|
SECURITY: TBL
EXCHANGE: New York Stock Exchange CURRENCY: US Dollar
The Timberland Company
designs, engineers and markets premium quality footwear, apparel and accessories
under the Timberland® brand name and the Timberland PRO™ series sub-brand.
Timberland® products for men, women and children include premium boots,
casual shoes, hiking boots and boat shoes, as well as outdoor-inspired
apparel and accessories built to withstand the elements of nature. The
Timberland PRO™ series is engineered to meet the demands of the professional
worker.
http://www.timberland.com/
Timberland
Reports First Quarter Results
STRATHAM, N.H.--(BUSINESS
WIRE)--May 2, 2006--The Timberland Company (NYSE: TBL) today reported first
quarter net income of $29.2 million and diluted earnings per share (EPS)
of $0.45, compared with first quarter 2005 net income of $42.2 million
and diluted EPS of $0.61. For the purpose of comparison, Timberland estimates
that its 2005 diluted EPS would have been approximately $0.58 in the first
quarter, including costs related to stock options and its employee stock
purchase plan. First quarter 2006 results included pre-tax costs of $0.5
million related to the final closure of the Company's Puerto Rico manufacturing
facility and its establishment of a European finance shared service center.
These restructuring costs had an immaterial impact on EPS.
First quarter revenue
decreased 1.2% from strong prior-year results to $349.8 million as constant
dollar growth in international markets and gains in the U.S. were offset
by foreign exchange impacts. On a constant dollar basis, first quarter
revenue expanded 2.4%. U.S. revenue grew 1.7%, benefiting from Timberland's
recent acquisition of SmartWool and from gains in targeted expansion categories
such as the Timberland PRO(R) series, outdoor performance and casual which
offset anticipated declines in boot sales. International revenue decreased
3.5%, reflecting significant changes in foreign exchange rates over the
past year. On a constant dollar basis, International revenue grew 3.0%,
supported by gains in Asia and Canada. Foreign exchange rate changes reduced
first quarter 2006 revenue by $12.9 million or 3.6%.
First quarter results
reflected global gains in apparel and accessories revenue, which offset
a modest decline in footwear revenue. Apparel and accessories revenue increased
8.0% to $91.4 million supported by growth in Timberland(R) apparel sales
globally and the addition of the SmartWool(R) brand to the Company's product
portfolio. Global footwear revenues fell 4.5% to $253.9 million as strong
gains in men's casual and Timberland PRO series footwear offset declines
in boots, outdoor performance and kids'.
Global wholesale revenue
expanded 1.4% to $279.6 million. Worldwide consumer direct revenue declined
10.6% to $70.2 million, reflecting a 10.8% decrease in global comparable
store sales due to warm weather conditions in the U.S., later Easter timing
and lower excess product sales globally in Timberland(R) outlet stores.
Operating profit for
the quarter was $42.3 million, including the above noted restructuring.
Operating profit excluding restructuring costs was $42.7 million, 31.0%
below the prior-year level. Comparable operating margins decreased 530
basis points to 12.2%, reflecting lower gross margins and higher levels
of operating costs driven by investments in new businesses and international
expansion. For the quarter, foreign exchange rate changes reduced operating
profit by approximately $2.5 million.
EPS for the quarter decreased
26.2% from the prior-year level as the decrease in operating profit was
partially offset by benefits from lower levels of shares outstanding. During
the quarter, the Company bought back 1.0 million shares at a total cost
of $34.5 million.
Timberland ended the
quarter with $125.3 million in cash and no debt outstanding. The addition
of the Company's new SmartWool and Mion businesses contributed to moderate
increases in working capital levels. Timberland's accounts receivable increased
2.4% to $192.1 million, with all of the increase associated with its recent
acquisition of SmartWool. Its inventory at quarter end was $174.9 million,
8.6% higher than at the end of the 2005 first quarter, with the bulk of
this growth related to SmartWool and the expansion of the Company's Mion(TM)
and Timberland Boot Company(TM) brands.
While the Company's first
quarter results were largely in line with its expectations, it is modifying
its 2006 financial outlook to incorporate the impact of provisional anti-dumping
duties on European Union (EU) footwear sourced in China and Vietnam, proactive
steps that it is taking to ensure balanced inventory positions for its
retail partners in the U.S. boot business and continued soft trends in
U.S. boots. For 2006, the Company is now targeting flat to modest revenue
growth and declines in comparable EPS in the 20-25% range. For the purpose
of comparison, Timberland estimates that its 2005 EPS would have been approximately
$2.35, after excluding restructuring costs and including costs related
to stock options and its employee stock purchase plan. Included in this
outlook is an increase in the Company's overall effective tax rate to 34.5%
due to the imposition of provisional EU duties.
Impacts from these factors
are expected to be greatest in the second quarter of 2006. Timberland anticipates
second quarter sales declines in the mid single-digit range and an operating
loss in the $20-$25 million range. For the second half, it also expects
lower comparable earnings - impacted by anticipated pressure on third quarter
results. In the third quarter, the Company now expects low single-digit
revenue growth overall and gross margin declines in the 300-400 basis point
range - including impacts from EU duties in the $5-6 million range. For
Q4, it is targeting improved performance, with mid single-digit revenue
growth and more moderate gross margin pressures.
|
