Caleres, Inc. (NYSE:CAL)

Second Quarter 2011 Results

• The company reported a net loss of ($4.6) million, or ($0.11) per diluted share, compared to net earnings of $5.3 million, or $0.12 per diluted share, in the second quarter of 2010. On an adjusted* basis, the net loss was ($2.7) million, or ($0.06) per diluted share, compared to net earnings of $6.5 million, or $0.15 per diluted share in the second quarter of 2010.
• Net sales of $628.1 million, an increase of 7.2% compared to second quarter 2010 net sales of $585.8 million.
• Gross profit margin in the second quarter of 2011 was 37.7% versus 40.7% in the second quarter of 2010.

“In the second quarter, not only were we up against record Famous Footwear comps, we also saw the overall toning category negatively impact sales at both Retail and Wholesale Operations,” said Diane Sullivan, president and chief executive officer of Brown Shoe. “Although we experienced year-over-year growth in net sales in the second quarter, we also saw a more rapid than expected decline in toning. During the quarter, we continued to review our investment in this category and reduced the carrying value of our entire toning inventory, which resulted in a write-down of $0.06 per diluted share.”

“In addition, while we are making progress in our SAP stabilization, it has cost us more in terms of dollars and effort than we had anticipated,” continued Sullivan. “In the second quarter, results were negatively impacted by $0.07 per diluted share due to increases in allowances and chargebacks, margin related to lost sales, and incremental stabilization costs.”

“Importantly, as part of the strategic review of our portfolio, today we announced an agreement to sell AND 1 for $55 million in cash, which will be used to pay down debt. We will continue completing this comprehensive review of our brands, in conjunction with evaluating our SG&A spend and reducing our costs during the second half,” concluded Sullivan.

Full Year 2011 Guidance

“We’ve taken a hard look at our potential earnings for both the back half and full year of 2011, and as a result, we now expect 2011 adjusted EPS of between $0.85 and $0.97,” said Mark Hood, chief financial officer of Brown Shoe. “Our guidance reflects our continued concern about any potential impact from the overall global economic uncertainty, consumer acceptance of pending price increases, and expected cost pressures.”

ST. LOUIS--(BUSINESS WIRE)--Brown Shoe Company, Inc. (NYSE: BWS), (www.brownshoe.com) today reported its first quarter 2011 financial results, with

• net sales of $624.6 million, an increase of 4.5% compared to first quarter 2010 net sales of $597.7 million.
• Net earnings were $3.7 million, or $0.08 per diluted share, compared to net earnings of $10.0 million, or $0.23 per diluted share, in the first quarter of 2010. On an adjusted* basis, net earnings were $7.0 million, or $0.16 per diluted share, compared to net earnings of $11.2 million, or $0.26 per diluted share in the first quarter of 2010.
• Gross profit margin in the first quarter of 2011 was 40.0% versus 41.4% in the first quarter of 2010.

"As expected, we saw revenue improvement in the first quarter, although our overall results were mixed. Despite tough year-over-year comparisons, we were able to grow our gross profit margin at Famous Footwear and experienced revenue growth in our Wholesale Operations," said Diane Sullivan, president and chief operating officer of Brown Shoe. "I continue to feel good about our overall strategy, and the entire company is looking forward to heading into the back-to-school selling season and to meeting our consumers’ needs and driving market share in our target areas of healthy living, contemporary fashion and family."

"For 2011, we are maintaining our previous annual guidance, however, based on our first quarter results, we are currently expecting this to trend toward the lower end," said Mark Hood, chief financial officer for Brown Shoe. "As expected, we still foresee our annual improvement to come in the back half of the year, due to a strong first half in 2010 and costs related to the acquisition of ASG."

Preliminary Results:

ST. LOUIS, April 26, 2011 /PRNewswire/ -- Brown Shoe Company, Inc. today announced preliminary net sales results for the nine-week period ended April 2, 2011.  Consolidated net sales increased by 2.1 percent versus the year-ago period to $426 million.  Famous Footwear net sales decreased 8.1 percent in the period, driven by a same-store sales decrease of 7.0 percent.  Net sales in the Wholesale division increased 23.6 percent to $155 million.  Net sales in the Specialty Retail division decreased 1.0 percent during the period, with flat same-store sales.

