Brown Shoe Slashes FY Guidance After Weak Q2

Sales reached $628.1 million, an increase of 7.2 percent compared to second quarter 2010 net sales of $585.8 million.

On an adjusted basis, the net loss was $2.7 million, or 6 cents per diluted share, compared to net earnings of $6.5 million, or 15 cents per diluted share in the second quarter of 2010. Gross profit margin in the second quarter of 2011 was 37.7 percent versus 40.7 percent in the second quarter of 2010.

“In the second quarter, not only were we up against record Famous Footwear comps, we also saw the overall toning category negatively impact sales at both Retail and Wholesale Operations,” said Diane Sullivan, president and chief executive officer of Brown Shoe. “Although we experienced year-over-year growth in net sales in the second quarter, we also saw a more rapid than expected decline in toning. During the quarter, we continued to review our investment in this category and reduced the carrying value of our entire toning inventory, which resulted in a write-down of $0.06 per diluted share.”

“In addition, while we are making progress in our SAP stabilization, it has cost us more in terms of dollars and effort than we had anticipated,” continued Sullivan. “In the second quarter, results were negatively impacted by $0.07 per diluted share due to increases in allowances and chargebacks, margin related to lost sales, and incremental stabilization costs.”

“Importantly, as part of the strategic review of our portfolio, today we announced an agreement to sell AND 1 for $55 million in cash, which will be used to pay down debt. We will continue completing this comprehensive review of our brands, in conjunction with evaluating our SG&A spend and reducing our costs during the second half,” concluded Sullivan.