NEW YORK (Reuters) - Bootmaker Timberland Co.TBL.N said on Wednesday it would close nearly 40 specialty retail shops across the globe and take a $17 million charge amid declining sales.
Timberland, whose shares fell more than 6 percent, said it expects a low, double-digit drop in third-quarter sales and a full-year decline of about 5 percent.
“We have decided to begin the closure of most of our specialty retail stores in the United States, as well as stores in Asia and Europe,” Chief Executive Jeffrey Swartz said in a statement.
Most of the store closings will occur early next year, Timberland said, adding that will raise annual operating profit by $6 million, while lowering yearly sales by about $40 million.
Sales of Timberland’s trademark work boots, a long-time fashion staple of urban consumers, have been declining recently with footwear trends moving toward sneakers with slimmer profiles.
Timberland’s sales have also been hurt by later back-to-school seasons in Texas and Florida and by a challenging retail climate which has seen skittish consumers rein in spending, Susquehanna Financial analyst Christopher Svezia told Reuters.
Many retailers have warned that sales may be pressured over the second half of the year as consumers see their adjustable-rate mortgage payments jump and pay more for food and fuel.
“It’s just a difficult environment and there’s been a major fashion shift,” said Svezia, who has a “neutral” rating on Timberland’s stock.
Timberland said the closings are part of a transition to smaller, footwear-focused stores in the United States.
The Stratham, New Hampshire-based company also said it expects third-quarter operating margins to dip 6 percentage points, a drop Timberland partly blamed on a voluntary recall of its Direct Attach Steel Toe Series footwear.
Operating margins for the year will fall by 4 to 4-1/2 percentage points because of restructuring costs, Timberland added.
Timberland’s shares have fallen nearly 40 percent from their 52-week high of $33.45 on November 14. The stock fell $1.26 to $18.96 in morning trading on the New York Stock Exchange.
Reporting by Justin Grant
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