The Company's net sales performance during the nine-week period was impacted by the following items:

• The acquisition of American Sporting Goods Corporation on February 17, 2011, which added $23 million of net sales to the Wholesale segment for the period;
• The timing of the Easter holiday, which occurred three weeks later in 2011 than in 2010.  Accordingly, the Company's results for the nine-week period ended April 2, 2011 do not include a comparable build for the Easter selling season;
• The elimination of three weeks of Buy-One, Get-One (BOGO) promotional events at Famous Footwear in the nine-week period versus the same period a year ago.  An additional two weeks of BOGO are being eliminated in April, for a total of five fewer weeks in the first quarter versus the same period last year;

For the first quarter, the Company now expects

• consolidated net sales of $619 to $634 million, which includes an expectation for a same-store sales decrease at Famous Footwear in the 2.0 to 4.0 percent range.  In addition, a significant portion of wholesale shipments typically occurs in the last week of the quarter and may be dependent upon whether retail partners take receipt in the last week of April or first week of May.  The Company has not provided quarterly earnings per share guidance.  
• The Company remains comfortable with its previously stated full year 2011 guidance range of $1.25 to $1.32 per diluted share, or $1.37 to $1.47 per diluted share on an adjusted basis.

Fourth Quarter Highlights:

• Net sales for the fourth quarter increased 6.8 percent from the fourth quarter of 2009 to $604.5 million.
• Gross profit rate in the fourth quarter 2010 was 38.9 percent versus 41.1 percent in the year-ago period.  
• Fourth quarter net earnings were $3.4 million, or $0.08 per diluted share, compared to net earnings of $5.0 million, or $0.12 per diluted share, in the fourth quarter of 2009.  
• On an adjusted basis, net earnings were $5.0 million, or $0.11 per diluted share, compared to net earnings of $8.1 million, or $0.19 per diluted share in the fourth quarter of 2009.

Diane Sullivan, Brown Shoe's President and Chief Operating Officer, stated, "2010 represented a very solid year of growth for our Company.  We generated double-digit sales gains and more than doubled our earnings from last year while setting several records in the process. The year included a terrific performance at Famous Footwear and our Wholesale brands delivered nearly a 20 percent sales improvement from the prior year.  We were pleased to deliver this improvement even as we faced challenges in the second half related to sourcing and supply chain inefficiencies as well as the systems migration within our Wholesale business in the fourth quarter.  As a result of these pressures, Wholesale gross margins declined 320 basis points for the full year.  We are intently focused on correcting the systems and supply chain issues that we faced and are well on our way to identifying and implementing solutions to reach these objectives."

In the third quarter of 2010

• consolidated net sales were $716.1 million versus $625.6 million in the year-ago period, a 14.5 percent increase. The sales increase reflects continued strong momentum across the Company's retail, wholesale, and ecommerce businesses.

• Net earnings were $18.6 million, or $0.42 per diluted share, versus net earnings of $16.3 million, or $0.38 per diluted share, in the year-ago quarter.

The third quarter of 2010 included an after-tax charge of $1.2 million, or $0.03 per diluted share, and the third quarter of 2009 included an after-tax charge of $1.4 million, or $0.04 per diluted share. Charges in both quarters related to the Company's information technology initiatives.

Ron Fromm, Brown Shoe's Chairman and Chief Executive Officer, said, "Our record sales performance in the quarter was gratifying and reinforces that our targeted efforts to bring national brands and value to our core consumer are succeeding.  More important, earnings were ahead of expectations, even as our previously discussed investments in marketing and incentives moderated improvement in operating margins by 230 basis points.  Famous Footwear registered a record Back-to-School season, driven by broad-based gains across athletics, dress and casual styles.  Gross profit margin at Famous Footwear also improved, with less promotional activity on a year-over-year basis, proof that our customers continue to respond positively to our enhanced assortments.  Wholesale grew across all channels, posting the largest quarterly organic sales increase in at least a decade.  The investments we made in marketing and design are elevating demand for our brands and we expect this positive momentum to carry over into 2011."

