The Stratham, N.H.-based company said it is pushing ahead with its repositioning effort after posting double-digit declines in fourth-quarter profits and revenues last Thursday.
“The hard choices and the hard work necessary to restore the Timberland brand to health began well before the current downturn,” Timberland President and CEO Jeffrey Swartz said in a conference call. “So we believe we are well prepared to operate our brand successfully despite the volatility seen in 2008 and anticipated in 2009.”
Swartz said the company’s strong financial position will also help it weather the economic crisis. “Cash is king, and the balance sheet comes first,” Swartz said. The company ended 2008 with $217 million in cash, $418 million in working capital and no debt.
While overall sales have remained weak — global footwear revenues fell 8 percent during the fourth quarter — Swartz said there are bright spots.
The CEO was upbeat about two recent product launches — the Earthkeepers collection and Timberland Mountain Athletics — and cited improvements in the company’s classic boot business.
In a research note, Mitch Kummetz, an analyst with Robert W. Baird & Co., said Timberland could pick up some market share this fall if its boots continue to perform well at retail. Still, any uptick will likely be overshadowed by other challenges, at least for the near-term, according to Kummetz. “We expect Timberland’s fi rst-half sales to be weak, exacerbated by the licensing of apparel in North America and the closing of some retail stores,” the analyst wrote in a research note last week. “For the back half of the year, we expect retailers to be cautious.”
For the three months ended Dec. 31, Timberland said income dropped 46 percent to $13.1 million, or 23 cents a share, from $24.1 million, or 40 cents, in the year-ago quarter.
Revenues decreased 12 percent to $390.6 million from $442.7 million, reflecting, in part, the closure of 28 stores globally as the firm transitions to a licensing model for its North American apparel business, as well as declines in its global Timberland branded footwear and international apparel businesses.
Domestic comparable-store sales were down 16.4 percent in the quarter, while comps outside North America decreased 8.4 percent.
For the year, income grew 7 percent to $42.9 million, or 73 cents, from $40 million, or 65 cents, in the year-ago period. Revenues were down 5 percent to $1.36 billion from $1.44 billion.