Brown Shoe Wholesale Boosts Q4 Earnings

Lower costs and stronger sales in Brown Shoe Co.’s wholesale division helped drive a solid quarter for the St. Louis-based firm.

Earnings vaulted up 55 percent to $6.2 million, or 14 cents a diluted share. The result beat analysts’ forecast of 10 cents and was higher than the $4 million, or 9 cents a diluted share, in the prior corresponding period.

Revenue for the quarter fell 3 percent to $600 million, versus $618.7 million in the year-ago period. The result missed analysts’ expectations of $621.2 million.

Boosting the quarterly result was strength in the St. Louis-based firm’s wholesale division, which reported a 13.5 percent rise in sales to $196.3 million. Sales for the contemporary wholesale division surged 28.2 percent. Revenues hit $89.1 million due to strong demand for the Sam Edelman and Franco Sarto brands.

On the strong performance of the wholesale business, Diane Sullivan, chairman, president and CEO, told Footwear News in an exclusive interview, “The good news was it was across the entire portfolio. And in our contemporary fashion business, Sam Edelman had an almost 50 percent increase in business in the quarter.”

Meanwhile, Famous Footwear sales for the quarter dropped 8.6 percent to $347.4 million, with same-store sales falling 1.8 percent, largely due to the unseasonably cold winter, which tapered demand for athletic shoes but drove higher boot sales, management said.

On a conference call with investors and analysts, Sullivan said, “Unfortunately, a fabulous 2013 ended with one of the snowiest and coldest winters in recent memory, and we lost nearly 4 percent of our potential selling days in the fourth quarter due to weather. Accordingly, we saw an increase — as you would imagine — in boot sales, which were up 7.5 percent, but athletic sales were down 5.1 percent.”

For the full year, reported earnings were $38.1 million, or 88 cents a diluted share, versus $27.5 million, or 64 cents. Adjusted for one-off items, earnings were $61.5 million, or $1.41 a diluted share. Brown posted sales of $2.51 billion for the year, 1.4 percent higher than the $2.48 billion reported in 2012.

Looking ahead, Sullivan told FN, “We have decent expectations for 2014, although we’re off to a bit of a slow start with all the weather out there. 

“We expect the first quarter to be flat to a little bit down on last year, but as we look to our hot and warm-weather shoe markets, we see really strong velocity,” she said, adding that Brown’s management is very bullish on the company’s performance in fiscal 2014 once the weather turns.

She also predicted that shoes designed for the relaxed, casual category will be a hot trend for the year. “Anytime we have canvas slip-on shoes, they perform extremely well, and the relaxed vibe is selling,” Sullivan said.

For fiscal 2014, Brown predicted earnings of between $1.45 and $1.55 a diluted share on revenue of between $2.58 billion and $2.6 billion.

Brown CFO Russ Hammer added, “For 2014, we expect to continue to deliver toward our long-term goals while balancing our realistic outlook in terms of the economy, the consumer and the weather, especially this early in the year.”

Shares of Brown Shoe were 4.2 percent higher, at $26.47, in afternoon trading.

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