Fromm continued, "As we begin the fourth quarter, we continue to experience robust sales growth at Famous Footwear, where same-store sales are trending in the high single-digits, and momentum at Wholesale, driven by a 25 percent increase in backlog at quarter-end. Consequently, we expect to generate $1.00 to $1.05 in adjusted EPS this year, with further increases next year based on low to mid single-digit sales gains along with operating margin expansion, attributable in part to approximately $21 million in costs that are not expected to continue.  We are targeting diluted EPS for 2011 in the range of $1.31 to $1.43."

Fourth Quarter and Full Year 2010 Targets

The Company expects to generate earnings per diluted share of $0.90 to $0.95 for the full year 2010.  On an adjusted basis, excluding $0.10 of net restructuring and other special charges related to its information technology initiatives, the Company expects to generate earnings per diluted share of $1.00 to $1.05.

Consolidated net sales for the fourth quarter are expected to increase in the high single- to low double-digit range, which includes an increase in same-store sales at Famous Footwear in the high single-digit range and an increase in Wholesale net sales in the high 'teens to low 20s range.  

Introducing Full Year 2011 Targets

The Company introduces its full year 2011 earnings per diluted share target of $1.31 to $1.43 on a GAAP basis.  This range is predicated upon the following:

• Consolidated net sales growth in the low to mid single-digit range;
• Famous Footwear same-store sales growth in the low to mid single-digit range;
• Wholesale net sales growth in the mid single-digit range; and
• Included in this expectation is a normalized incentive compensation rate and the elimination of anomalous costs.

EPS estimates for fiscal year 2010 and 2011 ending January were $0.89 and $1.08, respectively.

Ron Fromm, Brown Shoe's Chairman and Chief Executive Officer, said, "We are very pleased with our first quarter results, which significantly exceeded our original expectations. Our strong sales momentum from the back-half of 2009 continued into the first quarter, as we capitalized on consumer lifestyle shifts and key product trends, supported by compelling consumer marketing.  The sales performance was broad-based across our multi-channel portfolio, with exceptional growth in our Famous Footwear, Naturalizer, and contemporary fashion brands.  Moreover, our retail sales momentum has continued into the second quarter and we see strengthening wholesale order placements due to improved sell-through as well as retailers placing orders earlier and farther out as Far East factory capacity tightens."

Fromm concluded, "The steps we've taken the last four years have driven our recent success through our cost-reduction programs, store productivity and real estate portfolio initiatives, infrastructure enhancements, and our investments in marketing and talent.  All of our segments generated improved gross margins and operating earnings in the quarter and we will continue to drive our business momentum with increased inventory support and marketing investments to generate sustainable growth while improving profits to higher return levels."

Based on the current outlook, the Company expects the following:

• Consolidated net sales for the full year of 2010 are expected to grow in the high single- to low double-digit range, with second quarter net sales expected to increase in the low- to mid-teens range;
• Famous Footwear same-store sales for the full year of 2010 are expected to grow in the high single-digit range, with second quarter same-store sales expected to grow in the low- to mid-teens range.  Famous Footwear is currently expected to open 25 new stores while closing 50 stores in 2010;
• Wholesale net sales are currently estimated to grow in the low- to mid-teens range for the full year of 2010, with mid- to high-teens growth in the second quarter;
• Selling and administrative expenses as a percent of net sales are expected to be in the range of 37.5 to 38.0 percent for the full year of 2010, which includes costs of $7.0 million to $7.5 million related to the Company's information technology initiatives;
• Depreciation and amortization of capitalized software and intangible assets are expected to total $49.0 million to $51.0 million for the full year of 2010;
• Net interest expense is expected to approximate $19.5 million to $20.5 million for the full year of 2010;
• The Company expects a tax rate of 37.0 to 37.5 percent for the full year of 2010; and
• Purchases of property and equipment and capitalized software are targeted in the range of $62.0 million to $65.0 million for the full year of 2010.