Brown Shoe Co. last week joined the growing list of footwear companies taking a hard look at their bottom lines.
The initiative — expected to save the company $22 million annually — includes a workforce reduction and the closing of 30 to 35 Famous Footwear stores.
“Everybody’s taking the opportunity to see where they can make cuts,” said Scott Krasik, an analyst with C.L. King & Associates. “Maybe the bubble of the last few years [had] masked the inefficiencies.”
During the past few weeks, Wolverine World Wide, Kenneth Cole and Reebok, among others, have all announced staff reductions and other cost-cutting measures.
At Brown, the company has offered a voluntary separation package to its domestic employees, and it will also initiate layoffs during the next few weeks.
“We continue to develop plans and manage to multiple [our] scenarios of outcome and, as part of our ongoing expense review process, we have decided to take proactive and responsible steps to respond to the economic challenges of the current environment,” Brown Chairman and CEO Ron Fromm said in a statement.
The St. Louis-based company said it could not predict how many positions would be eliminated — or quantify the costs of the reduction — until it becomes clear how many employees will take the package.
The firm also said it would discontinue wholesale shipment processing at its Fredericktown, Mo., distribution center, resulting in 59 permanent layoffs.
“While these are logical steps given the environment, we are not changing our forecasts given the continued deteriorating sales outlook,” Christopher Svezia, an analyst with Susquehanna Financial Group, wrote in a note last week. Svezia predicts that some of the savings will be reinvested in the company.
Separately, in an expected move, Brown said it had amended its revolving credit facility, raising it from $350 million to $380 million. The new plan comes with the ability to request an increase to $530 million.