Brown Shoe reduces store expansion plans

26 Nov '08

5 min read

* Selling and administrative expenses in the third quarter of 2008 increased by 8.6 percent to $235.8 million, or 37.3 percent of net sales, versus $217.0 million, or 33.7 percent of net sales, in the same period last year. The year-over-year change primarily consisted of two components, with 190 basis points of the change resulting from non-recurring costs of $16.5 million related to the Company's headquarters consolidation and its information technology initiatives, versus $4.5 million in the prior year related to Earnings Enhancement Plan costs. The remaining 170 basis point change resulted from the impact of operating 78 more Famous Footwear stores, expense deleverage from negative same-store sales performance, and lower wholesale sales;
* The factors above resulted in a decrease in operating earnings as a percent of net sales to 2.0 percent, or $12.9 million, in the third quarter of 2008, versus 6.6 percent of net sales, or $42.8 million in 2007;
* The Company recognized a $0.9 million tax benefit in the quarter resulting from a higher relative mix of foreign earnings, which are subject to lower statutory rates, and state tax incentives related to job creation and training, resulting from the Company's headquarters consolidation;
* Net earnings in the third quarter were $10.4 million, or $0.25 per diluted share, versus net earnings of $27.0 million, or $0.61 per diluted share, in the prior year. Third quarter of 2008 net earnings included charges of $10.1 million, or $0.24 per diluted share, primarily related to the Company's headquarters consolidation and its information technology initiatives. Third quarter of 2007 net earnings included charges of $2.9 million, or $0.06 per diluted share, related to the Company's Earnings Enhancement Plan.

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Brown Shoe Company Inc

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