US: Brown Shoe sees Q2 earnings plummet
Footwear company Brown Shoe Company has posted net earnings in the second quarter down 77.4% to $2.2m, including costs of $0.15 per diluted share from the relocation of its Famous Footwear division headquarters from Madison, WI to St Louis, MO.
Net sales in the second quarter decreased 1.3% to $569.2m compared to $576.6m in the year-ago quarter.
Gross margins in the second quarter of 2008 decreased 80 basis points to 39.3% of net sales from 40.1% of net sales in the second quarter of 2007, partly driven by increased promotions at the company's retail division.
Selling and administrative expenses in the second quarter of 2008 increased as a percent of net sales by 140 basis points to $218.3m versus $213.1m in the same period last year.
Ron Fromm, Brown Shoe's chairman and CEO, said: "During the second quarter, we continued to focus on advancing our long-term goals, while managing the business in an ongoing challenging retail environment.
"While sales and earnings were impacted by reduced store traffic and increased promotional activity across our industry, our expenses and inventory were well controlled, as we emphasised cost discipline and our freshness and velocity strategies. At the same time, we continued to invest in our brands, our stores, and infrastructure in support of our long-term growth."
Net sales at its Famous Footwear retail division increased 3.2% to $326.2m, compared to $316.1m for the second quarter of last year. Same-store sales in the quarter decreased by 2.9% and gross margins declined by 80 basis points in the quarter, as Famous Footwear increased promotional activity during the quarter
Brown Shoe's Specialty Retail segment, which primarily consists of Naturalizer stores and the Shoes.com e-commerce business, reported net sales in the quarter of $63.0m, a 1.5% increase from the year-ago period. Same-store sales declined 0.2 percent during the quarter though.
The company's wholesale net sales declined 9.3% in the quarter to $180.1m, compared to $198.4m in the year earlier period, as the company's retail partners tightly managed their inventory levels in the quarter.
Inventory at quarter-end was $502.9m, as compared to $474.5m at the end of the second quarter of 2007, Brown Shoe added.
The company expects earnings per share in the range of $1.12 to $1.29 per diluted share for the full year, earnings per share in the range of $0.31 to $0.41 per diluted share for Q3.
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