Timberland yesterday revealed a second-quarter loss of $16.6m and said its global revenue was down 1.1% to $224m, with an 8.5% fall in American sales.
The New Hampshire company's trademark heavyweight yellow work boots, once a common element of hip urban uniforms, have fallen out of vogue, losing ground to lightweight, more casual footwear such as Vans and Crocs.
Timberland is scrambling to change its product range. Chief executive Jeffrey Swartz said: "Our product development efforts focused on key consumer segments are enabling us to create more relevant products that better reflect the needs of our key consumer groups."
During early trading in New York, shares in Timberland fell 57 cents to a three-year low of $23.10. The firm predicted "significant sales declines" in boots and children's shoes of $100m over the whole of 2007.
Timberland's woes are in contrast to the performance of Crocs - the Colorado maker of colourful, comfortable rubbery clogs sported by fans including Jack Nicholson, Terri Hatcher and George Bush. Crocs's shares have quadrupled over 12 months. Last week, it reported a 162% surge in second-quarter sales to $224m, with profits almost tripling from $15.7m to $48.5m.
Timberland was established by a Boston-based apprentice stitcher, Nathan Swartz. His family still holds 70% voting control over the company's shares.
The Swartz clan have shown signs of impatience with Timberland's dismal share price performance. In November, they called in the investment bank Goldman Sachs to advise on strategic options, prompting speculation that the firm could sell up to private equity buyers. Mr Swartz promised improvement yesterday, citing a target of a 15% profit margin.
Special offers abound for Timberlands. Its website is offering pairs with up to a third off. One US retailer, Foot Locker, last year ran a promotion offering a free pair for every pair sold at full price.
At the height of Timberland's success in the mid-1990s, Mr Swartz courted controversy by suggesting that urban fans, including hip-hop and rap artists, were buying the company's work boots for "the wrong reasons" and that he wanted to cater for "honest working people" rather than pandering to fashion.
