Brown Shoe Specialty Retail segment sales up

02 Sep '08

5 min read

• Selling and administrative expenses in the second quarter of 2008 increased as a percent of net sales by 140 basis points to 38.4 percent of net sales, or $218.3 million, versus 37.0 percent, or $213.1 million, in the same period last year. The year-over-year change was driven by costs related to the relocation of the Famous Footwear headquarters to St. Louis, operating 103 more Famous Footwear stores, and deleverage as a result of lower net sales, partially offset by lower incentive compensation costs;

• Operating earnings as a percent of net sales decreased to 0.9 percent, or $4.9 million, in the second quarter of 2008 versus 3.1 percent of net sales, or $17.9 million in the second quarter of 2007;

• The Company generated a net tax benefit in the second quarter primarily related to a higher relative mix of foreign earnings, which are subject to lower statutory rates, the continuing shift in the Company's Far East operations to support its branded product business resulting in greater cost deductibility in higher-taxed jurisdictions, and tax credits for incentives related to the Company's headquarters consolidation initiatives;

• Net earnings were $2.2 million, or $0.05 per diluted share, versus net earnings of $9.8 million, or $0.22 per diluted share, in the prior year. Second quarter of 2008 net earnings include charges of $6.2 million, or $0.15 per diluted share, primarily related to the relocation of the Company's Famous Footwear division to St. Louis. Second quarter of 2007 net earnings included charges of $3.6 million, or $0.08 per diluted share, related to the Company's Earnings Enhancement Plan.

Segment Highlights for Second Quarter of 2008:

Retail Division
Net sales at Famous Footwear increased 3.2 percent to $326.2 million, compared to $316.1 million for the second quarter of last year. Same-store sales in the quarter decreased by 2.9 percent, versus a decrease of 0.3 percent, as reported on a comparable calendar basis, in the year-ago period. Gross margins declined by 80 basis points in the quarter, as Famous Footwear increased promotional activity.

Operating earnings decreased to $11.3 million, or 3.5 percent of net sales, compared to $19.0 million, or 6.0 percent of net sales, in the year-ago period. Famous Footwear opened 30 new stores and closed three during the quarter, resulting in 1,127 stores open at the end of the quarter compared to 1,024 during the year-ago period.

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Brown Shoe Company Inc

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