The Timberland Co. (NYSE:TBL) reported revenue up 10 percent for the first quarter, but its quarterly profit fell 30 percent on higher product costs.
The Stratham, N.H.-based footwear and apparel company reported first-quarter 2011 revenue of $349 million, versus $317 million during the first quarter 2010.
Timberland reported a first-quarter profit of $18 million, or $0.35 per diluted share -- a 30 percent drop from a profit of $25.7 million, or $0.47 per diluted share, during the same period in 2010.
Company officials said higher product costs -- which included increased employee costs plus investments in retail, advertising and enterprise systems associated with growth -- led to the lower profit. And Timberland officials expect those 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,” they said.
Those comments didn’t seem to settle investors as they punished Timberland’s stock – down 28 percent by mid-afternoon May 5 – following the earnings release earlier in the morning.
Timberland reported increased inventory levels, up 36.5 percent to $186.9 million from a year ago. Company officials attributed the rise to an improved outlook for the remainder of the year, higher product costs, and strategic purchases of core product.
Timberland President and CEO Jeffrey B. Swartz remained upbeat, saying the company was making investments to build a “stronger and healthier brand” for full-year and future growth. Timberland’s Earthkeepers and Outdoor Adventure marks were among the strongest revenue performers in the quarter, he said.
By region, Timberland saw it’s strongest revenue growth in Asia – up 17.8 percent to $51.3 million – fueled by continued expansion in China and new store openings in Taiwan and Hong Kong. Europe saw 9.3 percent growth in revenue to $165.7 million, driven by strong performance in men's and kids' footwear at wholesale. Timberland’s North American revenue rose 8.3 percent to $132 million, led by double-digit percentage growth of men’s footwear.
Timberland’s consumer-direct revenue increased 14 percent from a year ago to $97 million as it opened a net 8 new stores in the quarter for a total of 229 worldwide.
-- Compiled by David Clucas
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