Footwear manufacturer Brown Shoe Company, Inc. (BWS) Tuesday reported an increase in net profit for the third quarter, reflecting higher margins and lower restructuring costs, despite a decline in net sales. Brown Shoe shares are currently trading down more than 8% on the NYSE.
For the third quarter, net income attributable to shareholders was $16.30 million or $0.38 per share compared with $10.40 million or $0.25 per share in the prior-year period. On an adjusted basis, attributable earnings declined to $17.74 million or $0.42 per share from $20.51 million or $0.49 per share in the same quarter last year.
Net sales for the 13-week period decreased 1.0% to $625.64 million from $631.66 million in the third quarter of fiscal 2008.
On a segmental basis, sales from Famous Footwear were $389.2 million versus $362.7 million, specialty retail sales rose 1.4% to $66.5 million from $65.6 million in the previous-year period. However, sales from wholesale operations fell 16.5% to $169.9 million from $203.4 million a year ago.
The Greenwich, Connecticut-based company noted that same-store sales for Famous Footwear rose 4.7% during the quarter and specialty retail same-store sales increased 4.1%.
During the three-month period, selling and administrative expenses were $222.38 million versus $219.07 million, while restructuring and other special charges declined to $2.22 million from $16.50 million last year. Brown Shoe noted that charges in 2009 included costs related to the company's information technology initiatives, while charges in the third quarter of 2008 reflected costs related to its headquarters consolidation and information technology initiatives.
Quarterly gross profit rate increased 210 basis points to 41.4% of net sales from 39.3% of net sales in the same quarter last year, driven by margin improvements across all segments.
On a per-store basis, average inventory at Famous Footwear fell 2.3% in the quarter and at the company's North American specialty retail stores decreased 3.1% at constant dollars, as compared to year-ago period. The company stated that inventory at its wholesale division slipped 9.4% year-over-year.
For the 39-week period, net earnings attributable to shareholders plunged to $4.45 million or $0.10 per share from $19.81 million or $0.47 per share in the 2008-year period. Adjusted earnings were $8.85 million or $0.20 per share versus $31.00 million or $0.74 per share in the corresponding period prior year. Year-to-date net sales slumped to $1.68 billion from $1.76 billion last year.
Looking ahead, Brown Shoe expects to generate positive earnings in the fourth quarter, resulting in positive operating earnings and positive net earnings for the full year of 2009. The company anticipates fourth quarter net sales to grow in low- to mid-single digit range as compared with the fourth quarter of 2008, and also sees Famous Footwear same-store sales in the fourth quarter to be in a range of flat to a low-single digit increase.
Chairman and chief executive officer Ron Fromm said, "Although the timing of economic recovery remains uncertain, we are continuing these strategies into the fourth quarter and holiday season, as we expect consumers will continue to shop later in the season."
BWS is currently trading on the New York Stock Exchange at $10.42 per share down $0.95 or 8.36% on a volume of 299,051 shares. In the past 52-week period, the shares have been trading in a range of $2.04 to $12.33.
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