Brown Shoe Company, Inc. reported a net loss of $10.8 million, or 26 cents a share, in the first quarter after $28.8 million of costs associated with its ongoing portfolio realignment efforts, including its recent sale of Avia
and Nevados. Excluding brands that have been exited, net sales
were up slightly in the quarter.
In the year-ago quarter, it earned $1.7 million, or 4 cents per diluted share. Earnings for the first
quarter of 2012 included $12.8 million of portfolio realignment and ASG
integration costs.
Sales in the quarter reached $588.7 million versus first quarter 2012 net sales of $598.2 million,
reflecting an adjustment for discontinued operations. However, results
for the first quarter of 2013 and 2012 also included sales of $0.2
million and $10.2 million, respectively, from brands and businesses the
company has exited. .
On an adjusted basis, net earnings of $13.8
million, or 32 cents per diluted share, improved 37.7 percent compared to $10.0
million, or 23 cents per diluted share, in the prior year. Gross profit
margin for the first quarter of 2013 improved to 40.8 percent from 39.2 percent in
2012.
In addition to stronger-than-expected adjusted EPS of $0.32, we
reported record first quarter operating profit of $29 million at Famous
Footwear, as we saw improved consumer conversion related to our
strategic real estate, inventory and omni-channel efforts, said Diane
Sullivan, president and chief executive officer of Brown Shoe Company.
At wholesale, we refined our portfolio, with the recent sale of Avia
and Nevados, and we intend to use the related proceeds in our 2013 debt
reduction efforts. In the first quarter, prior to the divestiture, we
reduced our short-term borrowings by $39 million.
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13 Weeks |
1Q |
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|
1Q13 |
1Q12 |
Change |
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Consolidated net sales |
$588.7 |
$598.2 |
(1.6%) |
||||||
Famous Footwear |
352.3 |
347.1 |
1.5% |
||||||
Wholesale Operations |
181.6 |
194.9 |
(6.8%) |
||||||
Specialty Retail |
54.8 |
56.1 |
(2.5%) |
||||||
Gross profit |
240.0 |
234.3 |
2.5% |
||||||
| Margin | 40.8% | 39.2% | 160 bps | ||||||
SG&A |
213.8 |
211.5 |
1.1% |
||||||
| % of net sales | 36.3% | 35.4% | 90 bps | ||||||
Restructuring and other special charges, net |
5.2 |
10.2 |
(49.2%) |
||||||
Operating earnings |
21.0 |
12.6 |
66.5% |
||||||
| % of net sales | 3.6% | 2.1% | 150 bps | ||||||
Net interest expense |
|
6.0 |
|
||||||
Earnings from continuing operations before income taxes |
15.3 |
6.6 |
130.6% |
||||||
Tax rate |
51.9% |
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Net (loss) from discontinued operations |
|
(2.4) |
659.9% |
||||||
Net (loss) earnings |
($10.8) |
$1.7 |
(734.9%) |
||||||
| Per diluted share | ($0.26) | $0.04 | (750.0%) | ||||||
Adjusted net earnings |
|
$10.0 |
37.7% |
||||||
| Per diluted share | $0.32 | $0.23 | 39.1% | ||||||
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First Quarter Highlights
Famous Footwear first quarter 2013 sales of $352.3 million were up 1.5 percent
year-over-year, with good growth in athletic and canvas shoe styles as
the quarter progressed. Same-store-sales(2) were up
1.1 percent over the prior year, as strong same-store-sales
of 14.2 percent in April helped offset weather related weakness in February and
March. During the quarter, the company closed or relocated 13 stores and
added 12 new stores, as average revenue per square foot continued to
improve.
Wholesale sales were down 2.9 percent in the first quarter, excluding
discontinued and exited brands. The companys Contemporary Fashion
wholesale sales were down 2.5 percent in the first quarter, while Healthy
Living wholesale sales were down 3.1 percent, both excluding exited brands.
Wholesale gross margin of 31.8 percent expanded by 310 basis points during the
quarter. Both the Contemporary Fashion and Healthy Living platforms
contributed to the improvement, due to a more profitable brand mix,
higher initial margins and lower inventory markdown requirements.
Consolidated gross profit of $240.0 million was up 2.5 percent in the first
quarter, while gross margin of 40.8 percent improved by approximately 160 basis
points versus the prior year. SG&A for the first quarter was $213.8
million, or 36.3 percent of net sales, up approximately 90 basis points from
35.4 percent of net sales in the prior year. For the quarter, operating margins
improved 150 basis points to 3.6 percent.
Inventory at the end of the first quarter was $485.9 million, up 2.2 percent
compared to $475.6 million in the prior year. Wholesale inventory was up
2.4 percent, while Famous Footwear inventory was up 1.3 percent.
At quarter-end, Brown Shoe Company had $413.8 million in availability
under its revolving credit facility and $44.7 million in cash and cash
equivalents. The companys debt-to-capital ratio improved to 39.1 percent from
43.9 percent in the first quarter of 2012.
Financial Review and 2013 Outlook
Despite uncooperative weather in February and March, we were able to
deliver better than expected results for the quarter, said Russ Hammer,
chief financial officer of Brown Shoe Company. To reflect our strong
performance in the first quarter, we are raising our full-year adjusted
EPS guidance to $1.22 to $1.29. However, due to the timing of
back-to-school, our biggest sales quarter remains the third quarter.
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Metric |
FY13 |
|
Consolidated net sales |
$2.54 to $2.57 billion |
|
Famous Footwear same-store sales |
Up low-single digits |
|
Wholesale Operations net sales |
