196,213 | 696,514 | 602,922 | |||||||||||
| Operating expense | |||||||||||||||
| Selling | 141,910 | 123,378 | 427,367 | 407,987 | |||||||||||
| General and administrative | 34,174 | 35,654 | 123,912 | 116,772 | |||||||||||
| Impairment of goodwill | – | – | 5,395 | – | |||||||||||
| Impairment of intangible asset | 702 | – | 8,556 | 925 | |||||||||||
| Gain on termination of licensing agreements | – | – | (3,000 | ) | – | ||||||||||
| Restructuring | – | (27 | ) | – | (236 | ) | |||||||||
| Total operating expense | 176,786 | 159,005 | 562,230 | 525,448 | |||||||||||
| Operating income | 61,668 | 37,208 | 134,284 | 77,474 | |||||||||||
| Other income/(expense), net | |||||||||||||||
| Interest, net | 5 | (85 | ) | (104 | ) | 405 | |||||||||
| Other, net | 1,341 | (123 | ) | 7,080 | 3,506 | ||||||||||
| Total other income/(expense), net | 1,346 | (208 | ) | 6,976 | 3,911 | ||||||||||
| Income before income taxes | 63,014 | 37,000 | 141,260 | 81,385 | |||||||||||
| Income tax provision | 20,882 | 14,746 | 44,638 | 24,741 | |||||||||||
| Net income | $ | 42,132 | $ | 22,254 | $ | 96,622 | $ | 56,644 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 0.83 | $ | 0.40 | $ | 1.84 | $ | 1.01 | |||||||
| Diluted | $ | 0.82 | $ | 0.40 | $ | 1.82 | $ | 1.01 | |||||||
| THE TIMBERLAND COMPANY | |||||||||||||||||||||
| REVENUE ANALYSIS | |||||||||||||||||||||
| (Amounts in Thousands, Unaudited) | |||||||||||||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||||||||
| December 31, 2010 | |||||||||||||||||||||
