Earnings Releases
Brown Shoe Reports Strong Earnings Increase for Fiscal 1999
ST. LOUIS, Mo. (WIRE NEWS), February 24, 2000 — Brown Shoe Company, Inc. (NYSE: BWS) today reported net earnings for its fiscal year, ended January 29, 2000, climbed to $35,501,000 or $1.96 per diluted share, a 48 percent increase compared to $23,669,000 or $1.32 per diluted share in 1998. These results include the loss associated with completing the withdrawal from the company's international licensed business that amounted to $0.04 per diluted share in 1999 versus $0.42 per diluted share in 1998.
Consolidated net sales for the year increased 3.5 percent to $1,592,532,000 versus $1,538,530,000 in fiscal 1998.
Net earnings for the fourth quarter increased to $3,905,000 or $0.22 per diluted share versus $2,605,000 or $0.14 per diluted share in the year-earlier quarter. Consolidated net sales were $356,474,000 compared with $340,627,000 in fourth quarter 1998.
"We accomplished a great deal in 1999, posted impressive results and, more importantly, we see this momentum continuing," said Ronald A. Fromm, chairman and chief executive officer. "Our 867-store Famous Footwear chain completed another outstanding year, posting record earnings for the fourth consecutive year. Our Naturalizer flagship brand recorded significant gains with department stores. And, our Pagoda division contributed record profits, reflecting strong product development, relevant merchandising and excellent execution.
"These results not only reflect solid progress, but they reaffirm our confidence that our stores and brands are well positioned for even further gains in fiscal 2000."
Operating earnings for Famous Footwear grew to $54.0 million, a 14.4 percent increase over 1998. Famous Footwear sales increased 7.7 percent to $927.6 million in 1999, as a result of successful merchandising strategies and effective new marketing initiatives. The chain realized a same-store sales gain of 2.2 percent. In addition, stable gross margin rates, aggressive expense control and strong execution contributed to an improved operating margin of 5.8% in 1999 compared to 5.5% in 1998 and 4.6% in 1997.
Sales-per-square-foot rose 4.2 percent over 1998, reflecting continuing improvements in store productivity. In 1998, sales-per-square-foot increased 3.2 percent over 1997.
During fiscal 1999, Famous Footwear opened 77 stores and closed 37 stores, representing a net increase of 40 stores.
Sales of the wholesale operations -- the Brown Branded, Brown Pagoda, and Canadian wholesale divisions — were up 2.9 percent to $469.2 million for the year. Operating earnings of $32.8 million were slightly lower than last year due to a change in internal transfer pricing policy. Excluding the newly implemented transfer pricing policy, wholesale operations would have shown a 5.2 percent increase in operating earnings, over last year. This gain was led by strong operating performances by the Brown Pagoda division as well as the flagship Naturalizer brand.
The Naturalizer brand continued to achieve increasing consumer acceptance and additional retail distribution as new fashion-forward designs were incorporated into the product line. In 1999, the brand launched a powerful re-imaging campaign with new graphics and in-store merchandising materials, contributing to increases and setting the stage for further growth in fiscal 2000. Brown Pagoda continued to build upon its strategic business partnerships with major mass merchandisers in the United States. Strong performance in product development, sourcing and execution produced sales gains in children's, led by Barbie and Star Wars footwear; and in women's, particularly the Dr. Scholl's label.
Naturalizer Retail stores, located throughout the U.S. and Canada, posted sales of $186.6 million in 1999, even with last year. Same-store sales for Naturalizer Retail's U.S. stores decreased 4.1 percent and were 2.7 percent lower in Canada. The operating loss of $3.7 million in 1999, compared with last year's $0.8 million profit, was due to same-store sales declines and increased marketing expenses to promote the brand's new image. Encouragingly, in the latter part of 1999, the domestic, mall-based "concept" stores reversed that trend with four straight months of improved same-store sales.
"Overall, the chain's financial performance for 1999 was unacceptable," said Fromm. "We are confident, however, that new styles in Naturalizer product, marketing initiatives launched in the second half of 1999, and our program to identify more productive store locations, will lead to financial improvements in 2000."
There were 486 Naturalizer stores in operation at fiscal year-end, including 347 in the U.S. and 139 in Canada.
For the full year, Brown Shoe generated cash flow from operations of $39.1 million. Net debt as a percent of total capital improved to 35.6 percent from 41.1 percent at the end of fiscal year 1998. Inventories were tightly controlled in all operations, and ended the year in excellent shape.
