Declines in men's casual footwear & boots at Timberland
30 Jul '08
5 min read
The Timberland Company reported a second-quarter net loss of $18.9 million and a loss per share of ($0.32). These results compare to a second-quarter 2007 net loss of $19.2 million and a loss per share of ($0.31).
When adjusted to exclude restructuring and related costs, loss per share was ($0.32) and ($0.30) in the second quarters of 2008 and 2007, respectively.
Second-Quarter Results Summary: Revenue declined 6.3% to $209.9 million as declines in casual footwear, Timberland brand apparel and boots were partially offset by growth in Timberland PRO series footwear and SmartWool socks and apparel.
Foreign exchange rate changes increased second-quarter 2008 revenue by approximately $9 million, or 3.9%, due to the strength of the Euro and the British Pound, and increased operating income by approximately $1 million.
North America revenue declined 13.4% to $99.6 million, reflecting soft consumer spending in the U.S. Europe revenue decreased 1.3% to $78.8 million, or 8.3% on a constant dollar basis, driven by declines in men's casual footwear and kids'performance footwear.
Asia revenue increased 7.7% to $31.6 million driven by gains in foreign currency, but decreased 2.2% on a constant dollar basis.
Apparel and accessories revenue decreased 5.8% to $62.6 million, compared to $66.5 million in the second quarter of 2007, driven by anticipated declines in Timberland brand apparel partially offset by double-digit growth of SmartWool socks and apparel.
Global footwear revenue was $142.9 million, down 7.5% compared to the prior year, driven by declines in men's casual footwear and boots.
Global wholesale revenue decreased 10.0% to $136.1 million. Worldwide consumer direct revenue increased 1.3% to $73.8 million, reflecting gains in outlet sales in Europe and Asia.
Restructuring and related charges were $0.3 million in the second quarter of 2008, compared to $1.0 million for the second quarter of 2007.
Operating loss for the quarter was $30.0 million, a 4.7% improvement from the prior-year period. Operating loss excluding restructuring and related costs was $29.7 million, a 2.7% improvement compared to the prior year level.
The improved profitability reflects benefits from foreign currency translation as well as a 6.0% reduction in operating expenses excluding restructuring and related costs.
In the second quarter of 2008, the effective tax rate was 36.0%, compared to 34.5% in the second quarter of 2007. This increase in the effective tax rate resulted from a change in the geographical mix of profits, as well as from additions to specific tax reserves made during the period.
In connection with its continuing stock buyback program, Timberland repurchased approximately 847 thousand shares in the second quarter at a total cost of $15.0 million. It ended the quarter with $152.8 million in cash and no debt.
Inventory at quarter end was $195.0 million, down 9.7% versus 2007 second-quarter levels, due to the Company's disciplined inventory management in the face of challenging market conditions. Accounts receivable decreased 9.9% to $121.5 million, compared to the prior year.
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