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Brown Shoe Q2 profit jumps, introduces strategic earnings enhancement plan

23 Aug '06

4 min read

These strategic initiatives are currently expected to yield the following:

-- In 2006, benefits related to the strategic initiatives are expected to be minor with after-tax implementation costs estimated at $6 million to $7 million;

-- In 2007, after-tax benefits are estimated to be $10 million to $12 million with after-tax implementation costs estimated at $14 million to $16 million; and

-- Beginning in 2008, annual after-tax benefits are estimated to be $17 million to $20 million.

Total sales at Famous Footwear, the company's 963-store family footwear chain, rose 2.2 percent to $292,682,000 for the quarter, versus $286,245,000 for the same 13-week period last year. While same-store sales for the period decreased 0.1 percent, gross margin rate rose 120 basis points, which drove an operating earnings increase of 28.4 percent to $11,935,000 from $9,296,000 for the year-ago period.

Same-store sales for the 305 US and Canadian stores declined 2.7 percent. The division opened one new store and closed eight during the quarter.

For the first half of fiscal 2006:

-- Net sales increased 7.5 percent to $1,154,857,000, compared with $1,074,763,000 in the first half last year.

-- Net earnings for the six months were $25,222,000, or $0.87 per diluted share, inclusive of $0.07 per diluted share for stock option expense compared to $7,862,000, or $0.28 per diluted share, in the first half of fiscal 2005.

-- Net earnings, adjusted to exclude costs related to the new strategic initiatives and net recoveries from insurance companies related to remediation costs associated with the company's Denver, Colorado facility were $22,021,000, or $0.76 per diluted share, inclusive of $0.07 per diluted share for stock option expense.

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