Brown Shoe Co. said Famous Footwear delivered its second-best first quarter in the family shoe chain’s 50-year history. Unfortunately, those results were going against its top performance in fiscal Q1 2010, when toning footwear was king. Traffic was also hurt by heavy rain and tornados in key parts of its country.


Largely as a result, Brown Shoe reported earnings tumbled 63.0 percent in the first quarter to $3.7 million, or 8 cents a share. Excluding extraordinary items such as those tied to its acquisition of American Sporting Goods, earnings fell to 16 cents from 26 cents. Wall Street’s consensus estimate was 13 cents. Fiscal first quarter sales jumped 4.5 percent to $624.6 million.


Famous Footwear’s sales were down 5.4 percent to $342.7 million with same-store-sales off 3.9 percent. Operating profits slumped 33.3 percent to $18.8 million.


Famous gross margin was up 40 basis points to 45.7 percent of sales, due in part to the elimination of five weeks of BOGO sales that offset lower toning margins. For full year 2011, BOGO days are expected to be down 29 percent on top of last year’s 44 percent reduction.


On a conference call with analysts, Brown Shoe’s CFO Mark Hood noted that toning sales increased in units sold but the impact on first quarter comps was a negative 2.6 percent due to lower AURs.


“We remain confident in our strategy to replace the expected decline in toning with running, which was up more than 20 percent in the first quarter,” said Hood. “Running and toning performed well during the quarter, when the weather was actually in our favor. We lead the industry in toning revenue in the first quarter of last year, and we are still up against strong comparisons in the second quarter.”


Hood also noted that more than two-thirds of Famous Footwear stores are located in cold and moderate markets with warm and hot markets outpacing those markets by approximately 600 basis points. Comps in the Southeast grew almost 7 percent.


Overall sandal sales at Famous were down in the mid-singles due to the weather but are expected to rebound with more seasonal weather. While traffic was down, Famous conversion rate was up 3.8 percent and average unit retails were 2.4 percent higher.
In the Specialty Retail segment, largely driven by the Naturalizer chain, sales were down 1.7 percent to $59.9 million, reflecting slower sandal sales. Shoes.com sales increased 2.8 percent. Its operating losses widened to $3.7 million from $2.9 million a year ago.


Wholesale operations sales grew 27.1 percent to $222.1 million, reflecting the American Sporting Goods acquisition. Legacy wholesale sales were ahead 3.6 percent and better than expectations. ASG, acquired on February 17, contributed $41 million, or 6.6 percent, of total revenues. Dr. Scholl’s revenues were down due to efforts to grow the brand beyond the mass channel and anniversary toning sales. Contemporary fashion sales grew 14.8 percent, led a 27 percent increase by Sam Edelman. Operating earnings slid 25.2 percent t $6.5 million due to higher markdowns and allowances.


On the call, newly minted CEO Diane Sullivan said the company was in the process of addressing which wholesale brands “should be in and should be out of the portfolio” with decisions to be made in the fall.


Looking ahead, management said that due to first quarter results, BWS now expects results for the year to come in at the lower end of its previous guidance.