Earnings Releases
Brown Shoe Reports Second Quarter EPS of $.58 Versus $.24 Last Year
ST. LOUIS (WIRE NEWS), August 24, 1999 -- Brown Shoe Company, Inc. (NYSE: BWS) reported net earnings of $10,517,000, or 58 cents per diluted share, for the fiscal second quarter ended July 31, versus net earnings of $4,295,000, or 24 cents per diluted share, in the year- earlier quarter.
Consolidated net sales rose 6.9 percent to $410,100,000 from $383,618,000 a year ago.
"Strong performances by Famous Footwear and our wholesale operations, as well as a tight rein on expenses, contributed to the dramatic profit improvement in the second quarter," explained Ronald A. Fromm, Chairman of the Board, President and Chief Executive Officer.
"Famous Footwear once again posted record sales and operating earnings following record results in 1998 and the first quarter of fiscal 1999," Fromm said. Sales rose 9 percent to $237,500,000, with same-store sales up 4.3 percent. The improved sales performance, led by athletic footwear, opened-up casual footwear and sandals, played a key role in an 11 percent increase in operating earnings to $13,935,000. "Inventories are clean, well managed, and on plan as we move into the all-important back-to-school period," Fromm observed. At July 31, 1999, there were 839 Famous Footwear stores.
Sales of the wholesale operations, which include the Brown Branded, Brown Pagoda and Brown Canada divisions, climbed more than 17 percent to $120,348,000. Sales of Star Wars, Barbie and Dr. Scholl's licensed products were especially strong. Operating earnings, driven by higher sales and good expense leveraging, were up more than 150 percent to $8,778,000 from $3,438,000.
The Naturalizer Retail operations, which include U.S. and Canadian stores, experienced a 3 percent decline in sales to $49,977,000. Same-store sales in the U.S. decreased 6.9 percent and were up 0.8 percent in Canada. Operating earnings declined to $865,000 from $1,848,000. "Despite a difficult first half, the early performance of the new Naturalsport product is very encouraging, and the launch of Naturalizer's Eurosole product should contribute to an improved second half," Fromm said. At quarter-end, there were 329 stores in the U.S. and 136 in Canada.
"Earnings also benefited from our cost control discipline as selling and administrative expenses as a percentage of sales declined two full points to 34.5 percent from 36.5 percent in last year's second quarter."
"While results obviously were affected positively by a reduction in losses at the liquidated International division, if we exclude those losses in both quarters, earnings would have been up 56 percent," Fromm noted.
Cash flow from operations was $32 million in the quarter, the net debt to capital ratio improved to 39.2 percent and return on equity was 19.4 percent.
"In summary, we are encouraged by our strong second quarter results and the continuing momentum achieved in the first half of 1999, " Fromm concluded. "Our businesses are well positioned and our execution is strengthened as Famous Footwear enters the back-to-school season and our wholesale operations enter the Fall season. Back-to-school results are encouraging, with business running ahead of plan. Retail inventory levels and merchandise assortments are in place to drive business in the critically important third quarter."
For the first half of fiscal 1999 sales were up 2.7 percent to $806,926,000 from $785,927,000 the year before, while net income more than doubled to $16,833,000, or 93 cents per diluted share, from $8,166,000 or 46 cents per diluted share.
Safe Harbor Statement Under the Private Securities Litigation Act of 1995: This press release contains certain forward-looking statements that are subject to various risks and uncertainties that could cause actual results to differ materially. These include general economic conditions, competition, consumer apparel and footwear buying trends, and political and economic conditions in Brazil and China, which are significant footwear sourcing countries. The Company's reports to the Securities and Exchange Commission contain detailed information relating to such factors.
Brown Shoe, is a $1.6 billion footwear company with worldwide operations. The Company operates the Famous Footwear, Naturalizer and F. X. LaSalle chains of footwear retail stores and markets leading brands including Naturalizer, Life Stride, Naturalsport, and licensed brands including Dr. Scholl's, Barbie, Star Wars and Disney character footwear.
Brown Shoe press releases are available by fax through PR Newswire's Company News On-Call fax service at 800-758-5804, extension 109435. Brown Shoe news also is available on the Company's Web site at http://www.brownshoe.com.
| BROWN SHOE COMPANY, INC. CONSOLIDATED STATEMENTS OF EARNINGS |
| (Thousands, except per share) | Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||
| July 31, 1998 | August 1, 1998 | July 31, 1999 | August 1, 1999 | |
| Net Sales | $ 410,100 | $ 383,618 | $ 806,926 | $ 785,927 |
| Cost of Goods Sold | 249,025 | 229,616 | 488,044 | 476,601 |
| Gross Profit | 161,075 | 154,002 | 318,882 | 309,326 |
| Selling and Administrative Expenses | 141,533 | 140,116 | 283,182 | 282,898 |
| Interest Expense | 4,392 | 4,858 | 9,075 | 10,490 |
| Other (Income) Expense | (2,628) | 1,284 | (1,333) | 1,236 |
| Earnings Before Income Taxes | 17,778 | 7,744 | 27,958 | 14,702 |
| Income Tax Provision | 7,261 | 3,449 | 11,125 | 6,536 |
| Net Earnings | $ 10,517 | $ 4,295 | $ 16,833 | $ 8,166 |
| Basic Net Earnings per Common Share | $ .59 | $ .24 | $ .95 | $ .46 |
| Diluted Net Earnings per Common Share | $ .58 | $ .24 | $ .93 | $ .46 |
| Basic Number of Shares | 17,861 | 17,689 | 17,812 | 17,657 |
| Diluted Number of Shares | 18,248 | 17,979 | 18,112 | 17,933 |
Note: Other Income in the thirteen and twenty-six week periods ended July 31, 1999, includes $2.3 million of income from the sales of the le coq sportif brand in July 1999. This gain was substantially offset by a tax provision of $2.0 million which included $1.2 million of taxes to allow repatriation of the previously untaxed foreign cash generated from the sale.
| BROWN SHOE COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Thousands) | July 31, 1999 | August 1, 1998 |
| ASSETS | ||
| Cash and Cash Investments | $ 34,642 | $ 32,180 |
| Receivables, Net | 72,975 | 75,109 |
| Inventories (less reserve for valuation to last-in, first-out cost at July 31, 1999 of $12,692 and August 1, 1998 of $15,265) | 412,485 | 396,657 |
| Other Current Assets | 22,085 | 26,014 |
| Total Current Assets | 542,187 | 529,960 |
| Property, Plant and Equipment - Net | 84,582 | 78,950 |
| Other Assets | 76,066 | 75,250 |
| $ 702,835 | $ 684,160 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Notes Payable | $ 2,000 | $ - |
| Trade Accounts Payable | 163,404 | 161,772 |
| Accrued Expenses | 92,472 | 87,549 |
| Income Taxes | 11,897 | 14,197 |
| Current Maturities of Long-Term Debt | 10,000 | 15,000 |
| Total Current Liabilities | 279,773 | 278,518 |
| Long-Term Debt and Capitalized Leases | 172,033 | 182,029 |
| Other Liabilities | 19,175 | 20,540 |
| Shareholders' Equity | 231,854 | 203,073 |
| $ 702,835 | $ 684,160 |
CONTACT: Harry E. Rich, Executive Vice President and Chief Financial
Officer, 314.854.4107, Brown Shoe Company, Inc.
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