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Work sales up 26% at LaCrosse Footwear

28
Jul '09
LaCrosse Footwear Inc, a leading provider of work and outdoor footwear, reported results for the second quarter ended June 27, 2009.

For the second quarter of 2009, LaCrosse reported consolidated net sales of $30.0 million, up 8% from $27.8 million in the second quarter of 2008. For the first half of 2009, consolidated net sales were $55.9 million, up 6% from $52.5 million in the same period of 2008.

Net income was $1.7 million or $0.26 per diluted share in the second quarter of 2009, net income was up 15% and earnings per common share were up 18% from $1.4 million or $0.22 per diluted share in the second quarter of 2008. For the first half of 2009, net income was $1.0 million or $0.15 per diluted share, down from $2.2 million or $0.35 per diluted share for the same period in 2008.

Sales to the work market were $21.8 million for the second quarter of 2009, up 26% from $17.4 million for the same period of 2008. The growth in work sales reflects continued penetration into various branches of the U.S. military. Sales to the outdoor market were $8.1 million for the second quarter of 2009, down from $10.5 million for the same period of 2008, reflecting continued softness in the overall retail environment.

For the second quarter of 2009, gross margins were a record 40.8% of net sales, up from 40.4% in the same period of 2008. The increase in gross margins was primarily due to lower markdown sales in the quarter and improved production efficiencies in the Company's domestic factory.

LaCrosse's operating expenses were $10.2 million in the second quarter of 2009, up $1.3 million from the second quarter of 2008. The year-over-year increase was primarily driven by certain one-time costs associated with the transition to the Company's new Midwest distribution center of $0.5 million. The balance of the increase was primarily due to the Company's strategic initiatives related to its European operations and the formation and operation of its recently acquired brand, Environmentally Neutral Design Outdoor, Inc. (“END”).

The Company continued to maintain a strong balance sheet with no debt. At the end of the second quarter of 2009, LaCrosse had cash and cash equivalents of $5.1 million, which includes cash used during the quarter for the purchase of substantially all the assets of END for $0.4 million. The Company's year-over-year increase in inventories included $2.5 million to support the Company's European subsidiary, $1.7 million to support the increased domestic production of its military business, and $3.6 million to support the strategic decision to accelerate the delivery of certain core products in preparation for anticipated sales in the second half of the year.

“While retail demand remained weak across different market segments and geographic regions, we continued to grow our revenue, and invest in the long-term strength of our business,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “We continued to win more business with various branches of the U.S. military. Our success reflects a sustained commitment to work closely with our military customers and fulfill their demand for premium footwear with proven durability and performance in the field.


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