"The fourth quarter is traditionally our weakest quarter," said Fromm, "and in fourth quarter 1999, our retail divisions incurred slight same-store sales declines. This was offset, however, by good expense control together with some favorable quarter-end tax adjustments.
"Looking ahead to 2000, we will continue to invest in the new image and marketing of our flagship Naturalizer brand, and plan to drive significant gains in marketshare," Fromm said. "In addition, we are actively converting our LifeStride line from primarily a dress line to a casual line; and we have signed licensing agreements with Sammy Sosa and the Fox Family Network (Digimon and NASCAR Racers) for new children's footwear. We are continuing to invest in e-commerce initiatives for both our wholesale and retail customers. And, we look to Famous Footwear to continue its 'best of class' performance."
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 Shoe, Inc. is a $1.6 billion footwear company with worldwide operations. The Company operates the Famous Footwear and Naturalizer chains of footwear retail stores and markets leading brands including Naturalizer, LifeStride, NightLife, Naturalsport, Buster Brown, and licensed brands including Dr. Scholl's, Barbie and Star Wars character footwear.
Brown Shoe, Inc. press releases are available by fax through PR Newswire's Company News On-Call fax service at 800-758-5804, extension 109435. Brown Shoe, Inc. news also is available on the Company's web site at http://www.brownshoe.com.
| Brown Shoe Company, Inc. Consolidated Statements of Earnings (Thousands, except per share) |
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| Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||
| January 29, 2000 | January 30, 1999 | January 29, 2000 | January 30, 1999 | |
| Net Sales | $356,474 | $340,627 | $1,592,532 | $1,538,530 |
| Cost of Goods Sold | 221,829 | 200,367 | 967,161 | 925,190 |
| Gross Profit | 134,645 | 140,260 | 625,371 | 613,340 |
| Selling and Administrative Expenses | 128,975 | 132,092 | 558,436 | 551,877 |
| Interest Expense | 4,038 | 4,429 | 17,349 | 19,383 |
| Other Expense (Income) | (124) | 2,467 | (2,179) | 4,477 |
| Earnings Before Income Taxes | 1,756 | 1,272 | 51,765 | 37,603 |
| Income Tax (Provision) Benefit | 2,149 | 1,333 | (16,264) | (13,934) |
| Net Earnings | $3,905 | $2,605 | $35,501 | $23,669 |
| Basic Net Earnings per Common Share | $ .22 | $ .15 | $1.99 | $1.34 |
| Diluted Net Earnings per Common Share | $ .22 | $ .14 | $1.96 | $1.32 |
| Basic Number of Shares | 17,911 | 17,736 | 17,859 | 17,692 |
| Diluted Number of Shares | 18,071 | 17,999 | 18,125 | 17,943 |
Note: Other Income in the fifty-two week period ended January 29, 2000, includes $2.3 million of income from the sale of the le coq sportif brand in July 1999. This gain was substantially offset by a tax provision of $2.0 million, which included $1.2 million of taxes to allow repatriation of the previously untaxed foreign cash generated from the sale.
| Brown Shoe Company, Inc. Condensed Consolidated Balance Sheets (Thousands) |
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| January 29, 2000 | January 30, 1999 | |
| ASSETS | ||
| Cash and Cash Investments | $ 34,158 | $ 45,532 |
| Receivables, Net | 68,236 | 67,815 |
| Inventories (less reserve for valuation to last-in, first-out cost at January 29, 2000 of $11,709 and January 30, 1999 of $13,424) | 365,989 | 362,274 |
| Other Current Assets | 19,391 | 21,762 |
| Total Current Assets | 487,774 | 497,383 |
| Property, Plant and Equipment - Net | 84,600 | 82,178 |
| Other Assets | 77,964 | 75,671 |
| $650,338 | $655,232 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Notes Payable | $ - | $ - |
| Trade Accounts Payable | 113,820 | 124,921 |
| Accrued Expenses | 89,547 | 90,081 |
| Income Taxes | 4,402 | 6,442 |
| Current Maturities of Long-Term Debt | 10,000 | 25,000 |
| Total Current Liabilities | 217,769 | 246,444 |
| Long-Term Debt and Capitalized Leases | 162,034 | 172,031 |
| Other Liabilities | 20,590 | 19,583 |
| Shareholders' Equity | 249,945 | 217,174 |
| $650,338 | $655,232 | |
SOURCE: Brown Shoe Company, Inc.
CONTACT: Beth Fagan, Vice President, Public Affairs, 314-854-4093, of Brown Shoe Company, Inc.