Earnings Releases
Brown Group Reports Net Earnings Of $23.7 Million Or $1.32 Per Share On Sales Of $1.5 Billion For Fiscal Year 1998
ST. LOUIS, Mo. (WIRE NEWS), March 4, 1999 -- Brown Group, Inc. (NYSE: BG) reported net earnings of $23,669,000 or $1.32 per diluted share for the 52-week fiscal year 1998, which ended January 30, 1999, compared to a net loss of $20,896,000 or $1.19 per diluted share in fiscal year 1997.
The 1997 net loss includes after tax, non-recurring charges of $31,000,000 or $1.76 per diluted share associated with the phase-out of the company's Pagoda International marketing division and an after tax loss of $1,500,000 related to the sale of Famous Footwear's fixtures business.
The company reported consolidated net sales of $1,538,530,000 for fiscal year 1998 compared to $1,567,202,000 in fiscal year 1997. Adjusting for the sales decline related to the withdrawal from the Pagoda International division, and the sale of the Famous Fixtures business, sales increased 3.1 percent.
Net earnings for the fourth quarter of 1998, which ended January 30, 1999, were $2,605,000 or $.14 per diluted share, compared to a net loss of $12,645,000 or $.72 per diluted share in the fourth quarter of 1997. The 1997 fourth quarter loss includes after tax, non-recurring charges of $10,000,000 or $.57 per diluted share, associated with the Pagoda International withdrawal and the loss on the sale of Famous Fixtures. Consolidated net sales for the fourth quarter of 1998 were $340,627,000 compared to $362,678,000 in last year's fourth quarter. Adjusting for the reduction in sales at the Pagoda International division and the sale of the Famous Fixtures business, sales declined 1.3 percent in the quarter.
Announcement of these results was made by Ronald A. Fromm, Chairman of the Board, President and Chief Executive Officer, who said:
"We are pleased to report a year of continuing progress at Brown Group, led by a 25 percent earnings gain at Famous Footwear and a 23 percent earnings gain in Brown Shoe Company's Branded division. These results reflect sound management of our operations during a difficult and highly promotional year in the footwear marketplace. In addition, they confirm the solid positioning of our stores and brands within the industry, and their potential for further progress."Famous Footwear's sales and operating earnings reached an all- time record high during 1998. Sales of $861.3 million during the year were 1.3 percent higher than last year and were 3.9 percent higher adjusting for the sale of the Famous Fixtures business. Same-store sales increased .4 percent during the year, however sales per square foot increased 3.2 percent, reflecting improved store productivity.
"Famous Footwear's operating earnings were $47.2 million, a 24.5 percent increase over 1997 (excluding the effect of the sale of the fixtures business). This gain reflects continued improvements in execution, including higher margins, very good expense management and successful merchandising strategies to overcome the decline in athletic footwear sales. There were 827 Famous Footwear stores in operation at fiscal year-end, a net increase of 12 stores for the year.
"The company's wholesale operations -- the Brown Branded, Pagoda Licensed/Private Label, and Canadian Wholesale divisions -- also achieved improved results during 1998. Operating earnings increased 4.8 percent to $33.5 million. Sales were $455.9 million, a 1.7 percent increase over 1997. These results were led by very strong performance of the Naturalizer brand, as it continues to achieve increasing consumer acceptance and new retail distribution. Sales of the Naturalizer brand increased 8.7 percent in 1998.
"At the company's Naturalizer Retail operations -- which includes both U.S. and Canada -- a sales gain of 3.1 percent to $187.2 million for the year also reflects the encouraging momentum of the Naturalizer brand. Same-store sales for Naturalizer Retail's U.S. stores increased 2.6 percent during 1998 and were 1.2 percent higher in Canada. Operating earnings were $.8 million versus $2.3 million last year. This includes record results for the Canadian retail operations offset by losses in the U.S. operations due to higher store operating costs. There were 462 stores in operation at fiscal year-end including 331 in the U.S. and 131 in Canada.
"The withdrawal from the Pagoda International division has been substantially completed, as virtually all of the inventory has been sold, all licenses either terminated or assigned to other parties, and only minimal office operations retained. The withdrawal resulted in a loss for the year of $7.5 million and is expected to result in a loss of $1 million in 1999.
"With this dramatic improvement in our operating results, Brown Group generated positive cash flow of $49.2 million during fiscal year 1998. The balance sheet was materially strengthened during the year, with the elimination of short-term borrowings at year- end. Net debt as a percent of total capital was reduced to 41.1 percent from 50.2 percent at the end of fiscal year 1997. Inventories were tightly controlled in all operations during the year, ending the period well below plan and below last year.
"In summary, results for fiscal year 1998 place Brown Group in a solid position to continue to build momentum in both our retail operations and our wholesale businesses. The strong positioning of these businesses with today's consumer and our strengthened balance sheet provide good prospects for continued improvements."
