Thanks in part to its purchase of Stride Rite Corp. last year, Collective Brands saw growth in sales of 3.9 percent to $862.7 million for the third quarter ended Nov. 1. The boost came from owning Stride Rite for 13 more days this year than last, and from an 11.1 percent pro forma sales increase for this unit.
Higher average prices couldn’t help offset lower store traffic and unit sales at the group’s stores, including those of Payless ShoeSource, and for the period their comparable store sales were off by 3.2 percent.
Sales at Collective’s Payless ShoeSource were $665.1 million and at Stride Rite, $197.6 million. The company singled out Payless Latin America, Stride Rite International, Saucony and Sperry Top-Sider for their performance in the period.
Net income for the quarter jumped by 86.3 percent to $47.5 million, but taking into account lextraordinary items;, the figure would have been $26.6 million, a drop of 15.0 percent from last year.
Adjusted earnings before taxes, depreciation and amortization (EBITDA) increased slightly to $85.1 million compared with $83.8 million in 2007. The gross margin was up by 2.4 percentage points to 34.6 percent, but excluding the extraordinary items mentioned above, it fell by 1.1 percentage point to 34.1 percent. Higher product costs and more promotional activity hurt the gross margin at Stride Rite, and that, plus negative leverage on Payless’ occupancy costs, overtook the positive effects of higher merchandise margins at Payless.
During the quarter, Collective Brands opened 14 Payless and three Stride Rite stores while closing 24 Payless and one Stride Rite. It ended the period with 4,537 Payless stores and 353 Stride Rites.
The company would neither confirm nor change its previous profit guidance, saying economic conditions were too uncertain.