Collective Brands, Inc. reported a fourth quarter net loss of $10.9 million, or 17 cents per diluted share, compared to a net loss of $144.0 million, or $2.28 per share, in the fourth quarter of 2008.
Full year 2009 net earnings increased to $82.7 million, or $1.28 per diluted share, compared to a net loss of $68.7 million, or $1.09 per diluted share in 2008. Adjusted earnings before interest, taxes, depreciation and amortization was $301.6 million for 2009 compared to $282.8 million in 2008.
“Our results were strong as we delivered fresh, innovative product throughout our portfolio of brands both domestically and internationally,” said Matthew E. Rubel, Chairman, Chief Executive Officer and President of Collective Brands, Inc. “This focus on the consumer led to improved gross margins that, combined with actions that lowered operating costs, drove an 11% increase in adjusted operating profit for the year. As a result, we produced record free cash flow, strengthened our capital structure, and positioned Collective Brands for further growth.”
Collective Brands fourth quarter 2009 net sales were $741.7 million up 0.9%, or 3.3% on an adjusted(1) basis. The company’s fourth quarter 2009 comparable store sales(2) increased 0.7%. Comparable store sales for Payless increased 1.0% and comparable store sales for the Performance + Lifestyle Group (PLG) decreased 3.3%.
ADJUSTED(1)
------------------------
4th Qtr 4th Qtr
09 vs 09 vs
4th Qtr 4th Qtr 4th Qtr 4th Qtr 4th Qtr 4th Qtr
2009 2008 08 2009 2008 08
------- -------- --------- ------- ------- -------
Net sales $ 741.7 $ 735.2 $ 6.5 $ 741.7 $ 717.9 $ 23.8
Gross margin % 32.9% 16.7% 1,620 bps 33.0% 28.3% 470 bps
Operating profit $ 4.7 ($ 158.5) $ 163.2 $ 3.6 ($ 29.0) $ 32.6
EBITDA $ 39.6 ($ 124.3) $ 163.9 $ 38.5 $ 5.2 $ 33.3
Net (loss)
attributable to
Collective Brands,
Inc. ($ 10.9) ($ 144.0) $ 133.1 ($ 11.6) ($ 38.1) $ 26.5
Diluted (loss) per
share ($ 0.17) ($ 2.28) $ 2.11 ($ 0.18) ($ 0.60) $ 0.42
-- Net sales for the quarter increased from last year due primarily to
strong growth at PLG in Saucony and Sperry Top-Sider.
-- The gross margin rate increased 470 basis points on an adjusted basis
due to lower product costs, lower markdowns as a result of a clean
inventory position, and leveraging occupancy and distribution center
expenses.
-- Operating profit increased to $4.7 million as a result of higher net
sales and gross margin expansion.
Consolidated Full Year Results
Collective Brands 2009 net sales were $3.31 billion, down 3.9% or 1.7% on an adjusted(1) basis. The Company’s 2009 comparable store sales decreased 2.3%. Comparable store sales for Payless and PLG declined 2.3% and 1.6%, respectively. Adjusted 2009 net earnings attributable to Collective Brands, Inc.(1) were $84.5 million, or $1.31 per diluted share, compared to $62.2 million, or $0.99 per diluted share, in 2008.
Inventory at the end of the year was $442.9 million, down 10.0% compared to the prior year end due to lower product costs and a decrease in footwear units. Capital expenditures were $84.0 million compared to $129.2 million last year. The lower capital expenditures reflect the completion of distribution centers and reduced spending on stores. During the fourth quarter of 2009, Collective Brands added 11 new Payless stores, closed 24 Payless stores, and relocated three stores (two Payless and one PLG). For the year, the Company opened 60 new stores (51 Payless and nine PLG), closed 104 stores (103 Payless and one PLG), and relocated 25 stores (22 Payless and three PLG).
