Declines in Timberland brand apparel & casual footwear sales

01 Aug '09

4 min read

The Timberland Company reported a second-quarter 2009 net loss of $19.2 million and a loss per share of ($0.34). These results compare to a second-quarter 2008 net loss of $18.9 million and a loss per share of ($0.32).

Second-Quarter 2009 Results Summary:
• Revenue declined 14.4% to $179.7 million for the quarter, reflecting declines in Timberland brand apparel and casual footwear. Foreign exchange rate changes decreased second-quarter 2009 revenue by approximately $11 million, or 5.3%, due to the strengthening of the U.S. dollar relative to the British Pound and the Euro.
• North America revenue declined 13.3% to $86.3 million, reflecting soft consumer spending in the U.S. Europe revenue decreased 16.6% to $65.7 million but was down only 2.5% on a constant dollar basis. European results reflect declines in the apparel, outdoor performance and casual footwear businesses, partially offset by strong sales of men's and women's boots.
• Asia revenue decreased 12.3% to $27.7 million, and decreased 13.3% on a constant dollar basis, driven by declines in casual footwear and apparel, partially offset by strengthening of the men's and women's boots businesses.
• Global footwear revenue decreased 11.2% to $127.0 million, primarily due to declines in the casual footwear business, which offset strength in the boots business in the European and Asian markets. Apparel and accessories revenue decreased 24.6% to $47.2 million, primarily due to softness in the European market.
• Global wholesale revenue decreased 20.3% to $108.4 million, in part reflecting global financial and credit market challenges that have caused customers to reduce inventory levels and to shift from placing future orders to placing at-once orders. Worldwide consumer direct revenue decreased 3.5% to $71.3 million, reflecting the adverse impact of a stronger U.S. dollar and a difficult worldwide retail environment.
• Operating loss for the second quarter of 2009 was $36.4 million, compared to a loss of $30.0 million in the prior year period. In the quarter, there was no material impact from foreign exchange on operating income.
• In the second quarter of 2009, the effective tax rate was 44.3% compared to 36.0% in the second quarter of 2008. For the full-year 2009, the Company anticipates that its effective tax rate will be approximately 33%.
• In connection with its stock buyback program, Timberland repurchased approximately 700 thousand shares in the second quarter of 2009 at a cost of approximately $10 million.
• Timberland ended the quarter with $183.9 million in cash and no debt. Inventory at quarter end was $180.4 million, down 7.5% versus 2008 second-quarter levels, reflecting the Company's focus on maintaining clean inventory levels in the face of challenging market conditions. Accounts receivable decreased 17.6% to $100.1 million, compared to the prior year.

The Company anticipates that the back half of 2009 will continue to be challenging due to the low levels of consumer confidence and the financial health of the global economy. Given the continued volatile nature of current economic conditions, the Company continues to believe there is not sufficient visibility to set expectations for the remainder of 2009.

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