In an attempt to reverse a recent slump in profits, The Timberland Company is planning to shut around 40 of its larger retail stores and said it expects a wider shortfall in full year revenues amid soft market conditions and a product recall.

The stores marked for closure include most of its specialty retail stores in the US, as well as select stores in Asia and Europe, which were "not demonstrating the performance we require to justify continued investment."

Timberland also plans to close several underperforming US outlet stores.

The majority of the store closures will happen in the first several months of 2008, and the reduction in door count is anticipated to increase annual operating profits by around $6m, while lowering annual revenues by $40m.

Costs associated with shuttering the retail stores will be $17m.

The move is part of a transition to smaller, footwear-focused stores in the US, and will leave Timberland with more than 750 retail locations worldwide - 200 company managed stores, and 550 stores and shops operated by franchise partners and distributors.

The company also stressed today's measures are part of its strategy to redirect investment to higher return businesses, drive efficiencies across its organisation and rationalise its operating expense structure.

Jeffrey Swartz, Timberland's President and CEO said: "This initiative is one component of our ongoing efforts to rationalize our operating expense structure in order to drive further efficiencies, higher margins and healthy sustainable growth."

He added that the company "will continue to test and validate our new Footwear First model, and believe that it will provide the consumer facing branding we seek in a more compact and efficient structure."

The Stratham, New Hampshire-based company also revised its 2007 full-year outlook to reflect softer market trends, impacts from the anticipated store closures, and approximately $4m in additional costs related to a recent voluntary recall of some Timberland PRO Direct Attach Steel Toe Series products.

For the full year, Timberland now expects sales to fall by around 5% and operating margins to drop by 400 to 450 basis points.

Timberland has been out of step with footwear fashions for more than a year now, with sales flagging in both its distinctive men's work boots and kids' footwear.

Declines in its boot business have only been partially offset by gains from a slew of recent acquisitions such as SmartWool, GoLite, Howies and IPATH as the company tries to broaden its portfolio in casual and outdoor markets.

In August, Timberland said its second-quarter net loss widened to US$19.2m from $16.6m, while revenues slipped 1.1% to $224.1m.