• Second quarter 2009 net earnings reached US$18.7m compared to $8.1m in the same period last year.
  • Earnings news positive on strong comparisons with last year.
  • Net sales for the period reached $836.3m, down from $911.7m.

Collective Brands has seen a fall in its second quarter sales. However, net earnings were up on a favourable comparison to the same period last year when the company took a hit on litigation costs.

Second quarter 2009 net earnings reached US$18.7m compared to $8.1m in the same period last year.

However, earnings for last year's second quarter were impacted by litigation expenses and the final year of the Tommy Hilfiger adult footwear license. Taking these adjustments into account, the second quarter 2008 adjusted net earnings were $32.0m.

"While the retail environment remains challenging, I am pleased that our largest brands -- Payless, Stride Rite, Saucony, and Sperry Top-Sider -- continued to gain share at the retail level," said Matthew E. Rubel, chairman, chief executive officer and president of Collective Brands, Inc.

"We remain focused on driving innovation for consumers while investing in key growth opportunities. During the second quarter, we also lowered operating costs, reduced inventories, and generated stronger cash flows."

Net sales for the period reached $836.3m, down from $911.7m achieved in the same quarter last year.

"Net sales for the quarter decreased from last year due primarily to a decline in comparable store sales, the impact of the expiration of the Tommy Hilfiger adult footwear license, and foreign currency exchange rates. This was offset in part by sales growth in Saucony and Payless accessories," the company said.

The company said that its 2009 retail store count is expected to decline by 60, net of store openings.

INSIGHT

Like many multi-brand supplier/retailers, Collective Brands has spent the past year or so in the corporate gym - slimming down and toning up to get into better shape to see out the downturn and hit the ground running on the other side.

But it has to balance this with the desire to make the most of successful concepts like Payless, particularly on an international level.

The overseas business didn't have its most inspiring second quarter, mainly thanks to tough trading in some parts of Latin America, but the company isn't allowing that to deflect it from expanding its international footprint.

By year-end, Payless will have eight stores in the Middle East, where the business is already exceeding expectations, and the company expects to open 90 stores in the next five years in Russia (where business may be much tougher in the short term).

But none of that can disguise how tough the domestic US footwear marketplace has become.

As CEO Matt Rubel said, spending and traffic is down, and those consumers still heading for the tills are cutting spending and looking for deals.

What's more, the American "mom" is spending less on herself, with Rubel calculating that more than 3m women have effectively vanished from the marketplace over the past year.

But he was quick to add that those same "moms" were still spending as much if not more on their children - and this, he claimed, was a particular strength of the Payless concept.

For the full earnings release, click here