The progressively rising provisional anti-dumping duties charged in Europe against Far Eastern leather shoes are taking their toll on Timberland, but poor boot sales are weighing even heavier on the company, which reported an operating loss of $20.9 million for the 2nd quarter. The duties are expected to cost Timberland $4-5 million in the 3rd quarter and about $7-8 million on a pre-tax basis for the whole year. The company’s net loss for the 2nd quarter totaled $12,972,000, as compared to a profit of $6,345,000 one year ago, on sales that dropped by 5.7 percent to $226.6 million. The gross margin was off by 380 basis points at 45.3 percent.

Turnover in Europe increased by 1 percent, thanks to double-digit growth in apparel and casual footwear, offset by lower sales of children’s footwear and outdoor performance shoes. Sales were higher in Italy and Spain in the period, but they declined in France and the UK. Turnover in Asia increased by 2 percent and was driven by growth in Japan and Taiwan, while all other markets in the region remained soft. In the USA, wholesale turnover fell by 13 percent to $87.4 million, while direct sales to consumers were off by 5 percent, down to $33.2 million, and retail sales slid by 6.6 percent. Global retail sales were off by 5.6 percent.

While apparel and accessory sales expanded by 20 percent to $71.5 million, global footwear turnover fell by 15 percent to $150.8 million because of lagging boot sales. Difficulty in the company’s boot business has become a recurring problem, but Timberland said some of the recent softness reflects an earlier decision by the company to re-align distribution within the segment. Timberland’s signature yellow boot will no longer be sold in company retail outlets in the 2nd half, and the loss of sales from this move are not expected to be made up for by strong turnover anticipated from apparel and accessories. For the full year, Timberland is projecting revenues to climb in the low single digits and expects earnings to drop by roughly 25 percent to $112.5 million.