A small 0.6 percent increase in sales to $841.3 million at Collective Brands translated to a 13 percent increase in net income to $21.1 million for the second quarter ended July 31. The American group's operating margin rose by 0.5 percentage points to 4.4 percent, and the gross margin rose by 1.4 percentage points to 34.4 percent.
Comparable store sales fell by 5.0 percent. Stronger results in wholesale and international were dampened by weak results in the group's Payless Shoesource stores in the U.S.
Payless's U.S. operations had a 7 percent drop in sales to $508.0 million, with a 6.4 percent drop on a same-store basis and 43 fewer doors, and their operating profit plunged by 72 percent to $6.8 million. Payless International had a 6 percent sale increase to $109.8 million, and the operating profit jumped by almost 164 percent to $11.6 million. Comparable store sales outside the U.S. grew by 3.3 percent, helped by a favorable exchange rate in Canada and stronger performance in Ecuador.
The wholesale division of the group's Performance + Lifestyle Group saw turnover rise by 27 percent to $174.7 million, and operating profit skyrocketed by 214 percent to $22.9 million. There were higher sales of the Sperry Top-Sider, Saucony and Keds brands in both the U.S. and international markets. PLG Retail's revenues crept up by 1.5 percent to $48.8 million, while the operating loss widened to $4.6 million from a loss of $3.5 million. Comparable store sales were off by 5.7 percent. The operating loss took a hit on this decline, higher marketing expenses and higher markdowns.
For the full fiscal year, Collective Brands intends to increase its overall door count by 20 doors, net of closings. The number of Payless stores in the U.S. will fall by 20 with 80 closures offsetting 60 openings. Internationally, the banner will open 40 locations and close 20 others.