Timberland Vague on Second Half

NEW YORK — Economic woes continued to plague Timberland Co. during the second quarter, as the Stratham, N.H.-based company failed to show improvement on several quarters of losses.

“From our perspective, the global consumer crisis is unabated at the moment,” Timberland President and CEO Jeffrey Swartz said on a conference call. “But we believe that despite the pain generated by this crisis, well-led brands and businesses can emerge from this crucible stronger and more able.”

Executives indicated excitement over several new footwear initiatives, including the Earthkeepers, Classics and Mountain Athletic collections, but had little to offer by way of guidance for the remainder of the year, citing poor visibility. The company also declined to give an exact backlog number, instead noting increased penetration in more doors for several of its lines.

As for the second half, said Swartz, “retailers are holding up [on allocating] dollars. … We are in a position to fulfill demand. If we can create the third-quarter sell-through, it means fourth-quarter fillings.”

The company’s limited guidance did little to assuage Robert W. Baird & Co. analyst Mitch Kummetz, who lowered his full-year estimate on Timberland earnings per share to 62 cents from 70 cents. The full-year EPS consensus of analysts polled by Yahoo Finance is 74 cents.

“With regard to its big ideas, Timberland seems to be making some progress,” said Kummetz, “but we don’t see this being much of an offset to the tough environment over the near term.”

Kummetz said he expects the second half will lessen the pressures on Timberland, as foreign-exchange issues lift and comparisons ease, but, he added, “we suspect that the company’s overall fall orders are weak, and we believe that back-half reorders could be challenging as well.”

Kate McShane, an analyst from Citigroup, reiterated her “sell” rating on the stock, noting that even with easy U.S. and European comparisons for second-quarter sales, Timberland still turned in soft results in both regions.

She noted several concerns about the company’s future business, including “a prolonged turnaround for Timberland as retailers focus on top brands in a tougher retail environment” and “additional top-line risk from weaker orders and potential cancellations.”

Timberland last week reported a 2 percent loss for the quarter ended July 3, to $19.2 million, or 34 cents a share, versus $18.9 million, or 32 cents, from the second quarter of 2008. Analysts had expected a 30 cent loss.

Sales decreased by 14 percent to $179.7 million, compared with $209.9 million in the year-ago period. Trouble in the casual footwear business led to an overall footwear sales decline of 11 percent, to $127 million, while apparel and accessories revenue dropped 25 percent to $47.2 million.

For the first six months, Timberland’s net loss increased to $3.4 million, or 6 cents a share, from a loss of $900,000, or 2 cents, in the first half of last year. First-half sales came in at $476.4 million, down 13 percent from the year-ago period.

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