Safe Harbor Statement Under the Private Securities Litigation Act of 1995: This press release contains certain forward-looking statements that are subject to various risks and uncertainties that could cause actual results to differ materially. These include general economic conditions, competition, consumer apparel and footwear buying trends, and political and economic conditions in Brazil and China, which are significant footwear sourcing countries. The Company's reports to the Securities and Exchange Commission contain detailed information relating to such factors.
Brown Group, Inc. is a $1.5 billion footwear company with worldwide operations. The Company operates the Famous Footwear, Naturalizer and F. X. LaSalle chains of footwear retail stores and markets leading brands including Naturalizer, Life Stride, NaturalSport, and licensed brands including Dr. Scholl's, Star Wars and Disney character footwear.
Brown Group, Inc. press releases are available by fax through PR Newswire's Company News On-Call fax service at 800-758-5804, extension 109435. Brown Group, Inc. news also is available on the Company's web site at http://www.browngroup.com.
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BROWN GROUP, INC. CONSOLIDATED STATEMENTS OF EARNINGS | ||||
| (Thousands, except per share) | ||||
| Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||
| January 30, 1999 | January 31, 1998 | January 30, 1999 | January 31, 1998 | |
| Net Sales | $ 340,627 | $ 362,678 | $1,538,530 | $1,567,202 |
| Cost of Goods Sold | 200,367 | 231,905 | 925,190 | 988,530 |
| Gross Profit | 140,260 | 130,773 | 613,340 | 578,672 |
| Selling and Administrative Expenses | 132,092 | 139,912 | 551,877 | 559,536 |
| Interest Expense | 4,429 | 5,482 | 19,383 | 21,756 |
| Other Expense (Income) | 2,467 | (757) | 4,477 | (452) |
| Earnings (Loss) Before Income Taxes | 1,272 | (13,864) | 37,603 | (2,168) |
| Income Tax (Provision) Benefit | 1,333 | 1,219 | (13,934) | (18,728) |
| Net Earnings (Loss) | $ 2,605 | $ (12,645) | $ 23,669 | $ (20,896) |
| Basic Net Earnings (Loss) per Common Share | $ .15 | $ (.72) | $ 1.34 | $ (1.19) |
| Diluted Net Earnings (Loss) per Common Share | $ .14 | $ (.72) | $ 1.32 | $ (1.19) |
| Basic Number of Shares | 17,736 | 17,613 | 17,692 | 17,591 |
| Diluted Number of Shares | 17,999 | 17,854 | 17,943 | 17,841 |
| Note: The consolidated statements of earnings for the thirteen weeks ended January 31, 1998 includes an after-tax restructuring charge of $10.0 million related to the Pagoda International operations, of which $6.8 million is reflected in cost of goods sold, $3.1 million in selling and administrative expenses, and $.1 million in other income. Results for the fifty-two weeks ended January 31, 1998 reflect after- tax restructuring charges of $31.0 million related to the Pagoda International operations, of which $14.7 million is reflected in cost of goods sold, $7.3 million in selling and administrative expenses, $1.0 million in other income and $8.0 million in income taxes. | ||||
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BROWN GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (Thousands) | ||||
| January 30, 1999 |
January 31, 1998 | |||
| ASSETS | ||||
| Cash and Cash Investments | $ 45,532 | $ 50,136 | ||
| Receivables, Net | 67,815 | 77,355 | ||
| Inventories (less reserve for valuation to last-in, first-out cost at October 31, 1998 of $14,968 and November 1, 1997 of $16,984) | 362,274 | 380,177 | ||
| Other Current Assets | 21,762 | 30,862 | ||
| Total Current Assets | 497,383 | 538,530 | ||
| Property, Plant and Equipment - Net | 82,178 | 82,744 | ||
| Other Assets | 75,671 | 73,714 | ||
| $655,232 | $694,988 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Notes Payable | $ -- | $ 54,000 | ||
| Trade Accounts Payable | 124,921 | 118,907 | ||
| Accrued Expenses | 90,081 | 93,191 | ||
| Income Taxes | 6,442 | 11,995 | ||
| Current Maturities of Long-Term Debt | 25,000 | - | ||
| Total Current Liabilities | 246,444 | 278,093 | ||
| Long-Term Debt and Capitalized Leases | 172,031 | 197,027 | ||
| Other Liabilities | 19,583 | 20,678 | ||
| Shareholders' Equity | 217,174 | 199,190 | ||
| $655,232 | $694,988 | |||
Brown Group, Inc.
For more information contact:
Mary Sylvia Siverts
8300 Maryland Avenue
Post Office Box 29
St. Louis, Missouri 63166-0029
(314) 854-4000
Vice President - Public Affairs
(314) 854-4093