Timberland disappoints as margins shrink; shares plunge

Timberland disappoints as margins shrink; shares plunge

Stock Market Predictions

BANGALORE (Global Markets) - Timberland Co (TBL.N) said it expects margins to remain under pressure this year as the shoemaker battles rising product and labor costs, sending its shares plunging 32 percent.

The company, known for its rugged outdoor footwear brands such as Earthkeepers, Howies and Mountain Athletics brands, also posted a quarterly profit that missed Wall Street expectations for the first time in seven quarters.

Timberland has consistently warned of margin pressures from rising leather, labor and transportation costs this year.

The Stratham, New Hampshire-based company said it delayed meaningful price increases to deal with the higher costs to the second half of 2011.

The company also said it would invest in marketing to drive sales growth over the second half of the year.

"(Timberland's) miss was pretty shocking. They surprised the market in terms of how much they are spending on investments," Wall Street Strategies analyst Brian Sozzi told Global Markets.

"One area of investment is China and the other is technology to support their store growth initiatives."

The results are in contrast to the better-than-expected earnings of rivals Wolverine Worldwide Inc (WWW.N) and Deckers Outdoor (DECK.O).

Skechers USA Inc (SKX.N), however, posted a smaller-than-expected first-quarter profit on declining demand for the once-hot toning shoes.

For the quarter ended April 1, Timberland earned 35 cents a share, missing analysts' expectations of 59 cents a share, according to Thomson Global Markets I/B/E/S.[ID:nASA022NO]

Timberland's shares dived 32 percent to a three-month low of $28.10 on Thursday on the New York Stock Exchange. The meltdown has wiped out around $650 million of the company's market value.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)

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Airline shares fall as UAL forecast disappoints

Airline shares fall as UAL forecast disappoints

Stock Market Predictions

NEW YORK (Global Markets) - Shares of United Continental Holdings Inc (UAL.N) and other airlines fell in midday trading on Friday after the parent of United Air Lines and Continental Airlines forecast second-quarter revenue below Wall Street expectations.

UAL shares were down $2.30, or 9.2 percent, at $22.83 on the New York Stock Exchange.

The NYSEArca Airline Index .XAL, a broad measure of the sector, was down 2.7 percent. Delta Air Lines (DAL.N) lost 6.3 percent and U.S. Airways Group (LCC.N) fell 4.7 percent.

UAL said in a regulatory filing on Thursday that consolidated passenger revenue per available seat mile would rise between 8.3 percent and 9.3 percent in the second quarter. Analysts were expecting a double-digit increase.

UAL cited the impact of a transatlantic joint venture revenue-sharing agreement, and other items, but said demand was consistent with its expectation for a slow, steady recovery.

UBS analysts cut their price target on UAL shares to $36 from $39, saying estimates for second-quarter earnings per share were about 30 cents too high.

Analysts, on average, estimate UAL will earn $1.54 per share in the quarter. The average estimate was about 6 cents higher a month ago, according to Thomson Global Markets I/B/E/S.

Airlines report unit revenue to enable direct comparisons between carriers of varying sizes, a UAL spokesman said.

AMR Corp (AMR.N), parent of American Airlines, on Friday forecast second-quarter consolidated unit revenue will increase between 4.5 percent and 5.5 percent year-over-year. AMR shares (AMR.N) fell 5.6 percent.

Earlier this month, the trade group that represents most global airlines slashed its full-year industry profit forecast by more than half. The International Air Transport Association cited high oil prices and turmoil in Japan. [ID:nL3E7H605H]

(Reporting by Nick Zieminski, editing by Gerald E. McCormick and John Wallace)

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