UPDATE 2-Timberland Q2 loss wider than estimates, shares fall

Wed Jul 29, 2009 10:29am EDT

* Q2 loss/shr $0.34 vs est -$0.30

* Declines in casual footwear, apparel sales hurt

* Stronger U.S. dollar weighs

* Sees back half of '09 to be challenging

* Stock down as much as 11 pct (Adds conference call details, analyst comment, stock activity)

BANGALORE, July 29 (Reuters) - Timberland Co TBL.N posted a wider-than-expected quarterly loss, hurt by weakness in its casual footwear and apparel business and a stronger U.S. dollar, and expects the back half of 2009 to continue to be challenging, sending the bootmaker's shares down 11 percent.

On a conference call with analysts, the company, which believes there is insufficient visibility to set expectations for the remainder of 2009, said gross margin for the remainder of the year will continue to be hit by forex exposure.

During the second quarter, a stronger U.S. dollar versus the British pound and the euro hurt Timberland's quarterly sales by about $11 million.

Citigroup analyst Kate McShane, who is concerned about Timberland meeting its goals over the next year, said a conservative outlook on the footwear industry for 2009 could prolong a turnaround for the company as retailers focus on top brands in a tougher retail environment.

She was also concerned about weaker orders and potential cancellations as retailers continue to right-size inventories to keep up with slowing consumer demand.

The analyst, who believes the valuation of Timberland shares is high, reiterated her "sell" rating and has a price target of $13 on the stock.

For the second quarter, the company posted a net loss of $19.2 million, 34 cents a share, compared with $18.9 million, or 32 cents a share, a year earlier.

Revenue fell 14 percent to $179.7 million. Global footwear revenue decreased 11.2 percent, while revenue from apparel and accessories declined about 25 percent for the period.

Analysts on average were expecting a loss of 30 cents a share, before special items, on revenue of $191 million, according to Reuters Estimates.

Timberland's shares fell to a low of $13.21, before recouping some losses to trade down $1.19 Wednesday morning on the New York Stock Exchange. (Reporting by Amitha Rajan in Bangalore; Editing by Savio D'Souza, Jarshad Kakkrakandy)

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