Earnings Preview: DSW, Collective, Brown Shoe, Genesco

Earnings Preview: DSW, Collective, Brown Shoe,
DSW

Four footwear firms report their first-quarter earnings this week. Here’s what analysts are expecting:

DSW Inc.

Analysts polled by Yahoo Finance expect DSW to earn 75 cents a share in the first quarter when the retailer reports its results on Tuesday.

Steve Marotta, analyst at C.L. King and Associates, said he expects revenue to increase 8 percent to $486.9 million, from $449.5 million in the year-ago period.

“The quarter started a bit better than it finished, [and] given the company’s Northeast and Midwest store concentration, weather-related weak sandal sales in April might be a component in any reported late-quarter softness,” Marotta wrote in a research note.

“Sandals [will] generate larger dollar volumes and comprise a greater percentage of sales in Q2 compared to Q1, [and] while weather is a transitory issue, we recognize management’s ability to execute as a permanent aptitude,” he added.

Collective Brands Inc.

Will Payless domestic comparable-store sales finally register a positive change?

“We believe unfavorable weather likely pushed back sales of spring product, such as sandals and open-toe footwear, and that a later Easter kept traffic levels subdued earlier in the quarter,” said a research note from Susquehanna Financial, adding it is lowering its second-half numbers in anticipation of increasing gross margin pressures.

“While the company plans to take price increases, we expect some resistance from the Payless domestic customer to lead to a decrease in units, particularly if gas prices remain high,” the note added.

The good news is the Performance + Lifestyle Group wholesale should see more success given its strong stable of brands — but investors should also expect to see lower gross margins.

When the company reports on Tuesday, analysts are looking for EPS of 82 cents a share on revenue of $915.1 million, as polled by Yahoo Finance.

Brown Shoe Co. Inc.

The outlook for Brown Shoe is mixed, as analysts said robust gains in wholesale will be mildly offset by poor performance in retail.

Susquehanna Financial expects a same-store sales decline of 2 percent at Famous Footwear and a 20 percent increase in wholesale revenues.

“Famous Footwear will need to see a sequential improvement in comps to attain the full-year guidance of low to mid single-digit comps and stable gross margin,” said Susquehanna analyst Christopher Svezia in a research note. “Unseasonably cold spring weather also dampened sales of open-toe product in the first quarter and could lead to higher markdowns in May. Comparisons [will be] tough in the next two quarters and even more so on a two-year basis.”

Contemporary brands and the recently acquired American Sporting Goods are expected to drive more than 30 percent of growth at wholesale for the year, Svezia added.

Analysts are looking for EPS of 14 cents a share on revenue of $622.2 million, as polled by Yahoo Finance, when the company announces its results Wednesday.

Genesco Inc.

Genesco is expected to report good results for the quarter on Thursday, when analysts will be looking for earnings of 48 cents a share, as polled by Yahoo Finance. Revenue is expected to rise to $441.3 million.

“The strong start in February, the strong trends in footwear and hats, the closure of the Sports Avenue acquisition and the potential shift of tax refunds into the first quarter of 2012 should all be additive to sales in the quarter and for the full year,” said analyst Sam Poser in a research note released by Sterne Agee.

“We expect a 6 percent same-store sales increase at Journeys, driven by fashion items such as wedges, sandals and boots [and] a 4 percent same-store sales increase at Johnston & Murphy, as we believe the brown shoe trend has continued to accelerate,” Poser said.

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