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Q2 impacted by timing of US Govt orders, LaCrosse

26
Jul '10
LaCrosse Footwear, Inc., a leading provider of premium, branded footwear for work and outdoor users, reported results for the second quarter ended June 26, 2010.

For the second quarter of 2010, LaCrosse reported net sales of $26.6 million, down 11% from $30.0 million in the second quarter of 2009. For the first half of 2010, net sales were $60.8 million, up 9% from $55.9 million for the same period of 2009.

Net income was $0.1 million or $0.02 per diluted share in the second quarter of 2010, down from $1.7 million or $0.26 per diluted share in the second quarter of 2009. For the first half of 2010, net income was $1.8 million or $0.27 per diluted share, up 83% from $1.0 million or $0.15 per diluted share for the same period of 2009.

Sales to the work market were $18.6 million for the second quarter of 2010, down 15% from $21.9 million for the same period of 2009. For the first half of 2010, sales to the work market were $45.0 million, up 10% from $40.9 million for the same period of 2009. The decrease in work sales in the second quarter of 2010 was primarily due to the timing of U.S. government orders.

Sales to the outdoor market were $8.0 million for the second quarter of 2010, down 2% from $8.1 million for the same period in 2009. The quarterly decrease in outdoor sales reflects the impact of constraints on the supply of finished goods caused by capacity limitations experienced by the Company's manufacturing partners in China.

Limitations on the supply of products especially impacted sales of certain key outdoor product styles as retailers transition to product styles being launched in the second half of 2010. For the first half of 2010, sales to the outdoor market were $15.8 million, up 5% from $15.0 million for the same period in 2009.

The Company continued to maintain strong gross margins and strengthen its operations. Gross margin for the second quarter of 2010 was 40.9% of net sales, comparable to the same period of 2009. LaCrosse's operating expenses were $10.7 million in the second quarter 2010, up 4% from the second quarter 2009. The Company has continued investing in its domestic sales, marketing and product development efforts.

The Company continued to strengthen its balance sheet, generating $9.9 million of cash from operations in the first half of 2010. At the end of the second quarter 2010, LaCrosse had cash and cash equivalents of $17.3 million, up from $5.1 million at the end of the second quarter 2009, after paying dividends of $9.6 million to its shareholders since the second quarter of 2009.

The Company significantly reduced its inventory by $8.5 million or 24% from the second quarter of 2009, reflecting execution of the planned transition to certain new products being launched in the second half of 2010, as well as improved management of its European inventories.

“While the timing of large orders to various branches of the U.S. government adversely impacted our business in the second quarter, we remain confident that our business fundamentals are sound,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc.


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