Brown Shoe Company is implementing a new $14-17 million restructuring program, involving the shutdown of 80 under-performing stores, of which 60 are in the USA and 20 are in Canada, and opening 30 new stores over the next two to three years. It will also involve handling all US and Canadian buying, merchandising, planning and allocation functions at the company’s headquarters in St. Louis, Missouri, and retail accounting and information systems support at Madison in Wisconsin. Brown Shoe will also streamline its Naturalizer wholesale operations by adding new staff to its sales, marketing and product development teams.
These moves are intended to generate a more productive retail store base and to raise margins as of 2006. Through the changes. Brown wants to focus its remaining store base on high-traffic fashion and outlet malls and launch new marketing campaigns to promote the Naturalizer brand’s image. Following the completion of all the store closings by April 2006, 275 of the remaining 300 doors in Brown’s specialty retail unit will carry the Naturalizer banner before the 30 outlet locations are added. The company will be testing a new store prototype later this year.
Brown Shoe saw its net profit decline to $3,779,000 in the 1st quarter ended Apr. 30 from $8,526,000 in the year-ago period, in spite of a 6.4 percent increase in consolidated sales to $523.3 million, due especially to higher income tax provisions. The group’s gross margin dropped from 40.5 to 40.2 percent, but operating earnings improved to $23,068,000 from $14,850,000, thanks especially to gains at Famous Footwear and in its wholesale division.
While sandals had trouble getting through its 927 stores, the Famous Footwear chain recorded a 1.5 percent sales increase on a same-store basis and 34.1 percent higher operating profit on 6.1 percent higher revenues. Instead, the specialty retail division, which cnow onsists mainly of 366 Naturalizer stores, had a higher operating loss on 10.6 percent higher sales.
The acquisition of the Bass license in February 2004 and of Bennett Footwear on Apr. 22 had only a minimal impact on the performance of the wholesale division, whose sales increased by 5.7 percent to $181.3 million, with the Naturalizer brand posting a 6.1 percent increase.