Consumer spending environment remains challenging in Q1 - Brown Shoe

28 May '09

5 min read

Brown Shoe Company, Inc. reported results for the first quarter of fiscal 2009 ended May 2, 2009.

First Quarter 2009 Results
· Net sales were $538.7 million, a decrease of 2.8 percent compared to $554.5 million in the year ago quarter;
· Net loss attributable to Brown Shoe Company, Inc. (hereafter “net loss”) was $7.6 million, or $0.18 per diluted share, inclusive of information technology initiatives costs of $0.04 per diluted share. This compares to net earnings attributable to Brown Shoe Company, Inc. (hereafter “net earnings”) in the first quarter of 2008 of $7.2 million, or $0.17 per diluted share, which included a net gain of $0.12 per diluted share from insurance recoveries, net of associated fees and costs, related to environmental remediation, partially offset by costs from the Company's headquarters consolidation initiatives;
· Cash and cash equivalents totaled $46.1 million at quarter-end;
· Debt, net of cash and cash equivalents, was reduced by $32.7 million from the end of fiscal 2008; and
· Average inventory per store at quarter-end was down 5.1 percent at Famous Footwear versus the prior year period and down 5.6 percent, on a constant dollar basis, at the Company's North American Specialty Retail stores.

Ron Fromm, Brown Shoe's Chairman and CEO, stated,“As anticipated, the consumer spending environment remained challenging in the first quarter, which negatively impacted our sales and profitability. During the quarter, we were successful in advancing our key priorities that focused on managing expenses, inventory, working capital and debt, while maximizing opportunities within our largest businesses of Famous Footwear, Naturalizer, and Dr. Scholl's. As a result, our sales and operating performance were slightly better than our expectations, we generated positive cash flow, and we lowered our net borrowings by more than $30 million from the end of last year.”

Fromm concluded, “While sentiment in the industry may have improved some since last quarter, visibility remains difficult, so we will continue to manage our business with discipline, focusing on expense, capital, and balance sheet management. In keeping with this objective, we have decreased our Famous Footwear store opening plan for 2009 and we now expect net openings to be flat to down 15 in 2009 (open 55 and close 55 to 70). Additionally, we are planning net store closings of approximately 30 stores per year in 2010 and 2011. We expect sequential improvement of operating results in the second quarter, resulting in a narrower loss than in the first quarter, and that our efforts to manage expenses will enable us to generate positive net earnings for the full-year.”

Consolidated Results for First Quarter 2009:
- Net sales were $538.7 million, a decrease of 2.8 percent compared to $554.5 million in the first quarter of 2008. Famous Footwear net sales were $317.6 million, a decline of 0.4 percent from the first quarter of last year, as same-store sales declined 4.9 percent in the quarter, partially offset by operating 66 more stores. Net sales at the Company's wholesale division decreased by 5.0 percent in the quarter versus the same period last year, with net sales of Naturalizer increasing by 0.6 percent versus the same period last year and Dr. Scholl's decreasing by 5.1 percent;

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