Revenues fell by 14.4 percent at Timberland in the second quarter ended July 3, hitting $179.7 million. The gross margin fell by 1.9 percentage points to 42.0 percent of sales due to higher product costs, currency effects, lower margins on off-price business and higher provisions for inventories. The company’s operating loss worsened to $36.4 million compared with a loss of $30.0 million for the same period in 2008.
The company's net loss increased, though not as significantly, to $19.2 million against a loss of $18.9 million last year.
Timberland noted that $11 million of the drop in sales, or 5.3 percent, was the result of currency exchange rates among the U.S. dollar, the pound and the euro.
European sales fell by 16.6 percent to $65.7 million, but excluding currency effects this was a drop of 2.5 percent. Men’s and women’s boots sold well in Europe, but could not offset the declines in apparel, outdoor and casual footwear. There were also decreases in Asia (down by 12.3 percent to $27.7 million), where Timberland saw the same dynamics as in Europe, and North America (down by 13.3 percent to $86.3 million), where it was hurt by a poor consumption climate.
Footwear fared the best, with sales sliding by 11.2 percent to $127.0 million. Boots were strong in both Europe and Asia. Apparel and accessories dropped by 24.6 percent to $47.2 million while royalty and other revenues declined by 26.7 percent to $5.5 million.
Wholesale revenues contracted by 20.3 percent to $108.4 million; consumer-direct revenues only crept down by 3.5 percent to $71.3 million. Comparable store sales outside the U.S. dropped by 2.5 percent; in the domestic market they fell by 8.2 percent.
Timberland would not provide guidance for the full year, citing “the continued volatile nature of current economic conditions.” It did, however, say that it had strong orders for some key brands, such as Earthkeepers, Mountain Athletics and Classics (more in Shoe Intelligence).
