A turnaround is finally in sight. The revenues of Timberland were flat at $421.8 million in the third quarter, but rose by 1.7 percent excluding foreign currency effects, which decreased the total by about $9 million. The sales figures reflected strong growth in boots in Europe and in the SmartWool brand, offset by declines in casual footwear and Timberland apparel.
On the other hand, net income grew by 23.1 percent to $37.8 million for the quarter, ended on Oct. 2. The gross profit margin fell by 0.4 percentage points to 46.1 percent, but operating income was up by 10.0 percent to $58.5 million. In the quarter, foreign exchange rate changes depressed operating income by approximately $7 million.
European revenues decreased by 2.3 percent to $195.2 million, but this was a growth of 3.3 percent on a constant currency basis. Sales in North America increased by 2.0 percent to $188.2 million, reflecting strong growth in the kids’ boot business and in the SmartWool brand. Asian turnover fell by 2.3 percent to $38.3 million, and decreased by 9.1 percent on a constant dollar basis, driven by declines in casual footwear and apparel. That was partially offset by a strengthening of the men’s and kids’ boots businesses.
Global footwear revenues increased by 1.8 percent to $319.1 million, while apparel and accessories declined by 6.7 percent to $95.8 million, with softness across all regions.
The global wholesale turnover was relatively flat at $342.2 million, while retail sales fell by 4.2 percent to $79.5 million, reflecting the adverse impact of foreign exchange and weakness in North American outlet stores. Retail stores in the U.S. had a 14.6 percent drop in comparable store sales, while comparable store sales outside the domestic market fell by 6.6 percent.
In connection with its stock buyback program, Timberland repurchased about 755,000 shares during the quarter, at a cost of approximately $10 million.
In Europe, Timberland has opened its first store that features all the brands of the group. The 350-square-meter selling surface in downtown Munich features Timberland, SmartWool, Ipath (shoes and apparel for action sports) and Abington (high-end boots). The store also presents Timberland’s Howies brand, which is available in Germany for the first time. Howies markets ecological and sustainable streetwear. Timberland acquired the Welsh brand in 2006.
For the fourth quarter, Timberland expects strength in SmartWool as well as its Pro products, but mixed results for its own branded products. It is looking to Earthkeepers, Classics and Mountain Athletics going forward
