Brown Shoe Co.’s strong first-quarter earnings performance was applauded by market watchers, who were upbeat about the rest of the year.
While unfavorable weather stalled sales early in the quarter, late reads show a dramatic uptick in revenue.
“The bottom line is that trends improved at the end of the quarter and momentum has continued moving into the second quarter,” Susquehanna Financial analyst Christopher Svezia wrote in an earnings note. “Clearly results were well received by investors, with shares up 12 percent on the news.”
Brean Capital LLC analyst Danielle McCoy added, “[Brown’s] solid results were a reiteration of the enormous progress made to stabilize the business model, and we believe strong momentum will continue as management executes further against its strategic plan. Despite poor weather conditions … management proved their ability to adjust product flow and maximize inventories by having the right product in the right stores at the right time, as well as capitalizing on its powerful stable of wholesale brands.”
Last month, the firm sold its Avia and Nevados brands for $74 million to Galaxy Brand Holdings Inc.
“This transaction will help us better focus our resources and efforts, strengthen our balance sheet and better position us to take advantage of future opportunities,” Brown President and CEO Diane Sullivan said on a conference call with investors and analysts. “It also allows us to continue to expand and strengthen the Ryka brand, which was the most integral and relevant part of [the American Sporting Goods] acquisition for us.”
Weather woes hampered sales at Famous Footwear during the first two months of the quarter; however, comparable-store sales increased 14.2 percent in April. “The good news is that we made up the difference faster than expected and were back on track to meet our Famous Footwear sales plan for 2013 by mid-May,” said Sullivan.
For the first quarter, the firm reported a net loss of $10.8 million, or 26 cents a share, compared with a profit of $1.7 million, or 4 cents, in the same period of 2012. Revenues during the quarter declined to $588.7 million, from $598.2 million a year ago.
On an adjusted basis — factoring in sales lost from sold brands — the company posted earnings of $13.8 million, or 32 cents, up 37.7 percent compared with the $10 million, or 23 cents, reported a year ago.
Analysts polled by Yahoo Finance had expected earnings of 22 cents on revenues of $609.1 million.
During the quarter, Famous Footwear racked up sales of $352.3 million, a 1.5 percent improvement over the $347.1 million reported a year ago, led by demand for athletic and canvas styles. The company closed or relocated 13 stores during the quarter, and opened 12 new locations.
On the wholesale side of the business, sales decreased 2.9 percent during the quarter, excluding discontinued and exited brands.
The company also raised its full year guidance and expects earnings of $1.22 to $1.29 a share, on revenues of $2.54 billion to $2.57 billion.