Footwear retailer Brown Shoe Co. Inc. (BWS: Quote) reported Tuesday a narrower net loss for its second quarter, benefited by higher margin and improved results in its Famous Footwear segment. Quarterly adjusted earnings significantly surpassed Wall Street estimates. Despite being cautious about the environment, the company also lifted the bottom of its adjusted earnings forecast range.
In pre-market activity, Brown Shoe shares gained $1.10 or 7.14 percent, and are currently trading at $16.50.
President and Chief Executive Officer Diane Sullivan said, "For the second quarter, we delivered record setting sales and operating earnings at Famous Footwear, which was coupled with strong performance from our Contemporary Fashion brands."
For the second quarter, net loss attributable to the company narrowed to $2.5 million or $0.06 per share from $4.6 million or $0.11 per share in the year ago quarter. The latest results included portfolio realignment charges of $12.4 million and $2.3 million of charges related to a previously announced organizational change.
Adjusted net earnings for the quarter, which excluded items, were $6.8 million or $0.16 per share. On average, five analysts polled by Thomson Reuters expected the company to earn $0.03 per share. Analysts' estimates typically exclude special items.
Net sales declined 3.4 percent to $599.3 million from $620.6 million last year. Results included sales from brands and businesses the company has exited over the past nine months. Excluding exited sales, net sales were down 0.7 percent from the prior year. Analysts expected revenues of $606.31 million.
Segment-wise, Famous Footwear sales grew 1.6 percent with contribution from both running and sandals. On a same-store-sales basis, sales grew 3.9 percent over the prior year. Sales of wholesale operations, meanwhile, fell 9.4 percent and that of specialty retail declined 10.8 percent.
Gross profit edged up 0.1 percent, and gross margin climbed 140 basis points to 39 percent from last year's 37.6 percent, reflecting lower costs.
For fiscal 2012, Brown Shoe now expects earnings to be in the range $0.34 to $0.44 per share, and adjusted earnings of $0.85 to $0.95 per share. Earlier, the company had expected earnings of $0.53 to $0.65 per share and adjusted earnings of $0.83 to $0.95 per share.
Net sales for fiscal 2012 are still expected to be in the range of 2.57 billion to $2.59 billion.
Analysts expect the company to report earnings of $0.89 per share on revenues of $2.57 billion for fiscal 2012.
The company also projects that Famous Footwear same-store sales would be up in low-single digits and that total gross profit margin would increase 20 to 40 basis points.
Sullivan added, "While we're encouraged by our performance in both the second quarter and the first half -- including the continued successful execution of our ongoing portfolio realignment efforts -- we remain cautious about the overall macroeconomic environment."
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by RTT Staff Writer
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