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The stock chart for



is starting to resemble the mountains its rugged boots are designed for: steep.

The company's stock has soared in the last couple of years as it has gone from a niche maker of hiking boots for the woodsy to an internationally known brand. In 2000, a year that saw the

S&P 500 Index

fall about 9%, Timberland stock enjoyed a 168% rise, adjusted for splits, closing Friday just shy of $60.

Analysts have only recently discovered the company, which has tried to shed its reputation as unresponsive to investors. And while some analysts think its stock may be starting to look pricey, Timberland's strong growth rate and its discount to its peers could give it a boost.

Striking a Balance

The company's strength, according to those who follow the industry, is that it does what few shoemakers can: balance fashion with durability. The result is that Timberland, based in Stratham, N.H., caters equally to the trendy urbanite and the backwoods logger. In addition, the company is poised for strong growth in its apparel division and has been aggressive in entering foreign markets, having bought up its Asian licensee,

Timberland Asia

, last year.

"It has struck a balance between the fashion and technical side. That is not something many companies can do," says Mark Hoffman, national sales manager at industry group

Sports Trend Info

and formerly a buyer at

Athlete's Foot

for over 20 years. "The assessment of Timberland is the same as it has been for 10 years. Every buyer has been asking when the company is going to slow up. It hasn't."

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Timberland pulling ahead

And isn't likely to anytime soon. Apparel sales growth is expected to hit 27% this year, after falling roughly 2% in the past two years, augmenting Timberland's already robust growth from footwear sales. And the company plans to spend a record amount on marketing this year as it integrates its advertising for apparel and footwear lines into a national campaign.

Meanwhile, its market share continues to climb. In 2000, the company owned 36% of the market for outdoor footwear, up from 34% in 1999, according to statistics provided by Sports Trend Info. And so far this year, it has captured about 40% of the market.


While Timberland pops up in


magazine's list of the top companies to work for, it has never been a top company for analysts to follow.

"They haven't always had the best reputation in terms of communicating with Wall Street," says David Turner, an analyst at

Ferris Baker Watts

. Turner has a long-term accumulate rating on Timberland, and his firm does not have an underwriting relationship with the shoe manufacturer.

But in recent years, the company has done a better job of wooing the Street, say analysts.

For management at Timberland, extending an olive branch to Wall Street has paid off in a big way: a soaring stock price and a growing list of analysts who follow the company.

"I think it was a conscious effort," says Susan Ostrow, senior manager of investor relations at Timberland. "Over the years we have worked to become more investor friendly.

"Until recently, I would say it was one of the reasons why we weren't widely covered. But in the past week, we've had three firms pick us up." In late 1997 the company began holding two face-to-face analyst meetings a year to discuss strategy, and now makes it easier for analysts to reach the company's chief financial officer, says Ostrow.

The brokerages that cover Timberland, in addition to Ferris Baker, are

Morgan Stanley Dean Witter


Lehman Brothers


Still, the company does not offer the one thing analysts would like most: earnings guidance. Ostrow says the company talks only strategy, and won't comment on whether analyst estimates are in the right ballpark.

Staying the Course

The key question for most who follow the company is whether the stock has become too expensive.

For example, Kevin Johnson, director of research at fund manger

Aronson Partners

, which owns stock in Timberland, says his firm has held off on upping its position. "We've been staying the course," he says. "It looks good from an overall momentum point of view, but it's pretty rich."

Pretty rich compared to what?




, for one. The premier athletic footwear maker, which analysts say is Timberland's most appropriate peer when it comes to valuation, trades at

over 23 times estimated 2001 earnings, and analysts estimate it will increase earnings at an annual rate of 15% over the next five years. Compare this with the same metrics for Timberland: It trades at close to 18 times earnings, and analysts expect 18% earnings growth for the next five years.

While some would argue that Timberland's lack of earnings guidance should result in the stock's trading at a discount to its peers, analysts have had little trouble distilling the information they get into accurate estimates. In the past quarter and fiscal year, the

First Call

consensus estimates were off only by a penny or two.