28.7.2006. Meldung: The Timberland Company: Second Quarter Results

Timberland Reports Second Quarter Results
Wednesday July 26, 7:00 am ET

STRATHAM, N.H.-- July 26, 2006--The Timberland Company today reported a second quarter net loss of $13.0 million and diluted earnings per share (EPS) of ($0.21), compared with second quarter 2005 net income of $6.3 million and diluted EPS of $0.09. For the purpose of comparison, Timberland estimates that its 2005 diluted EPS would have been approximately $0.07 in the second quarter, including costs related to stock options and its employee stock purchase plan. Second quarter 2006 results included pre-tax costs of $0.4 million related to the Company"s establishment of a European finance shared service center and the final closure of its Puerto Rico manufacturing facility. Excluding these restructuring costs, EPS would have been ($0.20).

* Second quarter revenue decreased 5.7% to $226.6 million as gains in international markets and growth in U.S. casual, outdoor, and industrial categories were offset by anticipated declines in U.S. boots and kids" sales. Foreign exchange rate changes reduced second quarter revenues by $1.3 million, or 0.6%.
* International revenue increased 1.1%, or 2.3% on a constant dollar basis, supported by growth in southern Europe, distributor markets, Canada, and Japan. U.S. revenues decreased 10.9%, due primarily to declines in boots and kids" sales, which offset benefits from the addition of the SmartWool® brand to the Company"s product portfolio and strong growth in key expansion categories such as Timberland PRO® series footwear and men"s casual footwear and apparel.
* Second quarter results reflected global gains in apparel and accessories revenue, which offset anticipated declines in footwear revenue. Apparel and accessories revenue increased 20.0% to $71.5 million supported by growth in Timberland® apparel sales globally and the addition of SmartWool. Global footwear revenues fell 15.1% to $150.8 million as strong gains in Timberland PRO® series and men"s casual footwear partially offset declines in boots and kids", which were impacted as expected by proactive steps to improve stock-to-sales ratios at U.S. accounts.
* Global wholesale revenue decreased by 7.5% to $156.1 million. Worldwide consumer direct revenue declined slightly to $70.5 million, reflecting a 5.6% decrease in global comparable store sales.
* The operating loss for the quarter was $20.9 million, compared to an $8.4 million operating profit in the prior year period. The operating loss excluding the above noted restructuring costs was $20.4 million. These results were consistent with the Company"s performance expectations, reflecting anticipated gross profit pressures from lower boot sales, including impacts from higher product returns and clearance sales, as well as investments in new businesses and international expansion. For the quarter, foreign exchange rate changes reduced the operating loss by approximately $1.7 million reflecting favorable changes in hedge rates compared to the prior year period.
* Timberland ended the quarter with $108.1 million in cash and no debt outstanding while continuing to support its share repurchase program. Timberland repurchased 1.2 million shares in the second quarter at a total cost of $34.6 million. Timberland effectively controlled working capital levels despite lower Timberland® brand revenues and impacts from the addition of new businesses. Inventory at quarter end was $211.0 million, 2.5% lower than at the end of the 2005 second quarter. Timberland"s accounts receivable decreased 3.8% to $125.7 million.
* Timberland continues to target flat to low single-digit revenue growth for the full year and expects declines in comparable EPS performance in the 25% range, which is at the lower end of its previously stated profit range. For the purpose of EPS comparisons, Timberland estimates that its 2005 EPS would have been approximately $2.35 after excluding restructuring and related costs and including costs related to stock options and its employee stock purchase plan. This outlook includes the impact of provisional anti-dumping duties on European Union (EU) footwear sourced in China and Vietnam, which the Company now estimates will lower profits in the range of $7-$8 million in 2006.
* For the third quarter, Timberland expects flat revenue growth and gross margin declines in the 400 basis point range. For the fourth quarter, it is targeting relatively improved performance, with high single-digit revenue growth and more moderate gross margin pressure. Timberland will continue to support investment against its growth strategies, including continued global expansion and development of Timberland"s business portfolio, which will likely contribute to low double-digit second half operating expense growth, with higher cost growth in the third quarter.

Jeffrey B. Swartz, Timberland"s President and Chief Executive Officer, stated, "As anticipated, we saw pressure on our overall results, impacted in part by proactive steps taken to maintain Timberland"s premium brand positioning. Our strategy remains intensely focused on building a global portfolio of premium brands sharing standout values by providing innovative, authentic solutions for consumers. Through efforts focused on leveraging consumer insight and segmentation to elevate and expand our presence in targeted growth categories, we drove continued progress this quarter in developing our casual, outdoor and industrial businesses, and expanding our global reach. We believe the development of our global business portfolio will provide a strong foundation for sustaining our long-term growth and building Timberland"s value as a brand and enterprise."

Note that comments made by the Company and Mr. Swartz are Timberland"s performance targets, based on current expectations. These comments are forward-looking, and actual results may differ materially.

As previously announced, Timberland will be hosting a conference call to discuss second quarter results today at 8:25 AM Eastern Time. Interested parties may listen to this call through the investor relations section of the Company"s website, www.timberland.com, or by calling 617-614-6205 and providing access code number 45581919. Replays of this conference call will be available through the investor relations section of the Company"s website.

Timberland (NYSE: TBL - News) is a global leader in the design, engineering and marketing of premium-quality footwear, apparel and accessories for consumers who value the outdoors and their time in it. Timberland markets products under the Timberland®, Timberland PRO®, SmartWool®, Timberland Boot Company(TM) and Mion(TM) brands, all of which offer quality workmanship and detailing and are built to withstand the elements of nature. The Company"s products can be found in leading department and specialty stores as well as Timberland® retail stores throughout North America, Europe, Asia, Latin America, South Africa and the Middle East. More information about Timberland is available in the Company"s reports filed with the Securities and Exchange Commission (SEC).


The Timberland Company
Karen Blomquist, 603-773-1212
Senior Manager, Investor Relations

Source: The Timberland Company
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