Brown Shoe Co., Inc. reported fourth quarter 2013 net earnings surged 55.0 percent on lower costs and higher sales at the company's Wholesale division.

However, same-store sales at Famous Footwear declined in the period and the footwear company forecast financial results for fiscal 2014 below analysts' estimates with the first-quarter seeing an early-impact from chilly weather.

In the quarter, earnings reached $6.2 million, or 14 cents a share, up from $4.0 million, or 9 cents, a year ago. Earnings bested Wall Street’s average estimate of 10 cents a share. The year-ago net included portfolio realignment efforts of $1.8 million on an after-tax basis, or 5 cents per share. Sales were down 3.0 percent to $600.0 million.

At the Famous Footwear segment, sales were down 8.6 percent to $347.4 million with same-store-sales off 1.8 percent. Performance in the quarter was impacted by severe winter weather, which led to a 5.1 percent decline in running shoe sales while helping drive boot sales ahead 7.5 percent. Operating earnings fell 38.8 percent to $12.1 million.

Gross margins improved to 45.5 percent of sales from 44.0 percent, benefiting from the reduction of BOGO promotions during the holiday shopping season.

On a conference call with analysts, Diane Sullivan, CEO, president and chairman, described the fourth quarter as “one of the snowiest and coldest winters in recent memory, and in total we lost nearly 4 percent of our potential selling days in the fourth quarter due to weather.”

The fourth-quarter sales decline masked a “fabulous 2013,” with record sales for the second and third quarter, including a 5.6 percent increase for back-to-school, she noted.

For the year, Famous Footwear’s sales in the year were up 0.9 percent $1.53 billion, while annual operating earnings of $107.1 million were up 13.8 percent. For 2013, same-store-sales were up 2.9 percent. Revenue per square foot hit $207, up 4 percent.

Regarding the current year, Sullivan noted that Famous is still seeing store closures related to weather, estimating that the chain lost approximately 6 percent of its potential selling days in February and lost the same amount so far in March. On the plus side, sales have been up 10 percent to 15 percent in sales regions Famous has designated as warm and hot compared to its cold and moderate markets so far in the first quarter of 2014.

“The product success we've seen in those markets have us feeling very confident about spring styles once spring finally gets here; and that's the point, it always does at some point in time,” said Sullivan. “So with that in mind, we could see first-quarter sales shifting into the second quarter since spring is already delayed and consumers remain in a buy-now, wear-now frame of mind.”

Famous closed or relocated 62 stores and opened 51 this year over 2013 to end the year with 1044. For 2014, it expects to open 50 to 55 stores and close 50 stores.

In its Wholesale segment, sales grew 13.5 percent in the quarter to $196.3 million. Operating earnings adjusted to exclude year-ago portfolio-adjustment charges were leapt 111.2 percent to $15.0 million. Gross margins in the segment eased slightly to 30.7 percent from 31.1 percent.

In the Healthy Living platform, wholesale sales of $107.2 million were up 4.3 percent, led by a double-digit improvement in Naturalizer. Dr. Scholl’s was up low-single digits and LifeStride was ahead low-double digits. Sullivan described Ryka as among the “laggards” with the athletic brand still being repositioned. Said Sullivan, “That's going to take a little bit of time so I would expect we're talking 2015 before we really are feeling that they're going to positively comp.”

The company’s Contemporary Fashion wholesale sales jumped 28.2 percent to $89.1 million, led by gains over 50 percent for Sam Edelman and low double-digits for Franco Sarto. Strong gains were also seen for Carlos and Vince, helping offset declines for Via Spago and Fergie.

For the full year, Wholesale Operations sales of $763.7 million (including $1.6 million of sales from exited brands) were up 5.3 percent over $724.9 million in 2013. In the Healthy Living portfolio, wholesale sales of $421.3 million were up 2.4 percent in 2013. For Contemporary Fashion, wholesale sales of $340.8 million were up 12.7 percent. Adjusted operating earnings reached $49.0 million, up from $39.4 million a year ago.

In its Specialty Retail segment, primarily its Naturalizer stores, sales in the quarter were down 14.3 percent to $56.2 million while the segment showed a loss of $2.03 million against a loss of $1.1 million the prior year. For the year, revenues were down 7.0 percent to $221.9 million; the operating loss was $2.03 million against $1.3 million.

Consolidated gross margin in the quarter increased 20 basis points to 40.2 percent. SG&A grew to 38.5 percent of sales, up 90 basis points.

For full year 2013, companywide sales were up 1.4 percent to $ 2,51 billion. Net earnings improved 37.5 percent to $38.1 million, or 88 cents a share. On an adjusted basis before realignment costs, net earnings were up 26.5 percent to $61.5 million, or $1.41 per share.

Inventory at the end of the fourth quarter was $547.5 million, up 8.7 percent. Wholesale inventory was up 8.7 percent, while Famous Footwear inventory was up 8.6 percent.

Looking ahead, Brown Shoe expects 2014 EPS in the range of $1.45 to $1.55, or a 3 percent to 10 percent increase over 2013. Consolidated net sales are projected in a range of $2.58 billion to $2.60 billion. Analysts expected the company to report earnings of $1.61 per share for the year on revenue of $2.61 billion.

Among its segments, Famous’ comps are expected to be up in the low-single digits. The Wholesale segment is expected to show a gain in the low- to mid-single digits while its Specialty Retail sales are expected to be down low-single digits.

Russ Hammer, CFO, noted that with the weather-related store closures and delayed spring buying, Brown Shoe could see this year's first-quarter earnings at or below last year's level although the company expects to make up some of the sales as warmer weather arrives. He added regarded the full-year outlook, “We only have six weeks of 2014 behind us and the third quarter remains our largest.”