Timberland Q1 profit falls 65 percent
First-quarter profit for Timberland Co. (NYSE: TBL) fell 65 percent, hurt by restructuring costs and weaker sales of boots and kids’ footwear.
Quarterly earnings dropped to $9.3 million, or $0.15 per share, from $26.1 million, or $0.40 per share, in the prior-year period. Excluding restructuring costs, Timberland said its earnings per share dropped to $0.22 from $0.41.
First-quarter revenue slipped to $336.3 million from $349.8 million, compared with analysts’ expectations of $331.2 million. It was down 3.9percent driven primarily by declines in boots and kids’ footwear, which were partially offset by gains in SmartWool and in Timberland PRO. Foreign exchange rate changes increased first-quarter 2007 revenues by approximately $11.8 million, or 3.3percent due to the strength of the Euro and the British Pound, and increased operating income by approximately $7 million.
International revenue increased 4.1percent, but declined 2.1percent on a constant dollar basis, driven by weakness in Europe as a result of anticipated declines in boots and kids’ sales, which were partially offset by strong growth in Asia. U.S. revenues decreased 13.2percent, impacted by unseasonable weather, which added to anticipated pressures on boots and kids’ sales.
Timberland said first-quarter results reflected declines in global footwear sales, which were partially offset by modest global gains in apparel and accessories revenue. Apparel and accessories revenue grew 4.4percent to $95.4 million, as gains in SmartWool and the addition of Howies offset declines in Timberland brand apparel. Global footwear revenue fell 7.2percent to $235.6 million as declines in boots and kids’ sales as well as modest declines in casual footwear and outdoor performance were partially offset by gains in Timberland PRO series footwear.
Global wholesale revenue decreased 7.3percent to $259.0 million reflecting the anticipated declines in boots and kids’ footwear sales, the company said. Worldwide consumer direct revenue increased 10.0percent to $77.3 million, reflecting comparable store sale gains in the United States and Asia, along with the benefit of new store openings globally, which offset a comparable store sales decline in Europe.
Operating profit for the quarter was $13.6 million, down from $40.1 million in the prior year period. Operating profit excluding restructuring costs was $20.1 million, down $20.4 million versus comparable prior year levels. Profit declines were driven by anticipated pressures on gross margins and increased costs related to investments in support of growth strategies, including global business expansion and development of Timberland’s brand portfolio.
Restructuring and related costs jumped to $6.5 million from $481,000, due to Timberland’s decision to license its North America wholesale apparel business. Overall operating costs grew to $148 million from $133.9 million.
Stride Rite Q2 profit falls
The Stride Rite Corp. (NYSE: SRR), which includes the Saucony and Hind brands, said fiscal second-quarter profit fell 16 percent as wholesale sales in its children’s group fell. The company is being bought by Payless ShoeSource (NYSE: PSS) for about $800 million, in a deal announced in May.
Net income for the quarter dropped to $14.2 million, or $0.38 per share, from $16.9 million, or $0.45 per share in the year-ago quarter.
The company said results were hurt by $0.09 per share by a higher tax rate. Results also include $800,000 in pretax expenses related to Robeez integration costs and the company’s pending acquisition by Payless ShoeSource Inc. Excluding acquisition and integration costs, net income would have been $0.39 per share, it added.
Revenue rose 8 percent to $209.2 million from $194 million last year.
Children’s Group wholesale sales fell 16 percent to $15.4 million, while retail sales rose 4 percent to $58 million. Other wholesale sales, including Keds, Sperry Top-Sider, Saucony and Hind rose 8 percent to $117.2 million.
The company reaffirmed earnings guidance between $1.10 and $1.15 per share for fiscal 2007. It expects revenue to grow 5 percent to 8 percent for the year, excluding integration and acquisition costs.
West Marine lowers 2007 profit outlook
Shares of West Marine (Nasdaq: WMAR) slipped June 26 after the company trimmed its outlook for 2007 earnings and same-store sales. The retailer said it cut its full-year earnings guidance and same-store sales outlook due to weakness in a key boating market and disappointing revenue.
The company said it now anticipates 2007 net income in a range of $0.24 to $0.34 per share, down from its prior forecast for a profit between $0.45 and $0.55 per share.
West Marine said it anticipates same-store sales falling between 1.5 percent and 2.5 percent. It previously forecast a 1 percent to 2 percent increase.
West Marine sees full-year revenue between about $683 million and $688 million, which would miss analyst estimates of $701.4 million.
Shares of West Marine dropped as low as $0.90 to $12.69 in June 26 trading and closed at $13.34. The stock has traded in a 52-week range of $11.03 to $18.38.
GSI maintains Q2 ’07 guidance
GSI Commerce (Nasdaq: GSIC), an e-commerce website creator and operator, said it still anticipates posting a second-quarter loss of $6.5 million to $7.5 million, or $5 million to $6 million on an adjusted basis.
It also reiterated its expectation of reporting sales of between $125 million and $135 million for the quarter. The company maintained its earlier 2007 guidance, saying it still expects net income of $38 million to $41 million for the year, or $12 million to $15 million on an adjusted basis. The company expects 2007 revenue of $710 million to $760 million.
Additionally, GSI said it’s planning a private offering of $100 million in unsecured convertible senior notes due 2027. It also plans to offer up to an additional $25 million in notes to cover over-allotments.
The company said it would use proceeds from the offering for working capital and general corporate purposes, including possible acquisitions.
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