Restructuring drives Brown Shoe’s profits

Restructuring drives Brown Shoe’s profits

March 15–Paring its retail stores and reworking its brand portfolio paid off for Brown Shoe Co. last year, with the Clayton-based company reporting improved profitability and revenue gains.

The footwear retailer reported Friday that profit rose 12 percent to $27.5 million, or 64 cents a share, in fiscal year 2012, which ended on Feb. 2, while revenue grew 1 percent to $2.6 billion despite fewer stores.

“Today we are a slightly smaller, but leaner and more profitable company,” President and Chief Executive Diane Sullivan said in a conference call with analysts on Friday.

The company, however, believes this current fiscal year could be a bit tougher than what Wall Street had been expecting.

Brown Shoe, which operates nearly 1,300 Naturalizer and Famous Footwear stores, offered a conservative full-year outlook Friday because payroll tax changes and other fiscal events could cause shoppers to tighten their discretionary spending.

The retailer foresees 2013 adjusted earnings between $1.18 and $1.25 per share on revenue in a range of $2.55 billion to $2.58 billion.

Analysts, on average, were expecting higher earnings of $1.31 per share on revenue of $2.65 billion. The company’s more cautious outlook sent Brown Shoe’s shares down 90 cents, or 5 percent, to $17.50 on Friday.

Brown Shoes made the forecast when it released its fourth quarter results. For the quarter ended Feb. 2, the retailer earned $4 million, or 9 cents per share, compared with a loss of $8.2 million, or 21 cents, a year earlier.

Taking out restructuring charges and other items, earnings were 14 cents per share. Analysts surveyed by FactSet expected earnings of 8 cents per share.

In 2012, Brown Shoe closed or relocated 89 underperforming stores, while opening 55 stores. It also realigned its distribution facility network, which included the closure of a facility in Sikeston, Mo.

The restructuring, which began in 2011, will conclude this year.

“We’re staying very focused on the same game plan that we’ve laid out to make sure we don’t get distracted,” Sullivan said in a phone interview.

Brown Shoe plans to shutter fewer Famous Footwear stores this year, 60, as the restructuring winds down, while it plans to open 55 stores, including four here: Lake Saint Louis, Edwardsville and two in outlet malls in Chesterfield.

“It’s not so much about new store growth, it’s about having the right stores,” Sullivan said. New stores are being built smaller, with about 5,500 square feet of space, she said.

The changes come as more of Brown Shoe’s customers go online for their shopping. Its website had 60 million visitors in 2012, with a quarter of those coming from mobile users.

The increasing number of people who use smartphones prompted Brown to create an app that should launch by June for Famous Footwear’s growing rewards program. The program has 8.5 million members and accounts for 66 percent of the Famous Footwear’s business.

Also in 2013, Target will begin selling Brown Shoe’s Sam Libby brand, which Brown Shoe acquired from The Jones Group in 2012.

The Associated Press contributed.