Timberland Hits Its Stride

“Give Racism the Boot.” That politically correct advertising slogan, combined with environmentally conscious products, has turned Timberland Co. of Hampton, New Hampshire, into a hot marketer and a torrid stock. With customers from suburban professionals to inner-city youths clamoring for its rugged boots and outdoorsy apparel, Timberland last month reported the strongest third-quarter sales and profits in its 20-year history.

The company is the happy beneficiary of a fashion shift: Timberland’s classic waterproof boot has replaced Nike’s Air Jordans as the look of choice for youths and young adults. And shoppers who come to retailers looking for Timberland’s best-selling Weatherbuck waterproof casual shoes ($99) can also buy garments like men’s full-length leather overcoats ($1,100) with the Timberland label.

Such success is new to the family-run company, which often had trouble getting its goods into the hands of customers and was little known in the U.S. outside the Northeast. Timberland began to hit its stride after chairman Sidney Swartz, 57, named his son Jeffrey, 33, chief operating officer in 1991 and gave him day-to-day responsibility for running the company. The younger Swartz opened new Timberland outlets and, better still, got the company’s merchandise into the stores on time. Timberland now runs over 100 “Concept Shops” in retailers such as Nordstrom and Macy’s in the U.S. and markets its products in 45 foreign countries. International operations account for 40% of sales.

Wall Street, which loved the Timberland stock as much as consumers loved the Timberland look, had sent the share price up fourfold since January. (At the same time, the boot trend kicked Nike stock down more than 40%.) But last week Timberland stock dropped from 83 1/4 to 71 5/8 in two days before closing the week at 73. A report in Barron’s suggested that the stock was overpriced and noted that Nike and other sneaker makers were rushing out their own lines of rugged footwear.

Is Timberland’s time over? Not at all. “People got overly euphoric and the stock got ahead of itself,” says Laurence Leeds Jr., who watches the company for Buckingham Research in New York City. “Its decline is minuscule compared to its rise.” The Swartzes own some 60% of Timberland stock, which makes it thinly traded and therefore highly volatile.

Jeffrey Swartz says Timberland will continue to stress its down-to-earth image. “There are times when our brand will be fashionable, and there are times when it won’t be,” he says. “But even when our brand is fashionable, it’s still going to rain, and even when our brand is not fashionable, it’s still going to be cold.” Clearly not out in the rain or cold: the Swartz family, whose stock is worth $489 million.

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