Press Release:
First quarter revenue increased 10.1% to $349.0 million, up 8.5% on a constant dollar basis
Global retail comparable store sales increased 8.2% versus prior year period, and increased 9.6% in North America
First quarter diluted earnings per share was $0.35, compared to $0.47 last year
STRATHAM, N.H.–(BUSINESS WIRE)– The Timberland Company (NYSE:TBL – News) today announced first quarter revenue of $349.0 million, a 10.1% increase compared with revenue of $317.0 million for the same period of 2010. First quarter net income declined 30.2% to $18.0 million, or $0.35 per diluted share, compared with net income of $25.7 million, or $0.47 per diluted share, for the same period of 2010.
“Earthkeepers and Outdoor Adventure drove healthy growth this quarter, positive proof that we are on the path toward a stronger and healthier brand and business,” said Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer. “We are making intentional strategic investments as we seek to deliver another year of top line growth, operating margin expansion, and appropriate earnings per share growth. We are confident we have the right strategy and team in place to be the number one outdoor brand on Earth.”
First Quarter Results:
Revenue increased 10.1% compared to the prior year period and was up 8.5% on a constant dollar basis, reflecting growth across North America, Europe, and Asia.
North America revenue increased 8.3% to $132.0 million compared to the prior year period, driven by growth across all brands, channels, and genders, including double digit growth in men’s footwear.
Europe revenue increased 9.3% to $165.7 million, 8.3% on a constant dollar basis, led by strong performance in men’s and kids’ footwear at wholesale.
Asia revenue increased 17.8% to $51.3 million compared to the prior year period, and increased 10.0% on a constant dollar basis, fueled by continued expansion in China, comparable store growth, and new store openings in Taiwan and Hong Kong. Asia’s strong performance was driven by double digit growth in retail apparel and accessories revenue.
Global footwear revenue increased 10.0% to $248.2 million from the first quarter of 2010, led by double digit growth in men’s and women’s footwear in North America and men’s and kids’ footwear in Europe. Apparel and accessories revenue increased 10.0% to $94.2 million, reflecting growth in every region.
Global wholesale revenue was up 8.6% to $252.0 million compared to the prior year period. North America and Europe led the favorable year over year comparison, delivering high single-digit wholesale revenue growth. Worldwide consumer direct revenue increased 14.0% to $97.0 million compared to the first quarter of 2010, with growth in all regions. The Company ended the quarter with 229 company-owned stores, a net addition of eight stores compared to the first quarter of 2010, and a net addition of one store compared to the fourth quarter of 2010.
Operating income for the first quarter of 2011 was $27.9 million, down 29.2% compared to operating income of $39.4 million in the prior year period.
Gross margin declined 300 basis points to 46.8%, with higher product costs more than offsetting the positive impacts of double digit revenue growth and product mix. The Company expects higher product costs to continue through 2011; however, the Company expects a positive impact from strategic price increases in the back half of the year.
Operating expenses as a percentage of revenue were 38.8% compared to 37.4% in the prior year period. The increase in operating expenses was driven by planned investments in retail, advertising, and enterprise systems initiatives, variable costs associated with strong revenue growth and higher employee related costs. Operating expenses in the first quarter of 2010 included a gain of $1.5 million from the termination of a licensing agreement.
In the first quarter of 2011, the effective tax rate was 39.1% compared to 34.3% in the first quarter of 2010.
See page 2 for more results
The Company ended the quarter with $265.3 million in cash and no debt. Accounts receivable increased 13.2% to $178.5 million compared to the prior year period, driven by revenue growth and the timing of sales. Inventory at quarter end was $186.9 million, an increase of 36.5% over a low level in the prior year quarter, driven by the outlook for the remainder of the year, higher product costs, and strategic purchases of core product.
Webcast Information
As previously announced, the Company will be hosting a conference call to discuss first quarter 2011 results today at 8:25 AM Eastern Standard Time. Interested parties may listen to this call through the investor relations section of the Company’s website, www.timberland.com, or by calling 706.643.2916 and providing access code number 40288472. Replays of this conference call will be available through the investor relations section of the Company’s website.
About Timberland
Timberland (NYSE:TBL – News) 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®, and Mountain Athletics® brands, all of which offer quality workmanship and detailing and are built to withstand the elements of nature. Timberland’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).
