Case
LaCrosse Footwear, Inc. (BOOT)
Case outline
LaCrosse Footwear, Inc. is an American manufacturer of shoes for sporting, recreational and occupational activities. This branch of the footwear industry is the only one that has some potential sales growth for domestic manufacturers. LaCrosse Footwear, Inc. has product lines in rubber, vinyl and leather. It faces strong competition from at least three domestic and six foreign firms. Foreign producers have the advantage of lower labor costs, but vinyl products do not require much labor; moreover, imports face large warehousing costs in order to serve a demand that is unstable and seriously affected by weather patterns.
LaCrosse Footwear, Inc. was incorporated in 1983 after a new management team had acquired the company from its original family owners who founded the rubber manufacturing company in 1897, in the city of LaCrosse, Wisconsin. Recently, LaCrosse Footwear, Inc. has been expanding rapidly through acquisitions of Danner Shoe Manufacturing, a premium quality leather sporting footwear producer, in 1994, Rainfair, Inc., a designer and maker of rainwear, for an approximate amount of $12 millions in 1996, and Pro-Track Corporation, a manufacturer of leather Lake of the Woods outdoor footwear, in 1997. In addition, LaCrosse Footwear, Inc. acquired the assets and trademark of Red Ball Inc., which competed directly with LaCrosse product lines.
Sporting and outdoor footwear sales tend to be seasonal with five months, from September through January, accounting for over 55% of sales. Orders are usually placed prior to July for shipment between June to October, with fill-ins in fourth quarter. Inventories ordinarily peak in early summer and receivables toward end of the year. In 1998, LaCrosse Footwear, Inc. sales have been seriously cut back by the warm weather during 1997-98 winter. In addition, L.L. Bean, a major catalogue vendor of outdoor gear, replaced LaCrosse handcrafted rubber bottoms by molded bottoms of a competitor. Sales of Danner leather line maintained a high growth of 10% in 1998.
As can be observed in the Balance Sheet, the unexpected sales
slump in 1998 caused LaCrosse inventories to remain high through
the end of 1998 while receivables did to expand. Cost of goods
sold went down in 1998 compared to 1997, but proportionately less
than revenues. More damaging was the increase in selling and administrative
expense that was necessitated by additional spending on promotion
and advertising to combat the sales slow down. The combination
of reduced gross profit and increased fixed cost caused net profit
to shrink by two thirds from what it was in 1997.
Financial data:
Condensed financial statements without notes are presented for selected years in following tables:
Normalized statements and selected ratios based on above financial statements are presented in
Information sources:
Visit company web site at http://www.lacrosse-outdoors.com
SEC 10-K file available at http://www.sec.gov/cgi-bin/srch-edgar or http://www.edgar-online.com/
LaCrosse stock is traded on NASDAQ/NMS under the symbol BOOT. Find stock quotes and recent news from http://finance.yahoo.com/ or http://www.quote.com/ or from the exchange.