Brown Shoe reported earnings in the fourth quarter were $5.0
million, or 12 cents a share, versus a net loss of $153.0 million, or
$3.68 a share, in the year-ago quarter. On an adjusted basis, excluding charges and
recoveries, earnings were $8.1 million, or 19 cents , compared to a net loss of $11.5 million, or 28 cents, a year ago.
Fourth quarter of 2009 net
earnings included after-tax charges of $2.8 million, or 7 cents per diluted
share, related to the company’s organizational changes announced in November of
2009 and $1.4 million, or 3 cents, related to its information
technology initiatives. These costs were partially offset by after-tax income
of $1.1 million, or 3 cents per share, related to the reduction of
reserves for future lease costs from its vacated Madison, WI offices. Fourth
quarter of 2008 net loss included after-tax charges of $141.5 million, or $3.40
per diluted share, related to impairment of goodwill and intangible assets and
net restructuring and other special charges.
Net sales were $566.0 million in the fourth quarter of
2009, an increase of 8.6%, compared to $521.0 million in the fourth quarter of
2008. — Famous Footwear net sales in the quarter were $342.7 million, a record
fourth quarter result and an increase of 9.7% from the fourth quarter of last
year, driven by a 9.0% same-store sales increase.
Net sales at the company’s Wholesale division were $151.1
million in the fourth quarter of 2009, an increase of 5.8% versus the same period
last year;
during the fourth quarter of 2009 increased 9.5% versus the same period last
year to $72.2 million, reflecting a 7.6% same-store sales increase during the
quarter.
390 basis points to 41.1% of net sales from 37.2% of net sales in the fourth
quarter of 2008. — The key drivers were an increase in gross profit rate in
its retail divisions during the fourth quarter of 2009 versus the same period
last year. Specifically, Famous Footwear achieved a 290 basis point
improvement, driven by strong sales in the toning, boot, and accessories
categories, and its Specialty Retail division generated a 130 basis point
improvement, resulting from strong product styling and more full-priced
selling.
profit rate in its Wholesale division, driven primarily by lower markdowns and
allowances resulting from improved sell-through rates at retail, contributed to
the increase in consolidated gross profit rate.
of 2009 increased by $4.3 million to $218.0 million, or 38.5% of net sales,
versus $213.7 million, or 41.0% of net sales, in the same period last year. The
year-over-year increase was primarily related to increased incentive
compensation costs, due to improved financial performance, and the timing of
marketing programs. These increases were partially offset by operating 28 fewer
North American stores in its Famous Footwear and Specialty Retail divisions as
well as expense controls across the enterprise.
Operating earnings in the fourth quarter of 2009 were
$9.3 million compared to an operating loss of $205.1 million in the fourth
quarter of 2008. Adjusted for net restructuring and other special charges and
impairment of goodwill and intangible assets, operating earnings in the quarter
were $14.4 million versus an operating loss of $20.0 million in the year-ago
perio
$5.0 million, an increase of $0.5 million from the year-ago period, primarily
due to higher average borrowings on the company’s revolving credit facility.
fourth quarter of 2009. This compares to a $55.6 million tax benefit in the
fourth quarter of last year, primarily due to the impairment of goodwill and
intangible assets and net restructuring and other special charges.
Inventory at quarter-end was $456.7 million, a 2.0%
decrease from the year-ago level of $466.0 million. Inventory at its Wholesale
division decreased 21.8% year-over-year reflecting the general decrease of
inventory levels across retail channels as a result of the economic
environment, as well as the anniversary of an ice storm in January of 2009,
which caused some shipments to be pushed from the fourth quarter of 2008 into
the first quarter of 2009. Average inventory on a per-store basis at Famous
Footwear increased 8.0% at quarter-end, reflecting the improved trend of
footwear sales and the investment in the higher-priced toning category for the
spring season.
revolving credit facility were $94.5 million versus $112.5 million during the
same period last year. Cash and cash equivalents at quarter-end were $125.8
million, a 44.8% increase from the prior year.
