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Brown Shoe Company Reports Third Quarter 2012 Results

Stocks in this article: BWS

Brown Shoe Company, Inc. (NYSE: BWS) ( brownshoe.com) today reported its third quarter 2012 financial results, with net sales of $732.2 million versus third quarter 2011 net sales of $713.8 million. Results for both the third quarter of 2012 and 2011 included sales of $15.6 million and $25.8 million, respectively, from brands and businesses the company has exited. Excluding exited brands, net sales were up 4.2% year-over-year.

Net earnings were $24.3 million, or $0.56 per diluted share, in the third quarter of 2012 versus $33.7 million, or $0.79 per diluted share, in 2011. Third quarter 2012 results included portfolio realignment charges of $2.6 million. Earnings for the third quarter of 2011 included a $21.6 million gain on the sale of AND 1, which was partially offset by portfolio realignment and integration related costs of $5.6 million. On an adjusted * basis, net earnings of $25.9 million, or $0.60 per diluted share, improved 18.3% compared to $21.9 million, or $0.51 per diluted share, in the prior year. Gross profit margin for the third quarter of 2012 improved to 39.0% from 38.7% in 2011.

“With the third quarter, we delivered not only solid back-to-school results, but also overall strong quarterly same-store-sales growth of 6.8% at Famous Footwear,” said Diane Sullivan, president and chief executive officer of Brown Shoe Company. “We also saw improvement in sales for both our contemporary fashion and healthy living brand portfolios, as we continued to deliver trend-right products that are must-haves for consumers.”

   

US$M, except per share (unaudited)

     

13 Weeks

   

39 Weeks

   

52 Weeks

      3Q’12     3Q’11     Change     3Q’12     3Q’11    

Change

    3Q’12     3Q’11     Change  
Consolidated net sales   $732.2     $713.8     2.6% $1,957.9     $1,953.9     0.2% $2,586.8     $2,558.5     1.1%  
Famous Footwear   436.8 416.2 4.9% 1,134.2 1,103.9 2.7% 1,486.7 1,459.4 1.9%  
Wholesale Operations   232.6 233.6 (0.4%) 650.7 665.8 (2.3%) 855.8 839.7 1.9%  
Specialty Retail   62.8 64.0 (1.8%) 172.9 184.3 (6.2%) 244.3 259.4 (5.8%)  
Gross profit   285.8 276.5 3.4% 758.7 758.1 0.1% 997.2 993.4 0.4%  
Margin   39.0% 38.7% 30 bps 38.7% 38.8% -10 bps 38.6% 38.8% -20 bps  
SG&A   242.4 239.4 1.2% 680.5 707.6 (3.8%) 910.4 934.4 (2.6%)  
% of net sales   33.1% 33.5%

-40 bps

34.7% 36.2% -150 bps 35.2% 36.5% -130 bps  
Net restructuring, other special charges   2.3 4.7   21.3 7.1   37.8 9.6    
Impairment of intangible assets   -- -- -- 5.8 -- -- 5.8 -- --  
Operating earnings   41.1 32.4 27.1% 51.1 43.4 17.6% 43.2 49.4 (12.5%)  
% of net sales   5.6% 4.5% 110 bps 2.6% 2.2% 40 bps 1.7% 1.9% -20 bps  
Net interest expense   5.4 6.6 (17.5%) 17.2 20.6 (16.8%) 23.0 26.0 (11.3%)  
Earnings before income tax   35.7 25.8 38.5% 33.9 22.8 48.8% 20.2 23.4 (13.8%)  
Tax rate   31.9% 31.7%   31.6% 32.0%   18.5% 19.9%    

Net earnings from discontinued operations

  -- 16.1   -- 17.1   (1.4)

17.1

   
Net earnings   $24.3 $33.7 (28.0%) $23.5 $32.8 (28.5%) $15.2 $36.2 (57.9%)  
Per diluted share   $0.56 $0.79 (29.1%) $0.55 $0.75 (26.7%) $0.36 $0.82 (56.1%)  
Adjusted net earnings   $25.9 $21.9 18.3% $42.7 $26.2 63.1% $46.8 $31.1 50.5%  
Per diluted share       $0.60     $0.51     17.6%     $1.00     $0.60     66.7%     $1.09     $0.71     53.5%  
 

Third Quarter Highlights

Famous Footwear reported record third quarter 2012 sales of $436.8 million, a 4.9% year-over-year improvement, with good growth in boat shoes, running shoes and accessories. On a same-store-sales basis, the third quarter was up 6.8% over the prior year, with the back-to-school season up 5.5%. During the quarter, the company closed or relocated 11 stores and added 18 new stores, and average revenue per square foot improved 10.3% year-over-year.

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