Brown Shoe to Carry Sales Momentum into 2010

BOSTON — Brown Shoe Inc. was “pleased but not satisfied” with its return to profitability in 2009, and last week said its top priority in the year ahead would be to further increase sales and earnings.

Chairman and CEO Ron Fromm forecast “a return to mid-single-digit sales growth for Brown Shoe during the year, coupled with a doubling of our earnings in the next 12 to 15 months.”

He added on the firm’s post-earnings conference call, “As we look forward to 2010, while the environment feels much better than it did a year ago, there still remains an element of uncertainty as to the pace and sustainability of the recovery. Regardless, we believe our business will continue to build on the favorable momentum from the back half of 2009.”

Looking to its biggest division, Famous Footwear, which Fromm noted had “record” fourth-quarter sales, the CEO said the retailer will focus in 2010 on growing revenues via the toning category, as well as work on driving stronger sales per square foot.

“Toning should continue to provide a significant lift to first-half 2010 comps as distribution has only reached all doors this [first] quarter,” Christopher Svezia, an analyst at Susquehanna Financial Group, wrote in a report last week. “However, we would watch for any signs of canibalization as other channels also ramp up in the category.”

Famous Footwear same-store sales are expected to increase in the low to mid-single digits for the year, the company said, with first quarter comps up in the high single digits. About 25 new stores are seen opening in the year, and the company has targeted 50 underperforming units for closure.

Brown also will focus on the toning category via its wholesale Dr. Scholl’s and Naturalizer brands.

“We do believe that this healthy living and wellness and comfort in toning trend dovetails nicely with the Dr. Scholl’s brand promise of comfort and well being,” Brown Shoe President and COO

Diane Sullivan said on the call.

Wholesale revenues are expected to be up in the high single digits to low double digits in the year.

St. Louis-based Brown reported last Wednesday fourth-quarter net earnings of $5.1 million, or 12 cents a diluted share, versus a loss of $153.1 million, or $3.68, the prior year. Results in the latest quarter included after-tax charges related to organizational changes and certain information technology projects.

Net sales rose 9 percent to $566 million. Sales at Famous Footwear rose 10 percent to $342.7 million, which included a 9 percent same-store sales increase. In addition, sales jumped nearly 40 percent at FamousFootwear.com. Toning product and boots were strong sellers.

In the wholesale division, fourth-quarter sales totaled $151.1 million, an increase of 6 percent. Specialty retail sales rose 10 percent to $72.2 million.

For the year, Brown earned $9.5 million, or 22 cents, versus a loss of $133.2 million, or $3.21, the prior year. Revenues fell slightly to $2.24 billion from $2.28 billion.

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