Brown Shoe Co., Inc. said it expects to cut 12% to 14% of its domestic workforce as part of its expense and capital containment initiatives that were announced January 21. Overall costs related to its expense initiatives are currently anticipated in the range of $27 million to $30 million ($5 million to $6 million will be non-cash), the majority of which will be incurred in the company's fourth quarter of fiscal 2008.
The company has also reduced its planned capital expenditures for the 2008 to 2011 period by an additional $35 million, bringing total planned capital expenditure reductions to $107 million for this period. These initiatives, which include changes in compensation structure, rationalization of operating expenses, and workforce reduction, are now expected to yield annual savings in the range of $28 million to $31 million.
The job reductions will come in business areas across the enterprise, excluding stores and distribution centers. Associate separations are beginning in February, with final dates of employment determined on an individual basis and driven by business need. Additionally, the Company has made commensurate reductions in workforce and payroll in its Far East sourcing operations, stores, and distribution centers.
“These are essential actions that we are taking to proactively address the uncertainty that remains in the marketplace and we remain focused on identifying additional opportunities to reduce expenses without impacting investments in key strategic growth opportunities. Reducing our workforce is a necessary measure to appropriately realign our cost structure to sales expectations. It is the right thing to do for our business and we are committed to implementing it in the right way for our business and our people, who have made tremendous contributions to our company's culture and successes,” Brown Shoe Chairman and CEO Ron Fromm said.
The company also announced that preliminary consolidated net sales for the thirteen-week period ended January 31 were $521 million. Preliminary net sales for the period for its Famous Footwear division were $312 million and same- store sales declined 3.6%. Preliminary net sales at its Wholesale division in the quarter declined by 25% the same period last year, slightly below expectations primarily due to a shift of shipments into the first quarter, as a result of the extreme winter weather in the last week of January.
Fromm continued, “Brown Shoe continues to work hard in this difficult economic environment to deliver unique consumer offerings and generate sales in our retail and wholesale brands, while effectively managing our liquidity, capital, and expenses. We are focused on maintaining our financial health while appropriately investing in strategic and market share opportunities, including scheduled brand launches in 2009. While we are in the process of closing our books for the quarter and the year, we are comfortable with our previous communication that we expect our adjusted earnings per diluted share to fall within the low-end of our guidance range.”
