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Brown Shoe Specialty Retail segment sales up
02
Sep '08
Brown Shoe Company Inc reported results for the second quarter of 2008 ended August 2.

Net sales in the second quarter decreased 1.3 percent to $569.2 million compared to $576.6 million in the year-ago quarter. Net earnings in the second quarter decreased 77.4 percent to $2.2 million, or $0.05 per diluted share, which includes costs of $0.15 per diluted share, primarily related to the relocation of the Company's Famous Footwear division headquarters from Madison, WI to St. Louis, MO. This compares to net earnings of $9.8 million, or $0.22 per diluted share, in the year-ago quarter, which included $0.08 per diluted share of costs related to the Company's Earnings Enhancement Plan.

Ron Fromm, Brown Shoe's Chairman and CEO, stated, “During the second quarter, we continued to focus on advancing our long-term goals, while managing the business in an ongoing challenging retail environment. While sales and earnings were impacted by reduced store traffic and increased promotional activity across our industry, our expenses and inventory were well controlled, as we emphasized cost discipline and our freshness and velocity strategies. At the same time, we continued to invest in our brands, our stores, and infrastructure in support of our long-term growth.”

Fromm continued, “To this end, we announced plans to implement a new enterprise resource planning system to transform the information technology infrastructure for our integrated business model, we made significant progress on the transition of Famous Footwear to St. Louis, and we continued to improve our product design competencies across our brands.

We believe these initiatives along with the diversification and growth from new brand launches, such as Fergie and our partnership with Vera Wang to design and market her Lavender Label Collection, will enable Brown Shoe to become a stronger more resilient company in the future.

Even so, we are taking a cautious approach to the back half of 2008 by appropriately reducing guidance and tightening our standards for capital management. As a result, we now expect 90 new store openings for Famous Footwear for the year, versus our original plan of 130. While we expect the retail environment to remain uncertain, we believe we are in a position of strength and expect to win market share while executing to our long-term strategic goals.”

Consolidated Results for Second Quarter of 2008:
• Net sales were $569.2 million, a decrease of 1.3 percent compared to $576.6 million in the second quarter of 2007;

• Gross margins in the second quarter of 2008 decreased 80 basis points to 39.3 percent of net sales from 40.1 percent of net sales in the second quarter of 2007. This decrease was driven by increased promotions at the Company's retail
division as well as an increased sales mix of licensed brands versus owned brands, an increased mix of mid-tier sales, and higher allowances in its Wholesale division;


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