Timberland has forecast a double-digit profit increase for the 2004 financial year, as the management feels that the company will remain in line with its longer-term objective of a 15 percent operating margin. During the third quarter, the company's net income rose by 29 percent to $68,640,000, while revenues increased by 18 percent increase to $493,933,000. The gross margin rose by 370 basis points to 49.4 percent, with 170 points due to favorable exchange rates.
International sales rose by 19 percent to $209.2 million, or by 11 percent in local currencies, with strong footwear sales in key categories such as boots, men's and women's casual styles and children's shoes. Global sales of apparel and accessories increased by 3 percent to $101.4 million, with another decline in Europe offset by a certain strength in the USA and Asia.
Total sales in Europe grew by 19 percent in dollars and by 9 percent in local currencies, with a strong gain in the UK and double-digit increases in key expansion markets such as Germany and Spain. Sales in Asia rose by 15 percent in dollars and 10 percent in local currencies, driven by casual footwear and clothing.
Total US revenues grew by 6 percent to $284.7 million, with similar increase in the wholesale and retail businesses. Retail sales showed a 1.3 percent increase on a same-store basis at the company's 78 stores in the USA, which are 4 fewer than a year ago.
The company benefited from cleaner inventories and aims to focus more on the industrial, outdoor and casual segments of the footwear market and on ore premium-positioned products, while improving the supply chain. It is considering launching casual footwear in the same style as its successful yellow boot. On the other hand, the launch of a much-heralded boot/sneaker combination, dubbed Merge, had little impact because of unseasonably warm weather in the USA.