Sales at this big American company fell by 2.8 percent to $538.7 million in the first quarter ended May 2. Brown Shoe Company ended up with a net loss of $7.6 million, compared with a profit of $7.2 million for the same period last year. The gross margin fell by 0.4 percentage points to 38.6 percent, affected by the promotional environment and a greater mix of mid-tier channel sales versus department store sales.

The company had an operating loss of $7.2 million for the quarter compared with earnings of $13.6 million from the year-ago period. These figures include restructuring and other charges of $2.6 million this year, and credits of $8.4 million last year.

Revenues from Brown’s retail chain Famous Footwear were nearly flat at $317.6 million, but its operating income plunged by 60.5 percent to $3.0 million. The gross margin for the chain was also flat at 43.0 percent. Comparable store sales were off by 4.9 percent, with a 4.5 percent drop in traffic. The company was operating 66 more Famous Footwear stores than in the same period in 2008, for a total of 1,166.

Sales of the Naturalizer brand crept up by 0.6 percent, while Dr. Scholl’s fell by 5.1 percent. Wholesale sales fell to $168.8 million from $177.7 million in the first quarter 2008. Typically 69 percent of annual sales are retail and the other 31 percent wholesale; 50 percent of total sales come from Famous Footwear.

Management described consumers’ buying habits as based on «need over want» and said it was encouraged by the strength of athletics during the period, particularly DC, Nike and Asics in running and Converse in the value segment. Famous Footwear intends to increase its purchase of athletic shoes for back-to-school, when the segment could account for 60 percent of the merchandise mix, up from the usual 45 percent. It has added Birkenstock and Puma to the roster of brands it carries.

The current net sales outlook for the full fiscal year is $2.2-2.3 billion. Brown Shoe has scaled back expansion plans for Famous Footwear, budgeting 55 openings and 55-70 closings, but wants to add about 30 new stores in 2010 and the same in 2011. It plans to invest heavily in information technology.

Meanwhile Famous Footwear has opened a new distribution center in Tejon, California. The 32,500-square-meter facility will serve about 300 stores, about a third of the company’s total. It could save up to two week’s delivery time, as previously trucks would have to go from California to the Midwest and back. In some cases orders will be filled the next day. It is expected to save up to $33 million.