The company says it will dump its G.H. Bass footwear license when the contract expires at the end of its financial year. The brand has been continually underperforming. The license was acquired by Brown Shoe Co. in 2004 from Phillips Van Heusen (PVH) Holdings, owner of the brand. Efforts to discover who will be handling Bass’ shoe line after Brown were unfulfilled at press time.
In announcing its results for its 2nd quarter, finished on July 29, Brown Shoe outlined a strategy which, it says, should result in after-tax gains of $10-12 million in 2007 and $17-20 million from 2008 onward. In connection with these initiatives, Brown will take after-tax charges of only about $6-7 million in its 2006 financial year, rising to $14-16 million in 2007.
The key elements of the plan include a reorganization of administrative and support areas, logistics and distribution platforms. It also calls for the elimination of operational redundancies, the realignment of the company’s strategic priorities and the establishment of more efficient supply chain processes.
In the latest quarter, Brown Shoe’s net revenues rose by 5.0 percent to $579,319,000, despite slower sales in its Famous Footwear retail chain. Adjusted net earnings were $5,881,000, as compared to $4,083,000 in last year’s quarter.
Comparable store sales for Famous Footwear slid by 0.1 percent, as the retail chain saw less consumer traffic but the management noted that shoppers were buying more expensive goods. Total sales increased by 2.2 percent to $292.7 million at the chain, coming below Brown Shoe’s expectations. Famous’ operating earnings grew by 28.4 percent to $11.9 million.
Kids’ footwear performed the best for Famous, posting increases across all categories, while junior, dress and casual footwear did well in the women’s segment, and dress and casual shoes had strong sales for the men’s business. As expected, athletic footwear did not fare well but is said to have been gaining momentum in the 3rd quarter. During the 2nd quarter Famous opened 28 stores and closed 17, bringing its door total to 963 at the end of the period. The retailer expects to open roughly 90 stores and close about 40 on the year.
In the specialty retail segment, which includes Naturalizer, Via Spiga, F.X. LaSalle, Franco Sarto, some concept stores and the Shoes.com e-commerce business, sales were up by 2.8 percent to $59.9 million. Same-store sales dropped by 2.7 percent. The division narrowed its operating loss to $1,450,000, as compared to a loss of $5,470,000 in the year-ago period, which included pre-tax charges of $2,349,000 related to the closure of underperforming Naturalizer outlets and the consolidation of Canadian operations. The division opened one new door and shuttered eight in the period, giving it at the end of the quarter a total of 305 doors in the USA and Canada.
The wholesale division’s turnover rose by 9.5 percent to $227.2 million, mainly due to strong sales for the Naturalizer and Dr. Scholl’s brands and for private label product. Operating earnings grew by 17.2 percent to $19.1 million for the division.
In management news, Brown Shoe’s Andrew M. Rosen, executive vice president and chief financial officer, plans to retire at the end of the year. Rosen has been with the company for 33 years. A successor is being sought internally and externally.