Collective Brands Inc., in likely its last report as a public company, said posted a profit in the second quarter despite closing hundreds of stores and taking charges related to the pending sale of the company. The 2012 second quarter net earnings attributable to Collective Brands, Inc. were $9.7 million, or 16 cents per share, compared to a loss of $35.0 million, or 58 cents per share, in the second quarter of 2011.
Collective Brands' second quarter 2012 net sales increased 0.4 percent to $886.0 million. This was driven by the company's 2.9 pecent comparable store sales increase and sales growth of 6.1 percent in the Performance + Lifestyle Group (“PLG”) Wholesale segment, offset in part by operating 375 fewer stores.
Adjusted earnings per share were 34 cents compared to 16 cents in the second quarter of 2011. Adjusted earnings before interest, taxes, depreciation and amortization were $61.3 million compared to $53.7 million the prior year, an increase of 14.2 percent.
The second quarter 2012 adjustments were comprised substantially of costs related to the review of strategic alternatives/pending sale of the company. These costs totaled $11.9 million on a pre-tax basis, or $0.18 per share after tax.
“Our second quarter results illustrate the progress that Collective Brands is making in executing the turnaround of the Payless business and continuing the growth in the Performance + Lifestyle Group,” said Michael J. Massey, Chief Executive Officer of Collective Brands, Inc. “The results reinforce the point that the new Payless strategy is working domestically as we are re-connecting with our core budget-conscious consumer through more relevant price points and styles. As we implemented the Payless strategy in Latin America during the quarter, we saw strong comparable store sales results. Within PLG, Sperry Top-Sider continues to deliver strong growth and we are again posting double-digit comparable store sales gains at Stride Rite retail stores, demonstrating their resurgence.”
Massey added, “I cannot emphasize enough how proud I am of our 30,000 associates and our leadership team for their contributions to our success.”
Consolidated Quarterly Results Selected unaudited financial data for the 13 weeks ended July 28, 2012 and July 30, 2011:
|
(Dollars in millions, except per share) |
2nd Qtr 2012 |
Adjusted2 2012 |
2nd Qtr 2011 |
Adjusted2 2011 |
Adjusted |
|||
|
Net sales |
$886.0 |
$886.0 |
$882.4 |
$882.4 |
$3.6 |
|||
|
Gross margin |
33.3% |
33.3% |
23.6% |
30.8% |
250 bps |
|||
|
Selling, general & administrative (SG&A) expense ratio |
30.9% |
29.6% |
29.6% |
28.4% |
120 bps |
|||
|
Net earnings attributable to Collective Brands, Inc. |
$9.7 |
$21.3 |
($35.0) |
$9.9 |
$11.4 |
|||
|
Diluted earnings per share |
$0.16 |
$0.34 |
($0.58) |
$0.16 |
$0.18 |
Among the highlights:
- Net sales for the quarter increased as a result of the comparable store sales increases in each of our retail businesses and growth in PLG Wholesale, offset, in part, by operating 8 percent fewer stores than at the end of second quarter last year. PLG Wholesale sales were driven by strength in Sperry Top-Sider and the Stride Rite Children's Group. In Payless, an improved merchandise mix built on a higher percentage of Incredible Value Every Day product, sharper opening price points and more basic fashions drove the same store sales increase.
- Gross margins improved to 33.3 percent from 23.6 percent in the year ago period. On an adjusted basis, the year-ago margin was 30.8 percent. The improved gross margin rate reflects strong improvement in our retail businesses resulting from same store sales increases, fewer markdowns consistent with the revised strategy in Payless and lower occupancy costs as a percent of sales from closing under-performing and non-strategic stores over the last year.
- SG&A increased to 30.9 percent as a percent of sales from 29.6 percent. On an adjusted basis, the rate was 29.6 percent against 28.4 percent. The SG&A expense ratio increased as the result of additional marketing spend, primarily at Payless, and an increase in incentive compensation linked to performance improvements.
- Inventory at the end of the quarter was $624.4 million, up 6.7 percent versus year ago levels. The planned inventory increase in Payless and Stride Rite retail stores provides greater depth to support planned comparable store sales increases, offset, in part, by operating fewer retail stores.
During the second quarter, the Company added 22 new stores (14 Payless and 8 PLG) and closed 34 stores (27 Payless and 7 PLG).
Wholly-Owned and
Joint Venture
Store Counts 07/28/12 04/28/12 07/30/2011
————– ————- ————- ————-
Payless Domestic 3.464 3,480 3,783
Payless
International 663 660 672
Performance +
Lifestyle Group
Retail 337 336 384
Total Stores 4,464 4,476 4,839
Franchise Store
———————- ————- ————- ————-
Payless International 174 160 103
Stride Rite 26 25 11
Total Franchise Stores 200 185 114
|
Wholly-Owned and Joint Venture Store Counts |
July 28, 2012 |
Apr. 28, 2012 |
July 30, 2011 |
|
Payless Domestic |
3.464 |
3,480 |
3,783 |
|
Payless International |
663 |
660 |
672 |
|
Performance + Lifestyle Group Retail |
337 |
336 |
384 |
|
Total Stores |
4,464 |
4,476 |
4,839 |
The Company also franchised stores in 23 countries and territories as of the end of the second quarter 2012.
|
Franchise Store Counts |
July 28, 2012 |
Apr. 28, 2012 |
July 30, 2011 |
|
Payless International |
174 |
160 |
103 |
|
Stride Rite
|
