Brown Shoe Company has seen its net earnings plummet by 32.4 percent in the 2nd quarter ended July 31, down to $7.8 million, after a relatively good first quarter. Consolidated net sales were $458.7 million, basically unchanged from last year’s level of $458.4 million in spite of the acquisition of the G.H. Bass license.
Most of the problems occurred at the wholesale level. Wholesale sales for the quarter were $136.9 million, down slightly from $137.9 million, and they generated 28.8 percent lower operating earnings of $9.0 million. This was attributed to lower sales in the children’s footwear business and lower-than-expected sales and margins for Bass, as well as transition costs of $1.5 million from moving the Bass business into the Brown Shoe model. At the end of the quarter, unshipped wholesale orders were up 13 percent, including 5 percent associated with the Bass brand.
In the retail segment, Brown Shoe's Famous Footwear chain of 915 family stores reached sales $269.8 million, up from $268.9 million for the same period last year, but its operating earnings declined slightly to $12.6 million from $12.9 million. Naturalizer Retail, the company’s 380-store chain selling the Naturalizer brand of women’s shoes in the USA. and Canada, posted combined second quarter sales of $48.3 million, down from $49.7 million. Combined same-store sales decreased 3.9 percent during the quarter, while the operating loss grew to $2.6 million from $1.0 million.
Brown Shoe says the back-to-school season has started at a slower pace, with sales and gross margins mixed by market, but generally lagging expectations. Because a disproportionate amount of sales and earnings come from its Famous Footwear chain during this important period — as compared to other quarters during the year — the company believes it prudent to wait until the back-to-school season develops before providing earnings guidance for the third quarter.