Ron Fromm, Brown Shoe’s Chairman and Chief Executive
Officer, said, “We are pleased to report better-than-expected fourth
quarter results and an overall strong second-half performance. This achievement
is even more gratifying given the challenging economic environment that existed
throughout the year. Our core brands, Famous Footwear, Naturalizer, and Dr.
Scholl’s, led the way. Both Famous Footwear and Naturalizer delivered
high-single digit same-store sales increases in the quarter and demonstrated
the strength of their multi-channel offerings with double digit gains in their
direct-to-consumer businesses. Fresh, on-trend product that provided excitement
for shoppers, strong inventory management, and more full-priced selling led to
a 390 basis point increase in our gross profit rate in the quarter.”
Fromm concluded, “As we look to 2010, we will continue
our strategies of driving profitable sales from our core brands, while focusing
on improving the productivity of our store base. This requires continuously
enhancing product styling and innovation in our brands and retail assortments,
evolving impactful consumer engagement programs, and generating greater
efficiencies from our operating platform. We are encouraged that the trends we
saw in the fourth quarter have continued into the first quarter and, while
there remains uncertainty as to the pace of economic recovery, we believe we will
see a return to mid-single digit sales growth for Brown Shoe during the year
coupled with a doubling of our earnings in the next 12 to 15 months.”
Outlook
Based on the current outlook, the company expects the
following:
expected to grow in the mid-single digit range, with first quarter net sales
expected to increase in the low-single digits;
2010 are expected to grow in the low- to mid-single digit range, with first
quarter same-store sales expected to grow in the high-single digit range.
Famous Footwear is currently expected to open 25 new stores while closing 50
stores in 2010;
the high-single to low-double digit range for the full year of 2010, with flat
to low-single digit growth in the first quarter;
are expected to be in the range of 37.5 to 38.0% for the full year of 2010,
which excludes costs of $7.0 million to $7.5 million related to the company’s
information technology initiatives;
intangible assets are expected to total $51.0 million to $53.0 million for the
full year of 2010;
million to $22.0 million for the full year of 2010;
full year of 2010; and
software are targeted in the range of $60.0 million to $65.0 million for the
full year of 2010.
SCHEDULE 1
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
(Thousands, except per share data) January 30, January 31, January 30, January 31,
2010 2009 2010 2009
Net sales $ 565,972 $ 520,995 $ 2,241,968 $ 2,276,362
Cost of goods sold 333,580 327,209 1,338,829 1,394,126
Gross profit 232,392 193,786 903,139 882,236
Selling and administrative expenses 217,972 213,690 859,693 851,893
Impairment of goodwill and intangible assets - 149,150 - 149,150
Restructuring and other special charges, net 5,089 36,028 11,923 54,278
Equity in net loss of nonconsolidated affiliate - 47 - 216
Operating earnings (loss) 9,331 (205,129 ) 31,523 (173,301 )
Interest expense (5,003 ) (4,707 ) (20,195 ) (17,105 )
Interest income 34 250 374 1,800
Earnings (loss) before income taxes 4,362 (209,586 ) 11,702 (188,606 )
Income tax benefit (provision) 364 55,552 (1,259 ) 53,793
Net earnings (loss) $ 4,726 $ (154,034 ) $ 10,443 $ (134,813 )
Less: Net (loss) earnings attributable to (322 ) (986 ) 943 (1,575 )
noncontrolling interests
Net earnings (loss) attributable to Brown $ 5,048 $ (153,048 ) $ 9,500 $ (133,238 )
Shoe Company, Inc.
Basic earnings (loss) per common share $ 0.12 $ (3.68 ) $ 0.22 $ (3.21 )
attributable to Brown Shoe Company,
Inc. shareholders
Diluted earnings (loss) per common share $ 0.12 $ (3.68 ) $ 0.22 $ (3.21 )
attributable to Brown Shoe Company,
Inc. shareholders
Basic number of shares 41,602 41,552 41,585 41,525
Diluted number of shares 41,777 41,552 41,649 41,525
