Earnings Releases
Brown Shoe Reports 3.7 Percent Increase in First Quarter Net Income; Earnings Per Share, $0.36 Versus $0.35
ST. LOUIS, MISSOURI, May 17, 2000 -- Brown Shoe Company, Inc. (NYSE: BWS) reported net earnings of $6,548,000 or $0.36 per diluted share for the first fiscal quarter ended April 29, 2000, compared to net earnings of $6,316,000 or $0.35 per diluted share in the first quarter of 1999, an increase of 3.7 percent.
Consolidated net sales for the first quarter of 2000 were $394,269,000 compared to $396,826,000 in last year's first quarter, a decrease of 0.6 percent.
"The late Easter retail season did not develop as planned throughout the footwear and apparel industries, and as a result, both our retail and wholesale divisions experienced lower-than-projected sales," said Ronald A. Fromm, chairman and chief executive officer. "That said, the generally lackluster Spring retail environment is not, in our opinion, a harbinger of more difficult times ahead. We remain confident that our businesses are well positioned and that we will sustain the operating momentum that has been visibly evident over the past two years."
"As we look toward the remainder of fiscal 2000, we are encouraged by consumer demand for the Naturalizer line, evidenced by strong department store gains and positive same-store sales in our domestic Naturalizer retail chain," Fromm said. "We also believe that same-store sales trends at Famous Footwear will normalize now that the Easter calendar shift is behind us. Finally, we have added several strong new licenses to our Buster Brown & Co. kids' line, further enhancing our position in the mass markets."
As previously reported, total sales at Famous Footwear, the company's 870-store family footwear chain, increased by $13.3 million or 6.0 percent to $236,952,000 for the quarter, from $223,613,000 for the same 13-week period last year. Operating earnings were $11,018,000, a 3.1 percent decrease compared to year-ago operating earnings of $11,373,000. Same-store sales for the period were down 1.0 percent. While expenses were well under plan, pressure on margins and lower-than-planned Easter sales resulted in the slight earnings decline.
Naturalizer Retail, the company's 480-store chain selling the Naturalizer brand of women's shoes in both the U.S. and Canada, posted a 6.5 percent sales increase for the first quarter: $46,982,000 compared to $44,130,000 for the same period last year. Increased marketing costs and a same-store sales decline at the Canadian stores resulted in increased operating losses of $1,724,000 compared to the year-ago loss of $1,188,000.
"Domestic same-store sales increases of 3.1 percent for the quarter indicate that our turnaround strategy for Naturalizer Retail is working, and should generate improved operating performance during fiscal 2000," Fromm said.
Similarly, sales of Naturalizer product by the wholesale division were up by 9.5 percent in the quarter, with an especially strong increase in sales to department stores as consumers are drawn to the redesigned collection by the new advertising campaign and aggressive visual merchandising.
Operating earnings for the wholesale businesses, which include the Brown Branded, Brown Pagoda and the company's Canadian wholesale operations, decreased to $8,060,000 from $9,885,000 for the prior year quarter. Sales for the quarter were $110,335,000 versus $126,306,000 last year. This decline in operating earnings reflected less-than-anticipated seasonal reorders of branded wholesale product as the branded business also was hurt by slow Easter retail sales. As planned, sales at the Brown Pagoda division were down significantly compared to first quarter last year when the division enjoyed a sales surge in Star Wars movie-related children's shoes.
As previously reported, the division's Buster Brown & Co. kids' team recently announced the signing of four strong licenses -- Digimon, Rugrats, NASCAR Racers and Sammy Sosa - with shoes due to the marketplace later this year.
In the first quarter of fiscal 2000, other income/expenses improved from expenses of $1,295,000 last year to income of $662,000 this year. This change was the result of charges recorded last year for environmental and legal matters that did not recur.
While inventories are slightly higher than planned, inventory quality is good. The overall increase reflects 36 additional Famous Footwear stores and 16 additional Naturalizer stores open versus a year ago, and increased inventories per store at Famous Footwear to position the chain for its aggressive summer sales plans.
"We firmly believe that our management team can produce positive results for shareholders," Fromm said. "We remain confident that we can achieve a long-term compound annual earnings growth rate of at least 15 percent. Given the current valuation afforded shares of BWS, our Board has authorized, and we have initiated, a share repurchase program. While it is unfortunate that the current stock price trades at a discount, we recognize the opportunity this presents for our shareholders, and we will continue to make open-market repurchases."
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 and Naturalizer chains of footwear retail stores and markets leading brands including Naturalizer, LifeStride, NightLife, Naturalsport, Buster Brown, and licensed brands including Dr. Scholl's, Barbie, Digimon: Digital Monsters, Rugrats and baseball-hero Sammy Sosa footwear.
Brown Shoe, Inc. press releases are available by fax through PR Newswire's Company News On-Call fax service at 800-758-5804, extension 109435. Brown Shoe, Inc. 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 | ||
| April 29, 2000 | May 1, 1999 | |
| Net Sales | $394,269 | $396,826 |
| Cost of Goods Sold | 232,783 | 239,019 |
|
161,486 | 157,807 |
| Selling and Administrative Expenses | 147,943 | 141,649 |
| Interest Expense | 4,265 | 4,683 |
| Other (Income) Expense | (662) | 1,295 |
|
9,940 | 10,180 |
| Income Tax Provision | 3,392 | 3,864 |
|
$6,548 | $6,316 |
| Basic Net Earnings per Common Share | $ .37 | $ .36 |
| Diluted Net Earnings per Common Share | $ .36 | $ .35 |
| Basic Number of Shares | 17,919 | 17,765 |
| Diluted Number of Shares | 18,060 | 17,976 |
| Brown
Shoe Company, Inc. Condensed Consolidated Balance Sheets (Thousands) |
||
| April 29, 2000 | May 1, 1999 | |
| ASSETS | ||
| Cash and Cash Investments | $ 32,509 | $ 26,926 |
| Receivables, Net | 56,360 | 76,852 |
| Inventories, Net | 424,101 | 389,181 |
| Other Current Assets | 20,164 | 21,936 |
|
533,134 | 514,895 |
| Property, Plant and Equipment - Net | 83,993 | 84,762 |
| Other Assets | 77,918 | 77,229 |
| $695,045 | $676,886 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Notes Payable | $ 16,743 | $ 28,000 |
| Trade Accounts Payable | 149,945 | 131,805 |
| Accrued Expenses | 78,806 | 82,501 |
| Income Taxes | 3,321 | 8,387 |
| Current Maturities of Long-Term Debt | 10,000 | 10,000 |
|
258,815 | 260,693 |
| Long-Term Debt and Capitalized Leases | 162,035 | 172,031 |
| Other Liabilities | 20,149 | 20,354 |
| Shareholders' Equity | 254,046 | 223,808 |
| $695,045 | $676,886 | |