Famous Footwear endured a tough quarter and back-to-school period,
according to company President Joe Wood. He pointed to the shift in the
retail calendar and the tough comparison to last year, when Famous
posted a very strong quarter, but also cited reduced traffic flow as a
major contributor to a sales decline.
Famous Footwear sales declined 1.4% to $361.0 million in the third
quarter, compared to $366.3 million for the third quarter last year.
Same-store sales for the quarter decreased 6.2%, or declined 2.6% on a
comparable calendar basis. Same-store sales declined 4.1%, or an
increase of 1.2% on a comp calendar, in the first half of the quarter
and declined 9.7%, or 8.8% on a comp calendar basis, in the back half
of the quarter. The company posted an 8.2% same-store sales
increase in the year-ago period.
Traffic declined 6% for the period, or down 3% on a comparable calendar
basis. Average unit retails were up about 1%, while conversions were
down 1.9%. Wood said all channels were affected during the
back-to-school timeframe, including the mall, strip stores and outlets.
Lower sales, along with a “slight decline” in gross margin and a lack
of leverage on expenses, led to a 22.2% decline in operating earnings
to $30.8 million, or 8.5% of sales, for the third quarter, compared to
$39.6 million, or 10.8% of sales, in Q3 last year.
Mr. Wood described August traffic as “down a little bit,” but overall,
the month was still described as “fairly decent.” September was
poor and October was said to be very poor. Traffic has improved
recently as weather has turned more seasonal and the boot business
picks up, but November was still negative. Wood said they
maintained their operating philosophy for markdown cadence, making the
statement that it would not have been productive to increase promotions
in a lower-traffic environment. They increased promotions the
last weekend of October to clean up inventory levels and moved their
planned Holiday promotions up two weeks to mid-November.
The kids business performed well for Famous Footwear, with sales up 3%
on a store-for-store basis for the quarter. Accessories sales were up
5% on a store-for-store basis. Athletics were “basically flat” for the
period. These increases were more than offset by an 8% comp
sales decline in the women's non-athletic business and 10% decrease in
men's non-athletic.
Total Brown Shoe Company revenues decreased 4.6% to $645.5 million for
the third quarter from $676.8 million for year-ago period. Net
income came in at $27.0 million, or 61 cents per diluted share, versus
net income of $26.9 million, or 62 cents per diluted share, in the
prior-year period.
For fiscal 2007, BWS now estimates that sales will range from $2.38
billion to $2.39 billion and expects diluted EPS of $1.40 to $1.45 per
share. On an adjusted basis, net earnings per diluted share are now
estimated to be $1.65 to $1.70. This estimate is predicated on
flat to negative 1% comp store sales at Famous Footwear for the full
year. Wholesale division sales are expected to decline 14% to 15% in
2007. The company continues to expect that sales will grow in its
Wholesale division in 2008 by mid-single-digits, as it continues to
execute its growth initiatives.
Famous Footwear opened 51 new stores and closed 15 during the quarter,
resulting in 1,060 stores open at the end of the quarter compared to
979 during the year-ago period.
