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Timberland Reports Third-Quarter 2010 Results

^{Published on 2010-11-04 07:51:11 - Market Wire}
 

STRATHAM, N.H.--([ BUSINESS WIRE ])--The Timberland Company (NYSE: TBL) today reported third-quarter 2010 net income of $52.2 million and diluted earnings per share of $1.00. These results compare to third-quarter 2009 net income of $37.8 million and diluted earnings per share of $0.68.

Third-Quarter 2010 Results Summary:

• Revenue increased 2.5% to $432.3 million compared to the prior year period, reflecting growth across Europe and Asia, partially offset by a decline in North America. Foreign exchange rate changes decreased third-quarter 2010 revenue by approximately $11.4 million, or 2.7%.
• Europe revenue increased 5.0% to $204.1 million versus 2009 third-quarter levels, and increased 12.3% on a constant dollar basis. Growth in Scandinavia, distributor markets, and Germany was partially offset by unfavorable foreign exchange rates as well as declines in the Benelux region and Italy. North America revenue declined 3.6% to $181.5 million compared to the prior year period, impacted by decreased sales of wholesale footwear. Asia revenue increased 19.7% to $46.7 million compared to the prior year period, and increased 13.3% on a constant dollar basis. This increase was driven by continued expansion in China and Taiwan as well as favorable foreign exchange rates compared to the prior year period.
• Global footwear revenue was essentially flat at $319.8 million compared to the third quarter of 2009. Apparel and accessories revenue increased 11.1% to $106.4 million compared to the prior year period, due to increased sales of Timberland® brand apparel in Asia and SmartWool® accessories in North America. Royalty and other revenue declined 9.8% to $6.1 million compared to the prior year period.
• Global wholesale revenue was up 1.9% to $348.7 million compared to the prior year period, reflecting growth in Europe and Asia, partially offset by declines in North America. Worldwide consumer direct revenue increased 5.2% compared to the prior year period, driven by comparable store sales growth in all three regions and the net addition of 8 new retail stores since the third quarter of 2009. Global retail comparable store sales improved 7.2%. The Company had 225 stores, shops, and outlets worldwide at the end of the third quarter of 2010 compared to 217 at the end of the third quarter of 2009.
• Operating income for the third quarter of 2010 increased 13.8% to $66.5 million compared to operating income of $58.5 million in the prior year period. The improvement was driven by a significant improvement in gross margin across all regions due to fewer and more profitable closeout sales as well as favorable mix.
• In the third quarter of 2010, the effective tax rate was 27.6% compared to 38.2% in the third quarter of 2009.
• In connection with its stock buyback program, the Company repurchased approximately 1.7 million shares in the third quarter of 2010 at a cost of approximately $30.0 million.
• The Company ended the quarter with $108.8 million in cash and no debt. Accounts receivable was flat at $269.0 million compared to the prior year period. Inventory at quarter end was $239.8 million, up 18.9% versus 2009 third-quarter levels.

Jeffrey B. Swartz, Timberlanda™s President and Chief Executive Officer, stated, aWe are pleased to report revenue growth and significant earnings improvement for the third quarter. Our 2010 financial results to date are a clear indication that our focused strategic investments to strengthen the Timberland^® brand and business are paying off. We see concrete evidence across our portfolio from strong retail comps and continued wholesale growth to significant improvement in the sales of our outdoor and Earthkeepers^TM collections, supported by our largest-ever marketing campaign, Nature Needs Heroes^TM. We continue to position Timberland as a brand that engages consumers, demonstrates environmental leadership and delivers superior returns for our shareholders."

As previously announced, the Company will be hosting a conference call to discuss third-quarter results today at 8:25 AM Eastern Time. Interested parties may listen to this call through the investor relations section of the Companya™s website, [ www.timberland.com ], or by calling 706.643.2916and providing access code number 65649220. Replays of this conference call will be available through the investor relations section of the Companya™s website.

Timberland (NYSE: TBL) 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^®, howies^®, Mountain Athletics^® and IPATH^® brands, all of which offer quality workmanship and detailing and are built to withstand the elements of nature. Timberlanda™s products can be found in leading department and specialty stores as well as Timberland^® retail stores throughout North America, Europe, Asia, Latin America, Africa and the Middle East. More information about Timberland is available in its reports filed with the Securities and Exchange Commission (SEC).

Certain statements in this press release may be aforward-looking statementsa within the meaning of the federal securities laws that are subject to material risks and uncertainties. These forward-looking statements are not guarantees of future financial performance or expected benefits. Many factors could affect our current expectations and our actual results, and could cause results to differ materially. Such factors include, but are not limited to: (i) Timberlanda™s ability to successfully market and sell its products in a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) Timberlanda™s ability to execute key strategic initiatives; (iii) Timberlanda™s ability to procure a majority of its products from independent manufacturers; (iv) changes in foreign exchange rates; (v) Timberlanda™s ability to obtain adequate materials at competitive prices; and (vi) other factors, including those detailed from time to time in Timberlanda™s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other filings we make with the SEC. Timberland undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

This press release includes discussion of constant dollar revenue change (which excludes the impact of changes in foreign currency exchange rates), which is a non-GAAP measure. As required by SEC rules, the Company has provided reconciliations of this measure on attached tables that follow its financial statements. Additional required information regarding this non-GAAP measure is located in the Form 8-K furnished to the SEC on November 4, 2010.

Constant dollar revenue changes, which exclude the impact of changes in foreign exchange rates, are not Generally Accepted Accounting Principle (aGAAPa) performance measures. We calculate constant dollar revenue changes by recalculating current year revenue using the prior yeara™s exchange rates and comparing it to prior year revenue reported on a GAAP basis. We provide constant dollar revenue changes for Total Company, North America, Europe, and Asia revenues because we use the measures to understand the underlying results and trends of the business segments excluding the impact of exchange rate changes that are not under managementa™s direct control. We have a foreign exchange rate risk management program intended to minimize both the positive and negative effects of currency fluctuations on our reported consolidated results of operations, financial position and cash flows. The actions taken by us to mitigate foreign exchange risk are reflected in cost of goods sold and other, net.