Timberland Co. (TBL), a designer and marketer of footwear, apparel and accessories, said that following the review of its global retail portfolio, it decided to close about 40 stores, principally larger, speciality retail stores in the United States, Europe and Asia, in addition to several underperforming US outlet stores.
The company said that the closure of stores, a majority of which is expected to occur in the first several months of 2008, is consistent with its strategy to transition to smaller, footwear-focused stores in the United States as well as in certain international markets. In addition, the company lowered its revenue and operating margin outlook for the third quarter and for the full year citing softer market trends, impacts from the anticipated store closures and about $4 million in additional costs related to its recent voluntary product recall of Timberland PRO Direct Attach Steel Toe Series products due to a potential safety issue.
The Stratham, New Hampshire-based company said that the reduction in door count is expected to increase annual operating profits by about $6 million.
Jeffrey Swartz, president and CEO of Timberland, said, “After the completion of an extensive analysis of our retail portfolio, we have determined that several stores are not demonstrating the performance we require to justify continued investment. As a result, we have decided to begin the closure of most of our speciality retail stores in the United States, as well as select stores in Asia and Europe.
Retail is an important component of the company’s multi-channel distribution strategy, and it will continue to operate approximately 200 retail doors globally following these select closures. The company-managed stores, combined with over 550 stores and shops operated by franchise partners as well as distributors, will leave the company with more than 750 Timberland retail locations worldwide following the closures.
For the recent second quarter, Timberland reported net loss that widened from a year ago, hurt by revenue declines in its boots, kids and apparel categories. The company’s net loss for the quarter was $19.2 million or $0.31 per share, compared to net loss of $16.6 million or $0.26 per share in the same period last year.