Brown Shoe Company saw shares jump more than 17% last week to close at $46.46 on Friday after posting better-than-expected results for third quarter ended October 28 and raising guidance for the full year. “It sure is a great time to be in the shoe business,” said company Chairman and CEO Ron Fromm, in making a statement not many people in the business would make these days. The strong results for the quarter were driven by an “exceptional performance” at Famous Footwear, the company’s 979-unit family footwear division. Total sales at Famous Footwear rose 11.7% to $366.3 million for the quarter from $328.1 million for the year-ago period. Same-store sales for the period rose 8.2%. Gross margin at Famous increased 160 basis points for the period, which helped the division increase operating earnings 51.0% to $39.6 million, compared to $26.2 million in the third quarter last year.

Joe Wood, president of the Famous Footwear division, said that sales metrics were up in all categories for the period, with average unit retail, conversion rates, traffic, and pairs per transaction all ahead of last year’s levels. He said a lower markdown rate also helped in growing margin and increasing operating profits. Sales were led by strong performances in the women's and children's categories, with kid’s showing the biggest gains, thanks to a strong back-to-school performance. The women’s business was led by gains in juniors, dress, and casual footwear. The men’s business was up across all categories, but was led by gains in the dress business. Mr. Wood said “margins were nicely up from last year.” Athletics posted gains as well, growing 3.9% on a store-for-store basis. The increase was attributed to Nike Reax and the skate category. He said the BTS performance was also enhanced by a larger commitment made to low profile fashion athletic product.

Athletic still represented the majority of sales during the period, but was off “a couple points” from its usual level during back-to-school when it historically represented 55% of total sales.

Famous Footwear opened 26 stores in the quarter and closed 10 stores, resulting in 979 stores open at quarter-end. Wood said they remain on target to open 90 new stores this year, while closing approximately 45 others during fiscal 2006. He expects to open approximately 110 new stores next year, while closing the same number as this year.

For Brown Shoe Company, net sales increased 9.6% to $676.8 million in Q3. Specialty Retail posted a 6.0% comp store sales increase. The shoes.com business was up 80%. Wholesale sales increased 7.0% to $242.3 million. Net income was up 36.1% to $26.9 million, or 93 cents per diluted share. Excluding four cents per diluted share for stock option expense for the period, diluted EPS came in at 97 cents per diluted share, compared versus previously issued EPS guidance of 81 cents to 86 cents and fiscal Q3 2005 adjusted net earnings of 81 cents per diluted share.

On another note, BWS said it determined early in the fourth quarter that it will close its Needham, MA office and consolidate these operations, including Bennett, into the existing New York City facilities, creating a new Brown New York group led by Rick Ausick. They will also close their Dover, NH distribution center and consolidate functions into the “existing wholesale and retail distribution network.” They will also outsource the Canadian wholesale business to a third-party operator.

For the full-year fiscal 2006, the company now estimates diluted earnings per share in the range of $2.28 to $2.33, inclusive of 15 cents per diluted share for stock option expense.