Famous Footwears fourth quarter sales grew 9.7% to $342.7 million, driven by a 9% comp store sales increase that represented its largest quarterly gain in more than a decade. Average selling prices and conversions increased, reflecting sales of higher price-point product both in toning and in boots, as well increased full price selling as the chain anniversaried significant liquidations in Q4. This offset a slight decline in traffic and average pairs per transaction.
On a conference call with analysts, Diane Sullivan, president and COO of Brown Shoe Co., the parent of Famous, said that while Famous was expected to show improvement, it exceeded expectations. Results followed a 3.6% decline in the prior-year quarter, resulting in a two-year comp gain of 5.4%. Also, for the first time in a decade, December sales were bigger than August sales.
Women’s churned out an 18% comp gain, driven by a strong increase in women’s athletics, particularly toning products.
We built on the robust consumer demand for this category with targeted marketing programs as well as TV and digital ads from our partners. And we are certainly continuing these efforts into 2010, said Sullivan.
Famous Footwears boot assortments also performed well, both in fashion as well in seasonal boots, which benefited from the colder winter weather. Mens declined 2.6% on a comp basis although it was partly due to liquidations to free up space for growing categories. Men’s Athletics posted a 2.9% gain, led by running, skate and cross-training.
Although Sullivan described it as a small business today, she said they have seen increasing momentum in the men’s toning product and said she believes the opportunity will continue to grow.
The fourth quarter kids business at Famous was down 2.6% on a same-store basis, driven by boots. Accessories comps surged 40% for the quarter.
Gross margins at Famous increased by 290 basis points to 44.1% of sales due to less aggressive promotions and the success of key product categories. The SG&A margin was 260 basis points lower due to sales leverage.
Famous Footwear recorded an operating profit of $13.9 million in the period against an operating loss of $11.9 million a year ago.
Famous ended the quarter with inventory up 8% on an average per store basis, consistent with its high-single digit plan as well as the investment in higher priced goods, particularly new toning styles. Our aged inventory position continues to be in fantastic shape, said Sullivan.
Although the month represents the smallest month of the quarter, February comps were up double-digits. First quarter comps at Famous are expected to increase in the high-single digit range and expand in the low- to mid-single digit range for the full year.
The chain is expected to open 25 stores and close 50 in 2010.
