Solid results in Timberland classic boot business in Europe
The Timberland Company reported fourth-quarter 2009 net income of $22.3 million and diluted earnings per share of $0.40. These results compare to fourth-quarter 2008 net income of $13.1 million and diluted earnings per share of $0.23.
Fourth-Quarter 2009 Results Summary:
• Revenue remained relatively flat at $387.8 million compared to the prior year period but was down 3.9% on a constant dollar basis, reflecting declines in the boots business partially offset by strong growth in the SmartWool brand and performance footwear. Foreign exchange rate changes increased fourth-quarter 2009 revenue by approximately $12.3 million due to the weakening of the U.S. dollar relative to the Euro, Japanese Yen, and British Pound.
• North America revenue decreased 6.5% to $215.7 million compared to the prior year period, due to a decline in the boots business partially offset by growth in Timberland brand apparel, SmartWool apparel and accessories, and men's performance footwear. Europe revenue increased 17.1% to $128.4 million versus 2008 fourth-quarter levels, and increased 8.3% on a constant dollar basis. European results reflect benefits from foreign exchange, continued strength in the boots business, growth in all categories of women's footwear, and the net addition of 9 retail stores since the fourth quarter of 2008. Asia revenue decreased 13.4% to $43.6 million compared to the prior year period, and decreased 17.6% on a constant dollar basis, driven by declines in boots, casual footwear, apparel, and the net closure of 8 retail stores since the fourth quarter of 2008.
• Global footwear revenue decreased 2.8% to $273.4 million from the fourth quarter of 2008, as declines in the boots business in North America and Asia offset growth in the European boots business. Apparel and accessories revenue increased 2.9% to $106.8 million compared to the prior year period, due to solid growth in the SmartWool apparel and accessories businesses.
• Worldwide consumer direct revenue increased 3.7% to $138.2 million from the fourth quarter of 2008, driven by an improvement in apparel and casual footwear, partially offset by a decline in boots. Global wholesale revenue was down 3.0% to $249.5 million compared to the prior year period, primarily due to a decline in the kids' boots business and Timberland apparel.
• Operating income for the fourth quarter of 2009 was $37.2 million compared to operating income of $23.1 million in the prior year period. This was driven by an increase in gross margin primarily due to supply chain cost favorability as well as benefits from foreign exchange, partially offset by increased operating expenses due to higher incentive-based compensation costs.
• In the fourth quarter of 2009 the effective tax rate was 39.9% compared to 48.9% in the fourth quarter of 2008. The tax rate for the full-year 2009 was 30.4% compared to 44.1% in 2008, due to the release of certain tax reserves.
• In connection with its stock buyback program, the Company repurchased approximately 872 thousand shares in the fourth quarter of 2009 at a cost of approximately $15 million.