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Brown Shoe Company Reports Second Quarter 2012 Results

Stocks in this article: BWS

Brown Shoe Company, Inc. (NYSE: BWS, brownshoe.com) today reported its second quarter 2012 financial results, with net sales of $599.3 million versus second quarter 2011 net sales of $620.6 million. Results for both the second quarter of 2012 and 2011 included sales of $8.5 million and $25.8 million, respectively, from brands and businesses the company has exited over the past nine months. Excluding exited sales, net sales were down 0.7% year-over-year.

The second quarter net loss of ($2.5) million, or ($0.06) per diluted share, improved when compared to ($4.6) million, or ($0.11) per diluted share, in 2011. The second quarter 2012 loss included portfolio realignment charges of $12.4 million and $2.3 million of charges related to a previously announced organizational change. On an adjusted * basis, net earnings of $6.8 million, or $0.16 per diluted share, improved compared to a loss of ($2.7) million, or ($0.06) per diluted share, in the prior year. Gross profit margin for the second quarter of 2012 was 39.0% versus 37.6% in 2011.

“For the second quarter, we delivered record setting sales and operating earnings at Famous Footwear, which was coupled with strong performance from our Contemporary Fashion brands,” said Diane Sullivan, president and chief executive officer of Brown Shoe Company. “We also continued to see leverage from our strategic portfolio realignment efforts, and this quarter’s results are another positive proof point we are delivering against our commitment to drive shareholder value.”

US$M, except per share (unaudited)

  13 Weeks   26 Weeks   52 Weeks
  2Q’12   2Q’11   Change   2Q’12   2Q’11   Change   2Q’12   2Q’11   Change
Famous Footwear     350.3       344.9     1.6 %     697.4       687.7     1.4 %     1,466.1       1,464.7     --  
Wholesale Operations     195.0       215.2     (9.4 %)     418.2       432.1     (3.2 %)     856.9       833.2     2.8 %
Specialty Retail    

54.0

     

60.5

    (10.8 %)    

110.1

     

120.3

   

(8.5

%)

   

245.4

     

262.9

    (6.6 %)
Consolidated net sales   $ 599.3     $ 620.6     (3.4 %)   $ 1,225.7     $ 1,240.1     (1.2 %)   $ 2,568.4     $ 2,560.8     0.3 %
Gross profit     233.8       233.6     0.1 %     472.9       481.6     (1.8 %)     987.9       999.1     (1.1 %)
Margin     39.0 %     37.6 %   140 bps     38.6 %     38.8 %   -20 bps     38.5 %     39.0 %   -50 bps
SG&A     219.3       233.9     (6.3 %)     438.2       468.1     (6.4 %)     907.5       942.1     (3.7 %)
% of net sales     36.5 %     37.7 %   -120 bps     35.8 %     37.7 %   -190 bps     35.3 %     36.8 %   -150 bps
Net restructuring, other special charges     7.4       0.7     n/m       18.9       2.4     n/m       40.2       6.7     n/m  
Impairment of intangible assets     5.8       --     n/m       5.8       --     n/m       5.8       --     n/m  
Operating earnings (loss)     1.3       (1.0 )   n/m       10.0       11.1     (9.9 %)     34.4       50.3     (31.5 %)
% of net sales     0.2 %    

(0.2

%)

  40 bps     0.8 %     0.9 %   -10 bps     1.3 %     2.0 %   -70 bps
Net interest expense     5.7       7.5     (23.8 %)     11.8       14.1     (16.5 %)     24.1       24.3     (0.3 %)
Earnings (loss) before income tax     (4.4 )     (8.5 )   48.0 %     (1.8 )     (3.0 )   40.6 %     10.3       26.0     (60.6 %)
Tax rate     38.3 %     35.5 %           38.8 %     29.6 %           5.1 %     24.6 %      

Net earnings from discontinued operations

    --       0.7     n/m       --       1.0     n/m       14.7       1.0     n/m  
Net earnings (loss)     ($2.5 )     ($4.6 )   45.0 %     ($0.8 )     ($0.9 )   8.8 %   $ 24.7     $ 21.0     17.4 %
Per diluted share     ($0.06 )     ($0.11 )   45.5 %     ($0.02 )     ($0.02 )   --     $ 0.58     $ 0.47     23.4 %
Adjusted operating earnings   $ 15.9     $ 1.2     n/m     $ 37.4     $ 17.7     111.2 %   $ 85.0     $ 61.2     38.9 %
Per diluted share   $ 0.16       ($0.06 )   n/m     $ 0.39     $ 0.09     333.3 %   $ 1.00     $ 0.65     53.8 %
           

Second Quarter Highlights

Famous Footwear reported record second quarter 2012 sales of $350.3 million, a 1.6% year-over-year improvement, with both running and sandals contributing, up 12.8% and 3.7%, respectively. On a same-store-sales basis, the second quarter was up 3.9% over the prior year. During the quarter, the company closed or relocated 26 stores and added 14 new stores, and average revenue per square foot improved 6.7% year-over-year.

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