Timberland sees fall in 1Q revenue

The Stratham-based Timberland Company reported a decrease in first-quarter 2006 revenues due in part to dollar gains in international markets, declines in domestic boot sales and negative foreign exchange impacts.
Net income decreased from record highs of 2005, the company said.

Timberland’s consolidated revenue decreased slightly by 1.2 percent to $349.8 million for first quarter 2006. On a constant dollar basis first quarter revenue grew by 2.4 percent. Net income decreased by 30.9 percent to $29.2 million from record numbers in 2005.

Operating profit for the first quarter was $42.3 million and included impacts of a restructuring charge of 500,000 related to the closure of Timberland’s Puerto Rico manufacturing operations and an establishment of a European finance shared service center.

Gross margin for the Company declined 250 basis points driven by product mix impacts reflecting lower boot sales, higher product costs and relatively higher levels of sales discounts and allowances.

Operating expenses increased 6.9 percent to $133.9 million in first quarter 2006. The increase reflects higher costs associated with business portfolio development, investments in international expansion and higher costs associated with share-based payment compensation reflecting new accounting requirements.

Diluted earnings per share decreased 26.2 percent to 45 cents, down from 61 cents for same quarter 2005. Cash at the end of the quarter was $125.3 million with no outstanding debt.

Timberland’s financial outlook for the remainder of 2006 have been modified to incorporate the impact of provisional anti-dumping duties on EU footwear sourced in China and Vietnam, the company said.

The company is targeting flat to modest revenue growth and declines in comparable earnings per share in the 20 percent to 25 percent range. – TRACIE STONE

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