Jan. 30, Oct. 31, Jan. 31,
Retail Store Counts 2010 2009 2009
----------- ----------- -----------
Payless ShoeSource 4,470 4,483 4,522
Performance + Lifestyle Group 363 363 355
----------- ----------- -----------
Total Stores 4,833 4,846 4,877
=========== =========== ===========
Quarterly Segment Results (dollars in millions)
Payless Payless PLG
Domestic International Wholesale PLG Retail Total
---------- ----------- ---------- ---------- --------
Fourth Quarter
2009
Net Sales $ 457.5 $ 123.9 $ 115.8 $ 44.5 $ 741.7
Operating
Profit /
(Loss) ($ 12.7) $ 16.7 $ 8.3 ($ 7.6) $ 4.7
Less:
Adjustments
for
Litigation $ 1.1 - - - $ 1.1
---------- ----------- ---------- ---------- --------
Adjusted
Operating
Profit /
(Loss)(1) ($ 13.7) $ 16.7 $ 8.3 ($ 7.6) $ 3.6
========== =========== ========== ========== ========
Fourth Quarter
2008
Net Sales $ 461.1 $ 112.0 $ 118.4 $ 43.7 $ 735.2
Less:
Adjustment
for Tommy
Hilfiger - - $ 17.3 - $ 17.3
---------- ----------- ---------- ---------- --------
Adjusted Net
Sales(1) $ 461.1 $ 112.0 $ 101.1 $ 43.7 $ 717.9
========== =========== ========== ========== ========
Operating
Profit /
(Loss) ($ 29.5) $ 10.3 ($ 89.7) ($ 49.6) ($ 158.5)
Add:
Adjustments $ 0.1 - $ 86.8 $ 42.6 $ 129.5
---------- ----------- ---------- ---------- --------
Adjusted
Operating
Profit /
(Loss)(1) ($ 29.4) $ 10.3 ($ 2.9) ($ 7.0) ($ 29.0)
========== =========== ========== ========== ========
-- Payless Domestic - Net sales were virtually flat, as a comparable store
sales increase was offset by 73 fewer stores at year-end. Sales
increased in children's footwear, boots, and women's accessories. The
operating results improved primarily due to gross margin rate
expansion.
-- Payless International - The net sales increase was driven primarily by
28 new store openings in Colombia and a $5 million benefit from foreign
exchange rates. The increase was partially offset by a sales decline in
Ecuador due to incremental tariffs. Operating profit increased due
primarily to a stronger holiday season and lower operating expenses
offset in part by increased costs to comply with incremental tariffs in
Ecuador. Fourth quarter operating profit in Payless International is
seasonally greater than Payless Domestic due to the importance of the
holiday season in Latin America and Puerto Rico.
-- PLG Wholesale - Higher net sales at Saucony and Sperry Top-Sider were
more than offset by the expiration of the Tommy Hilfiger adult footwear
licensing agreement. Operating profit increased due to not incurring
charges as in 2008, gross margin rate expansion, and higher net sales
at Saucony and Sperry Top-Sider.
-- PLG Retail - Net sales increased due to eight additional stores at
quarter-end offset in part by lower comparable store sales. The
operating loss narrowed due to not incurring charges as in 2008.
Outlook for Collective Brands
-- The 2010 effective tax rate is expected to be approximately 20%,
excluding discrete events primarily associated with the resolution of
outstanding tax audits.
-- Depreciation and amortization in 2010 is expected to total $140
million.
-- Capital expenditures in 2010 are expected to total approximately $100
million.
-- Collective Brands 2010 retail store count is expected to decline by
approximately 15 stores, net of store openings.Open Close Change
-------- -------- -------
Payless
Payless Domestic 54 114 (60)
-------- -------- -------
Payless International 36 11 25
-------- -------- -------
Payless Total 90 125 (35)
-------- -------- -------
PLG Total 20 0 20
-------- -------- -------
Collective Brands Total 110 125 (15)
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