After a tough first quarter, Timberland’s turnaround could take longer than expected.
The Stratham, N.H.-based company’s results missed analyst estimates, and market watchers said an uncertain macro-economic environment could impact the firm going forward.
“[There is] additional top-line risk from weaker orders and potential cancellations, as retailers continue to right-size inventories to keep up with slowing consumer demand,” said Citigroup analyst Kate McShane.
On the bright side, the firm did see improvements in its gross margin, which was up 750 basis points in the quarter.
“The company is slowly regaining some momentum, but this will likely be masked by negative foreign exchange in the back half of the year,” said Mitch Kummetz, an analyst at R.W. Baird. “Moreover, we don’t see as much margin opportunity over the balance of the year as was achieved in the first half.”
Timberland CFO Carrie Teffner said the company is focused on growing its top line across North America, Asia and Europe, as well as working with its suppliers and customers to mitigate supply-chain challenges.
The company continued to see revenue improvements and reported that sales in all regions were up for the quarter, with the strongest growth coming from Asia, at 10 percent. Total group revenue for the quarter rose 5 percent to $189 million. Global footwear sales rose 4 percent to $132 million, while apparel and accessories revenue increased 10 percent to $52 million.
For the period ended July 2, Timberland reported a net loss of $23.5 million, or 44 cents a share, compared with a net loss of $19.2 million, or 34 cents, in the same quarter a year ago. Analysts polled on Yahoo Finance had been expecting, on average, a loss of 34 cents. The bottom line was adversely impacted by a $13.2 million non-cash, pre-tax charge for the impairment of certain goodwill and intangible assets that are primarily related to the company’s Howies and Ipath brands.