Zacks_Analysts' Blog : LaCrosse Misses on Lower Revenues - Analyst Blog

LaCrosse Footwear Inc (BOOT), a leading developer and marketer of premium branded footwear for work and outdoor market, reported a loss of 10 cents in the first quarter of 2011, well below the Zacks Consensus Estimate of earnings of 17 cents and the prior-year quarter earnings of 25 cents.

Portland, Oregon-based LaCrosse reported first quarter net sales of $25.2 million, down 26.4% year over year.

The lower-than-expected results were due to a double-digit fall in the top line.

Inside the Headline Numbers

In the first quarter of 2011, the footwear company experienced negative sales growth due to lower U.S. military orders. However, revenue from other channels jumped 14% year over year.

Work Sales declined 39% from the prior-year quarter to $16.1 million, attributable to lower military footwear order from the U.S. government. Outdoor revenue increased 16% to $9.1 million, credited to the huge demand for hunting and hiking categories.

During the quarter, gross margin expanded 120 basis points (bps) to 41.4%, driven by solid performance at its wholesale and direct business and favorable consumer response for its new product. However, operating expense spiked 3% to $11.4 million due to increased marketing initiatives and product development activities.

Financial Aspects

LaCrosse ended the quarter with cash and cash equivalents of $0.5 million, long-term debt of $0.2 million and stockholder’s equity of $63.8 million.

Our Take

The company reported loss during the first quarter due to lower U.S. military orders, but witnessed margin expansion on the back of robust sales growth at outdoor market arising from the huge demand for core work and outdoor products.

Moreover, as the company heads into the second quarter of 2011, wholesale backlog is increasing year over year due to marketing efforts and strong demand for new products in fall 2011. Additionally, the company has also won a new delivery order from the United States Marine Corps worth $2.4 million for all-terrain boots, which will further grow the top line.

Hence, we believe that the company’s profit will increase in 2011 as LaCrosse continues to focus on introducing innovative products and strengthening its relationship with its retailers. Furthermore, the company intends to invest in marketing activities to enhance its brand awareness and increase its market share. The Zacks Consensus Estimate for 2011 and 2012 is pegged at $1.15 and $1.24, respectively.

LaCrosse currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock.

One of its prime competitors, Wolverine World Wide Inc (WWW) reported first quarter 2011 earnings of 72 cents, handily beating the Zacks Consensus Estimate of 66 cents on the back of strong demand witnessed across all its brands.