Famous Footwear just missed a seventh straight quarter of comp store sales increases in the second quarter ended July 29, as comps dipped 0.1% for the period compared to a 2.2% increase in the year-ago period.
The retailer continued its efforts to keep inventories clean, but was did not see the negative impact to the bottom line. Famous again saw lower store traffic during the period, but consumers also more likely to buy better goods, pushing average unit retail and the customer
conversion ratio up for the second quarter.
Joe Wood, president of Famous Footwear, said that the growth in the
second quarter was “very balanced” with the exception of athletics,
which has started to see some renewed energy in the third quarter.
He called out the kids business as the leading segment in Q2, posting
gains across all categories. He said the womens business continued
its strong performance, driven by juniors, dress, and casual categories.
The mens growth was led by dress and casual footwear. The
sandals category was a challenge during the quarter.
Athletics continued its softening trend, comping down for the quarter
as more consumers shift from classics to fashion athletic styles, many
of which, such as Skechers, are found in the non-athletic classifications.
Classics were said to be “flat,” but the skate category and running
product from Nike and Asics were called out as key performers.
Mr. Wood said that they had planned for the decline in athletics and
shifted buying patterns accordingly, especially in July, to more lowprofile,
skate, and juniors product. He said the athletics business
“picked up nicely” in early August and was comping up as back-toschool
sales shifts later into the season. Wood said he had “no complaints”
about how the segment was performing right now and expected
that the “pleasant turnaround in August so far should continue
through September. He said athletics naturally becomes a larger percentage
of the business during back-to-school and he said it continues
to gain momentum even as the balance of the business remain positive
in their contribution. Traffic also picked up in August.
Mr. Wood said the Nike Reax product performed as expected and created
excitement and drove traffic and transactions as the brands first
allocated program for the mid-tier channel hit the stores. Nike was
described as their largest vendor and Wood said that the brand becomes
even more dominant as they continue to introduce allocated
product into the channel. He also said the Skechers business “remains
exceptional” through BTS.
Total sales for Famous Footwear were up 2.2% to $292.7 million for
Q2 from $286.2 million in the year-ago period. Gross margins were
up 120 basis points. Operating earnings jumped 28.4% to $11.9 million
in Q2, compared to $9.3 million for Q2 last year. Inventories
were “down slightly” from the same time last year even with 30 additional
stores in the mix this year. FF parent, Brown Shoe Company,
Inc., reported a 5.0% increase in consolidated net sales to $579.3 million
for the second quarter. Net earnings were $15.2 million, or 52
cents per diluted share, versus net earnings of $4.1 million, or 14
cents per diluted share, in Q2 last year.
Famous Footwear opened 28 stores and closed 17 stores in Q2, resulting
in 963 stores open at quarter-end. Famous still expects to open
approximately 90 stores and close about 40 doors for the year.
>>> Another clue to the softening of the athletic specialty
business as Nike creates better product for this channel
