Famous Footwear HQ exit from Madison hits Brown Shoe earnings

Staff/news services  —  8/28/2008 11:09 am

St. Louis-based Brown Shoe Co. on Wednesday reported a 77.4 percent drop in its second-quarter profits due primarily to the cost of moving Famous Footwear's headquarters from Madison to St. Louis.

Brown Shoe reported a second-quarter profit of $2.2 million, or five cents a share, down from a profit of $9.8 million, 22 cents a share, a year ago. Brown Shoes said its second quarter sales fell 1.3 percent to $569.2 million from $576.6 million a year ago.

This year's second-quarter results included costs of $6.2 million, or 15 cents per share, for relocating the Famous Footwear headquarters.

The move, which will eliminate nearly 300 jobs here, is scheduled to be completed by the end of the third quarter, and is expected to result in charges totaling nine cents per share after the gain from selling its real estate in Madison.

Analysts surveyed by Thomson Reuters had expected a second-quarter profit of six cents per share on revenues of $588.7 million.

Brown Shoe Chairman and CEO Ron Fromm said an "ongoing challenging retail environment" affected its second-quarter results and has forced the company to cut the number of new Famous Footwear store openings this year to 90 from the 130 originally planned.

But Fromm also expressed optimism about the move of the Famous Footwear headquarters to St. Louis, a new brand launch with singer Fergie and a partnership with Vera Wang to design and market her Lavender Label Collection.

"We are taking a cautious approach to the back half of 2008 by appropriately reducing guidance and tightening our standards for capital management," Fromm said in a statement.

Brown Shoe said it now expects profits of $1.12 to $1.29 per share for the full year, down from its May forecast of $1.29 to $1.53 per share. That guidance includes the nine-cents-per-share impact of the Famous Footwear relocation.

It also said that it now expects net sales to be in the range of $2.38 billion to $2.40 billion for the full year. That's below its May forecast of between $2.43 billion and $2.48 billion.

Analysts surveyed by Thomson Reuters expect, on average, $1.39 per share on revenues of $2.43 billion for the year.

Brown Shoe's stock fell 50 cents per share, or 3.2 percent, on Wednesday to $15.37. Shares have traded in a range of $11.89 and $23.19 for the past year.

Staff/news services  —  8/28/2008 11:09 am