St. Louis—Brown Shoe Co. said today it swung into a fourth quarter profit as the footwear company recorded fewer restructuring charges and higher revenue at its Famous Footwear division, pushing results beyond analysts’ estimates.
For the quarter ended Feb. 2, the footwear and accessories company posted net earnings for the quarter were $4 million, or 9 cents a share, compared to a loss of $8.2 million, or 21 cents a share, in the prior year. The fourth quarter results included portfolio realignment costs of $2.9 million while fourth quarter earnings 2011 included portfolio realignment and integration costs of $18.5 million.
On an adjusted basis, net earnings were up 43% to $5.9 million, or 14 cents a share, compared to $4.1 million, or 10 cents a share, in the prior year. Analysts’ average estimate expected the company to report earnings of 8 cents a share for the quarter. (Analysts’ estimates typically exclude special items.)
Net sales for the quarter were $640.2 million, up from $628.9 million in fourth quarter a year ago and above analysts’ estimate for $634.33 million in sales.
Results for both the fourth quarter of 2012 and 2011 included sales of $2.8 million and $16.5 million, respectively, from brands and businesses the company has exited. Excluding exited brands, year-over-year net sales were up 4.8% in the quarter.
Brown’s Famous Footwear chain reported record fourth quarter sales of $380.1 million, a 7.9% year-over-year improvement, with good growth in athletic shoes, boat shoes and women’s boots. Comparable store sales were up 4.4%, marking the fourth consecutive quarter of comp store growth.
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During the quarter, the company closed or relocated 18 stores and added 12 new stores, and average revenue per square foot improved 6.9% year-over-year.
Meanwhile, sales at Brown’s wholesale division edged down 5.2%. In specialty retail, sales declined 8.1%.
Gross profit margin improved to 39.3% from 37.9% in 2011. For the full year, it improved to 38.9% from 38.6% in 2011.
“In 2012, we hit several milestones at Famous Footwear, by achieving record-breaking sales for the 52-week year, as well as our highest annual operating profit,” said Diane Sullivan, president/ceo. “We also strengthened our balance sheet, by reducing short term borrowings by nearly $100 million and reduced our SB&A (selling, general and administrative) expenses by $18.3 million.”
But Brown disappointed some market analysts by its weak forecast: projecting 2013 per share earnings of $1.18 to $1.25 on revenue of $2.55 billion to $2.58 billion. Analysts’ consensus had expected $1.31 a share on $2.64 billion revenue.
“Like many other peers, we are beginning to see the effect on our consumers of recent payroll tax changes and other fiscal events,” Ruff Hammer, chief financial officer, said. “As a result, we remain cognizant about the potential for changes in consumer discretionary spending in 2013 and any related impact on our results.”
Brown Shoes is in the middle of a three-year turnaround effort to make its 1,300 stores more consumer and product focused. The move came after the company posted weaker bottom-line results in 2011 amid lackluster sales at Famous Footwear, its biggest discount footwear retailer. The revamp includes shutting struggling Famous Footwear locations and shedding businesses like its children’s wholesale operations.
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