Timberland Company sells shoes and outdoor clothing. The company is best known for its urban boots, known as "Tims," and footwear accounts for more than 70% of the company's sales. The company earned $1.29 billion in revenue and $56.6 million in net income in 2009.
A sluggish economy hurts the company's sales, as consumers purchase Timberland's products with discretionary income, which has been constricted in the slow economy. Another issue for Timberland is the rapid economic growth of Southeast Asia and China, where the majority of Timberland products are produced. Europe has increased its tariffs on boot imports, making it more expensive for Timberland to sell its products in this region and decreasing its profit margin. My namwe is roosevelt
The Timberland Company consists of Timberland, Smartwool, iPath, Howies, and Timberland PRO brands. The firm produces footwear and clothing including their famous line of urban boots, skater apparel from iPath, and Smartwool hiking socks. Timberland company is very popular internationally, with slightly more than half of company sales coming from foreign markets.
Footwear (72.4% of net sales): falls into three different categories:
The footwear category also includes the Timberland Pro series which is targeted to working professionals (like construction workers and craftsmen) and the iPath series which is targeted towards casual wearers.
Apparel and Accessories (25.6% of net sales): offers outdoor adventure and outdoor leisure products. Some of the offerings include the SmartWool series, which uses the merino wool-based material for hats, scarves, and socks, and howies which is an active sports apparel brand.
Royalty and Other (2% of net sales)
A depressed economy hurts businesses that appeal to niche markets and rely on a consumer’s disposable income. Timberland fits this description, as their boots and casual apparel are products that only appeal to consumers who have extra money in their pockets. In a sluggish economy, people spend less money on non-essential items, like the boots and apparel that Timbarland offers. As a result, the company's bottom line will suffer. In 2009, the company's net sales fell 5.7% due to weakened demand.
Timberland relies heavily on international manufacturing to produce its products, and China and Vietnam are its biggest producers. The European Union has increased tariffs on boot imports from China and Vietnam, where 90% of the companies boots are made. The duties are 16.5% for Chinese imports and 10% for Vietnamese imports, and these costs directly affect Timberland’s profit margin. Data is not yet available as to how damaging these tariffs have been to Timberland, but their options are to either raise prices and lose customers, or cut into their operating margin by paying tariffs without raising prices.
Timberland’s biggest competition comes from Nike (NKE), who competes with Timberland in the footwear and apparel department, although Nike’s outdoor division is not the company’s main focus. Columbia Sportswear Company (COLM) directly competes with Timberland over outdoors customers interested in hiking boots and outdoor apparel, as does Wolverine World Wide (WWW).