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Timberland Q1 Revenues Up 19%%
APRIL 21, 2004 --
The Timberland Co. reported Q1 net income of $31.1 million and diluted EPS of $0.87, compared to net income of $19.3 million and diluted EPS of $0.53. Q1 revenue increased 18.7% to $321.8 million, driven by strong gains across global markets.
International results (+28.7%, or +14.6% in constant dollars) reflected double-digit constant-dollar sales gains in Europe and Asia and continued progress in key markets such as Canada. US revenue growth (+9.0%) benefited from strong wholesale results (+7.1%) and continued gains in Timberland's consumer direct business (+15.1% on a 6.1% comparable-store sales increase).
Overall revenue growth benefited from favorable foreign exchange rate changes, which added $18.9 million (or 7.0%) to Q1 revenue, and from additional selling days in Q1 2004, compared with the prior year.
Global footwear revenue expanded 23.6% to $239.4 million, driven by strong growth in men's and women's casual, boots and kids' categories. Global apparel and accessories revenue grew 7.6% to $79.3 million, driven by gains in Asian and US Timberland brand apparel, which offset constant-dollar declines in European and US Timberland PRO® series apparel.
Operating profit for the quarter increased 61.7% to $47.8 million, and operating margin rose 390 bps to 14.8%. Profit gains reflected strong revenue growth and significant improvement in gross margin, which benefited from favorable product mix, lower product related costs and favorable foreign exchange rate changes.
For the quarter, foreign exchange rate changes contributed approximately $12.8 million to operating profit, which was leveraged to support continued investments against strategic priorities, including international retail expansion, product development initiatives and global brand building efforts.
EPS for the quarter expanded 64.2% to $0.87, reflecting profit gains and continued benefits from share repurchases. In Q1, the company bought back 333,000 shares at a total cost of $20.1 million. The company currently has 4.3 million shares remaining under existing share repurchase programs.
Jeffrey Swartz, Timberland's president/CEO, stated, "Timberland delivered record revenue and profit results in the first quarter, driven by strong performance across global markets and continued benefits from our focus on supply chain execution. In the United States, our focus on driving footwear innovation across our portfolio, combined with strong performance in Timberland's consumer direct business, enabled us to deliver solid revenue gains in a competitive retail marketplace. Timberland's international business also posted strong results, reflecting double-digit constant dollar sales gains in Europe, Asia and Canada as we continue to benefit from efforts to enhance our premium integrated brand positioning in those regions.
"Overall, we are pleased to have delivered strong financial results in the first quarter. We believe that we are on track for solid performance in 2004 and are targeting mid- to high-single-digit revenue growth for the balance of this year. We remain committed to delivering solid revenue growth, double-digit profit gains and strong cash flow in 2004 and beyond and believe that the strategies we are pursuing will enable us to continue to deliver strong financial performance while capturing the great potential that we see for the Timberland brand."
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President & CEO: Michael
Editors note: On October 12, after this interview
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Sporting goods industry
Branding
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Apparel manufacturing
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US Timberland
The Timberland Company
Q1
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revenue growth
profit gains
foreign exchange rate changes
operating profit
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Jeffrey Swartz
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