Brown Shoe Company reported a sales decline of 1.6 percent in its first quarter, ended May 4, accompanied by a net loss of $10.8 million due to charges of $28.8 million associated with its ongoing portfolio realignment efforts, including its recent sale of Avia and Nevados. That compares to a profit of $1.7 million in the first quarter a year ago, which came after $12.8 million worth of portfolio realignment and integration costs.
The company announced in May this year that it was selling its Avia and Nevados brands to Galaxy Brand Holdings for $74 million, planning to use the proceeds to pay down debt. On an adjusted basis, the Missouri-based firm posted net earnings of $13.8 million in the latest fiscal quarter, up 37.7 percent over the first fiscal quarter a year earlier.
Brown Shoe operates nearly 1,300 Famous Footwear and Naturalizer retail stores. It also operates the Famous.com and shoes.com websites. Its wholesale portfolio includes brands such as Naturalizer, the Dr. Scholl's shoe license, LifeStride and Ryka, among others. The company is in the midst of a three-year turnaround, which started after it posted weaker results in 2011 amid bleak sales at Famous Footwear, its main shoe retail chain. The restructuring process involves shutting struggling locations and shedding businesses.
The group managed to improve gross and operating profits in the quarter. As a percentage of sales, the gross margin rose by about 1.6 percentage points to 40.8 percent, while the operating margins moved up by 1.5 percentage points to 3.6 percent.
Consolidated sales reached $588.7 million, down from $598.2 million in the first quarter of 2012. Excluding brands that have been shed, the company said that sales were up slightly in the quarter. The revenues reported for the first quarter of 2012 included sales of $10.2 million from brands and businesses that the company has since divested. Those operations contributed just $200,000 to Brown's sales in the first quarter of 2013.
Sales at Famous Footwear rose by 1.5 percent to $352.3 million in first quarter 2013, with growth in athletic and canvas shoe styles. Same-store sales at the chain increased by 1.1 percent, with strong same-store sales in April partially offsetting weather-related weakness in February and March. During the quarter, the company closed or relocated 13 stores and added 12 new ones, and average revenues per square foot continued to improve. Revenues in Brown Shoe's wholesale division declined by 6.8 percent. In specialty retail, sales were down by 2.5 percent.
The relatively strong performance of the first quarter has led the company's management to raise its outlook for 2013 profits.