Brown Shoe Company saw continued challenges in certain parts of their Wholesale business and weakness at Naturalizer Retail offset nice operating profit gains at Famous Footwear in the fiscal third quarter ended October 30. BWS beat EPS estimates by a penny in Q3, but fell far short of the year-ago performance. The quarter was also said to be favorably impacted by reduced compensation costs related to stock-based and incentive plans of $5.3 million after-tax, compared to Q3 LY.

The Famous Footwear sales increase was driven by new stores and Athletics, which grew 9% for the period. The Athletics business was fueled by Fashion Athletics driven by color and exclusive product. In non-Athletic, the Children’s business increased 5%, but the Men’s categories were down 1% and the Women’s business declined 6% for the quarter. The Casual categories were blamed for much of the weakness. Famous Footwear president Joe Wood said they flowed cold-weather goods later this year as the consumer shifts buying habits. That action has enable Famous to keep inventories lower while still capitalizing on late-season Athletic sales and Boot sale where the weather has shifted.

The improvement in Famous Footwear operating earnings was attributed to the leveraging of higher sales across the expense base.

In the Wholesale division, the LifeStride brand had a 19.4% increase in sales and the Carlos business increased 65.9% for the quarter. Naturalizer wholesale sales were down 9.8%. Unfilled orders for the Wholesale division are running 6% higher than last year.

Continued challenges at retail in the fourth quarter has prompted Brown to lower its full-year earnings guidance to $2.35 to $2.50 per diluted share, which would be a decline of 0.8% to 6.7% from diluted EPS of $2.52 last year. BWS estimates fourth quarter diluted EPS to be in the 48 cents to 63 cents per share range, versus 27 cents for the year-ago quarter, based on “slightly positive” same-store sales for the period. Famous comps are expected to be flat to up one percent, with Wood stating that the Boot business would be “slightly down”, and more than offset by the Athletic business.