Brown Shoe Q3 Results Top Estimates, Boosts 2014 EPS Outlook

(RTTNews) - Footwear retailer Brown Shoe Co., Inc. (BWS) reported Tuesday a profit for the third quarter that increased 21 percent from last year, reflecting improved operating margins and net sales growth. Both earnings per share and quarterly net sales topped analysts' expectations.

The company also raised its adjusted earnings guidance for the full-year 2014, citing strong wholesale results with the steady performance at Famous Footwear in the third quarter, while maintaining annual revenue outlook.

Following the announcement, the company's shares are surging nearly seven percent in pre-market trading.

"Wholesale overachieved again, with sales up 18.2% in third quarter, and both Healthy Living and Contemporary Fashion contributed strong double-digit sales improvement. At Famous Footwear, our focus on big ideas for back-to-school continued to deliver," Chairman, President and CEO Diane Sullivan said in a statement.

The St. Louis, Missouri-based company posted net earnings of $33.11 million or $0.75 per share for the third quarter, higher than $27.31 million or $0.63 per share in the prior-year quarter, which included $0.01 per share of earnings from discontinued operations.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 3.8 percent to $729.28 million from $702.79 million in the same quarter last year, and topped six Wall Street analysts' consensus estimate of $725.85 million.

Famous Footwear sales declined 1.0 percent to $435.4 million and same-store-sales edged down 0.2 percent. Wholesale operations sales increased 18.2 percent to $242.6 million, while specialty retail sales decreased 11.4 percent to $51.3 million from last year and same-store-sales declined 6.9 percent.

Consolidated operating margin for the quarter expanded 90 basis points to 7.3 percent, as gross margin increased 30 basis points and selling, general and administrative expenses as a percentage of total sales, improved 60 basis points.

Inventory at the end of the third quarter was $567.8 million, up 4.3 percent from $544.6 million at the end of the prior-year quarter.

Looking ahead to fiscal 2014, Brown Shoe raised its adjusted earnings guidance to a range of $1.65 to $1.69 per share from the prior forecast of $1.50 to $1.60 per share. However, the company maintained its revenues outlook in the range of $2.58 billion to $2.60 billion.

Street is currently looking for full-year 2014 earnings of $1.58 per share on annual revenues of $2.58 billion.

"Although our biggest quarter of the year is past, with nine strong months behind us -- and an easier comp ahead of us for the fourth quarter -- we expect to deliver a strong 2014," Sullivan added.

CFO Russ Hammer noted that, "While we expect to end the year on a positive note, we remain aware of the promotional potential at retail for the holiday season and alert to possible shifts in consumer sentiment."

BWS closed Tuesday's regular trading session at $28.48, up $0.19 on a volume of 0.70 million shares.