Brown Shoe Q2 Profit Tops Estimate, Boosts 2014 EPS Outlook

(RTTNews) - Footwear retailer Brown Shoe Co., Inc. (BWS) reported Wednesday a profit for the second quarter that increased from last year, reflecting improved operating margins and revenue growth. Earnings per share topped analysts' expectations, while quarterly net sales missed their estimates.

The company also raised its adjusted earnings guidance for the full-year 2014, citing a strong performance in the second quarter, while maintaining annual revenue outlook.

"Our second quarter results reflect the health of both our retail and wholesale businesses, as we continue to benefit from — and expand on — our portfolio realignment efforts," President and CEO Diane Sullivan said in a statement.

The St. Louis, Missouri-based company posted net earnings of $18.06 million or $0.41 per share for the second quarter, higher than $15.36 million or $0.35 per share in the prior-year quarter, which included $0.04 per share of earnings from discontinued operations. Excluding items, adjusted earnings for the year-ago quarter was $0.33 per share.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 2.3 percent to $635.87 million from $621.71 million in the same quarter last year, but missed five Wall Street analysts' consensus estimate of $637.68 million by a whisker.

Famous Footwear sales grew 1.4 percent to $393.6 million and same-store-sales were up 1.6 percent. Wholesale operations sales also increased 7.7 percent to $194.3 million, while specialty retail sales decreased 9.5 percent to $48.0 million from last year.

"At Famous Footwear, our focus on delivering a seamless omni-channel experience to our consumers helped kick off our Back-to-School selling season. At our wholesale brands, our trend-right merchandise is resonating with both consumers and retailers," Sullivan added.

Consolidated operating margin for the quarter expanded 120 basis points to 4.9 percent as selling, general and administrative expenses as a percentage of total sales, improved 130 basis points, partially offset by a 20 basis points contraction in gross margin.

Inventory at the end of the second quarter was $657.7 million, up 6.8 percent from $615.9 million at the end of the prior-year quarter. During the quarter, the company closed or relocated 16 stores and added 17 new stores.

"Despite a continued, industry-wide decline in traffic patterns and an overall tough retail environment, we were able to deliver against expectations in the second quarter," CFO Russ Hammer stated.

Looking ahead to fiscal 2014, Brown Shoe raised its adjusted earnings guidance to a range of $1.50 to $1.60 per share from the prior forecast of $1.47 to $1.57 per share. However, the company maintained its revenues outlook in the range of $2.58 billion to $2.60 billion.

Street is currently looking for full-year 2014 earnings of $1.56 per share on annual revenues of $2.58 billion.

BWS closed Tuesday's regular trading session at $31.37, up $0.10 on a volume of 0.76 million shares.