Outdoor financials: Timberland cuts '07 outlook, closing 40 stores, plus Johnson Outdoors, Eddie Bauer, Collective Brands, Forzani, Crocs

Timberland cuts ’07 outlook, closing 40 stores

Timberland (NYSE: TBL) cut its full-year revenue guidance on some upcoming store closings, softer market trends and costs related to a voluntary product recall.

The company said it now expects 2007 revenue to decline in the 5 percent range. It previously said sales were likely to decline by low single digits.

Timberland said it would close about 40 specialty retail stores in the United States, Europe and Asia as well as several underperforming U.S. outlet stores likely within the first several months of 2008. The company said the closures are consistent with its strategy to transition to smaller, footwear-focused stores in the United States and in certain international markets.

Jeffrey Swartz, Timberland’s CEO, said in a statement, “After the completion of an extensive analysis of our retail portfolio, we have determined that several stores are not demonstrating the performance we require to justify continued investment.”

Timberland will continue to operate approximately 200 retail doors globally following these select closures. These company managed stores, when combined with over 550 stores and shops operated by franchise partners and distributors, will still leave the company with more than 750 Timberland retail locations worldwide.

The reduction in door count is anticipated to increase annual operating profits by approximately $6 million, while lowering annual revenues by approximately $40 million.

Timberland also anticipates about $4 million in additional costs related to its voluntary recall of some Timberland PRO Direct Attach Steel Toe Series products due to a potential safety issue.

The company predicts a third-quarter sales decline in the low-teen digits range partially due to the recall. Fourth-quarter revenue is expected to be relatively flat.

An analyst with CitiGroup said in a client note that Timberland will likely continue to struggle in upcoming months as the company attempts to “compete in a very crowded outdoor performance space, translate its image from a boot company to a footwear company and deal with weakness in the athletic specialty channel, which continues to post negative comps due to weak traffic trends and significant markdowns.”



In other company news: Timberland reached a settlement with Acacia Research Corp., which develops, acquires and licenses patented technologies, on a patent dispute related to credit card fraud protection technology. Terms of the settlement were not disclosed.

The patented system includes an electronic card reader as well as the creation and use of a transaction number that identifies each transaction processed by the system.

The settlement resolves a case pending before a district court for the Northern district of Georgia.



Johnson Outdoors receives $11.2 million military tent order

Johnson Outdoors (Nasdaq: JOUT) said it has received orders from the U.S. military for tents totaling $11.2 million. It expects to deliver the tents in the first half of 2008.

The recent orders came as the company’s Binghamton, N.Y., tent manufacturing operation was ramping down production in anticipation of completion of existing military orders. A ten-week ramp-up period is required before production against new military orders can begin.

In order to maintain current job levels and retain its workforce during this pre-production ramp-up period, Johnson Outdoors has asked manufacturing employees to move to a three-day workweek beginning Oct. 8 until production against new orders begins.



Moody’s downgrades Eddie Bauer ratings

Moody’s Investors Service downgraded the credit ratings of Eddie Bauer (Nasdaq: EBHI) due to the company’s weak results during the first half of 2007. The specialty retailer reported a narrower second-quarter loss last month on a slight revenue gain of less than 1 percent.

Moody’s downgraded Eddie Bauer’s corporate family, senior secured loan and probability of default ratings one notch to “B3” from “B2.” Both ratings are non-investment grade designations.

The ratings agency, which held the company’s outlook at “Negative,” said Eddie Bauer is at risk of violating a term loan agreement at the end of the fourth quarter and expects the company’s credit metrics to remain weak over the next 12 to 18 months.

Collective Brands says Stride Rite acquisition not to add to 2008 earnings

Collective Brands (NYSE: PSS) said at an investor conference that it expects the August acquisition of The Stride Rite Corp. to result in cost efficiencies but no earnings gains in 2008. Saucony and Hind are now under the wing of Collective Brands as part of the Stride Rite acquisition.

The conference was the company’s first since its $800 million takeover of the rival shoe store chain and its name change to Collective Brands from Payless ShoeSource.

Collective Brands said the impact of purchase accounting would prevent the Stride Rite acquisition from contributing to earnings per share in 2008. Excluding purchase accounting, the company said Stride Rite’s earnings contribution is expected to exceed interest expense.

The company expects the acquisition to result in cost efficiencies of about $5 million in 2008. The company predicts efficiencies of $12 million to $15 million in 2009 and between $25 million and $30 million in 2010.

Collective Brands said its new business model, which combines retail, wholesale and licensing units, is expected to drive improvement in sales, gross margin, liquidity and cash flow. The company also operates Collective Licensing International, a brand development and licensing company.

The company cited its portfolio of brands, international growth opportunities, efficient supply chain and strong marketplace positioning among other competitive strengths.

Collective Brands shares jumped as high as $1.85 to $22.69 in trading on Sept. 27 and closed at $22.04. The stock has traded between $20.38 and $37.20 during the past 52 weeks.



Forzani improves sales for back-to-school selling period

For the fiscal 2008 back-to-school selling season, the Forzani Group’s (TSX: FGL) report card showed improved sales and flat margins. Retail system sales for the seven-week period ended Sept. 16 increased 4.9 percent over the same period last year.

Overall same store sales for the seven-week period increased 1.5 percent versus a 4-percent increase in fiscal 2007. Corporate same-store sales were flat, against an increase of 1.8 percent in the prior year. Softgoods sales outpaced hardgoods and footwear, it said. Franchise stores continued their trend of the first half of the year as same-store sales increased 5.4 percent, compared to a 9.2 percent increase in fiscal 2007, for the seven-week period.

The Forzani Group is Canada’s largest national retailer of sporting goods, offering an assortment of brand-name and private-brand products under the corporate banners Sport Chek, Coast Mountain Sports, Sport Mart, National Sports and Hockey Experts. The Forzani Group is also a franchisor of The Fitness Source.

Crocs CEO Exercises Options, Sells Stock

The president and CEO of Crocs (Nasdaq: CROX) has exercised options for 77,874 shares of common stock and then sold 92,474 shares, according to an SEC filing.

In a Form 4 filed with the SEC, Ronald R. Snyder reported he exercised options for the shares Sept. 25 for $0.51 to $10.50 apiece, and then sold the shares for $64.60 to $64.81 apiece the same day.

Insiders file Form 4s with the SEC to report transactions in their companies’ shares. Open market purchases and sales must be reported within two business days of the transaction.

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