Footwear retailer Collective Brands Inc. (PSS: Quote) said Friday it swung to a profit for the second quarter from a loss last year, when results were impacted by impairment costs. Results also reflect a modest rise in sales amid a fewer store count. Collective Brands' earnings for the quarter topped Street estimates, while sales missed expectations.
Collective Brands sells a variety of footwear through business lines such as Payless ShoeSource stores and Collective Brands Performance Lifestyle Group. To shore up margins, the company has been closing down unviable stores, and also had announced its sale to a a consortium that include Blum Strategic Partners IV L.P. and Wolverine World Wide Inc. (WWW). The sale is to close in the third calendar quarter or early in the fourth quarter.
Results for the quarter were buttressed by an expansion in gross margin to
33.3 percent from 23.6 percent last year, helped by an improvement in retail businesses, fewer markdowns, and lower occupancy costs, while the prior year was impacted by impairments.
Sales for the quarter edged up 0.4 percent from last year, and on a same-store basis, improved 2.9 percent.
At Payless International, sales edged up 1.9 percent, and same store sales were up 2 percent. Growth was driven by Latin America that saw an 11 percent increase in same-store sales, while Canada and Puerto Rico experienced mid and low single digit declines, respectively.
PLG Wholesale sales grew 6.1 percent, on growth at brands such as Sperry Top-Sider and Stride Rite Children's Group. At PLG Retail, net sales grew 10.6 percent and same-store sales were up 12 percent.
Meanwhile, Payless Domestic sales fell 3.5 percent from last year, due to fewer store count, but same-store sales gained 2 percent.
Topeka, Kansas-based Collective Brands reported second quarter net income of $9.7 million or $0.16 per share, compared to net loss of $35 million or $0.58 per share last year.
Excluding items, adjusted earnings for the quarter were $21 million or $0.34 per share, compared to $10 million or $0.16 per share a year ago.
On average, five analysts polled by Thomson Reuters expected earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter slightly rose to $886 million from $882.4 million last year. Analysts expected sales of $901.17 million.
As of July 28, 2012, Collective Brands operated 4,464 stores, compared to 4,839 stores in the prior year.
PSS closed Tuesday at $21.64, down 0.09%, on the NYSE. In after hours, the stock dropped 0.14%.
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by RTT Staff Writer
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