Footwear and accessories firm Timberland (NYSE:TBL) may want to consider moving overseas. U.S. consumers continue to shun its merchandise, with no end in sight. There is hope for a turnaround, but it had better happen soon, or investors may take an ax to their positions.

Timberland recently reported fourth-quarter and year-end 2006 results that showed it is still struggling to sell its boots and children's shoes -- the core of its business -- in domestic markets. Total U.S. sales for the year fell 4% as wholesale sales dropped 3% and direct sales through outlet and other stores shrank 7%, in part because of an 0.8% decline in same-store sales.

International growth improved 5.3% for the year, while store comps were a positive 1.1%. The problem is that global sales make up only 47% of the total, so domestic difficulties are dragging down otherwise decent overseas trends.

Timberland expects overall sales of boots and kids' shoes to remain weak in 2007 and to fall by more than $100 million next year. It also projects higher product costs to hit operating margins by 3% or more. And to cap off a frustrating year, the day after the earnings release, the company announced that its CFO is heading off to Iron Mountain (NYSE:IRM), while its chief operating officer is also calling it quits after 15 years with the company.

Fortunately, Timberland has no long-term debt, and cash-flow generation continues to hold up somewhat, so that management can repurchase stock and partially offset plummeting earnings with fewer shares outstanding. The problem is that there's just no telling when domestic sales trends will improve and lead to bottom-line growth once again.

In its earnings release, management touted strong sales in accessories and new brands, but accessories make up less than 30% of total sales, and recently introduced products make even less of an impact on total sales. Until existing product sales improve, Timberland's stock will likely continue to be dead money. It doesn't even pay a dividend, so there is even less reason to hold the shares until a rebound occurs.

Additionally, the shoe industry is crowded and, as a result, intensely competitive. Throw in a fickle consumer known to quickly leave a fashion hit for the newest product fad, and you have a space that is hard to invest in. I've found Nike (NYSE:NKE) to be one of the few shoe firms to have an enduring business model, but I shudder at the thought of investing in hot stocks such as Crocs (NASDAQ:CROX). Recent volatility at Deckers Outdoor (NASDAQ:DECK) is perhaps the paradigm for what investing in this space can be all about.

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Fool contributor Ryan Fuhrmann is long shares of Nike but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.