Earnings Releases
Brown Group First Quarter Earnings Per Share $.35 Versus $.22; Famous Footwear Continues Record Performance
ST. LOUIS, Mo. (WIRE NEWS), May 27, 1999 -- Brown Group, Inc. (NYSE: BG) reported net earnings of $6,316,000 or $.35 per diluted share for the first fiscal quarter ended May 1, 1999 compared to net earnings of $3,871,000 or $.22 per diluted share in the 1998 first quarter, an increase of 59 percent.
Consolidated net sales for the first quarter of 1999 were $396,826,000 compared to $402,309,000 in last year's first quarter, a decrease of 1.4 percent.
Announcement of the first quarter results was made at the Annual Meeting of the Company's shareholders held in St. Louis, Missouri, by Ronald A. Fromm, Chairman of the Board, President and Chief Executive Officer, who said:
"We are pleased with the substantial earnings gain Brown Group achieved in the first quarter, setting the stage for further progress throughout the year. This gain includes record first quarter results at Famous Footwear as we continue to build this successful business. It also includes a 25 percent increase in operating earnings for our wholesale division, reflecting improved margins and good expense leverage.
"During the first quarter, Famous Footwear continued to build on the record results achieved in 1998. Sales increased 5.3 percent in the first quarter to $223,613,000. Same-store sales rose 1.7 percent, including an increase of 3.5 percent during the important Easter selling period. These gains were the result of improved product selection in the men's and women's casual footwear categories and the updated junior category. This improved execution combined with good expense leverage led to a 9.1 percent increase in operating earnings to $11,373,000. There were 834 Famous Footwear stores in operation at quarter-end.
"The company's wholesale operations -- Brown Branded, Brown Pagoda and Brown Canada divisions -- achieved a substantial improvement in operating earnings during the first quarter. Operating earnings increased 25.2 percent to $9,885,000 while sales declined 4.2 percent to $126,306,000 for the quarter, as planned. Overall improved margins and lower expenses helped boost operating earnings.
"At the company's Naturalizer Retail operations -- including both U.S. and Canadian stores -- sales declined 4.1 percent to $44,130,000 compared with a strong first quarter last year. Same-store sales declined 6.7 percent for the domestic stores and were flat for the Canadian stores. These lower sales resulted in an operating loss of $1,188,000 for the quarter. There were 464 stores in operation at quarter-end, including 328 in the U.S. and 136 in Canada.
"We are dedicated to forming one integrated, increasingly efficient, brand-driven footwear operating company. We plan to continue to build on the positive momentum achieved in 1998 and in the first quarter of 1999. The positioning of our Famous Footwear business provides opportunities for further growth and earnings improvement. To date in May, sales at Famous Footwear are on plan and we look forward to continuing to build on the success of this business.
"We also are encouraged by the strong order position of our wholesale businesses as we move into the second quarter. Orders for our Naturalizer brand are up 6 percent over year-ago levels. In addition, we are excited about the opportunities for the Brown Pagoda division's Barbie and Star Wars licensed footwear brands. With continued progress at Famous Footwear and a strong wholesale order position, the second quarter results are on track, and we remain optimistic about the prospects for continued progress for the balance of the year."
In other business at the Annual Shareholders' Meeting, two directors were elected to serve three-year terms: Ronald A. Fromm and Patricia G. McGinnis. Six other directors continue in office: Julie C. Esrey, Richard A. Liddy, John Peters MacCarthy, Joseph L. Bower, Harry E. Rich, and Jerry E. Ritter.
Shareholders also approved the amendment of the company's Certificate of Incorporation to change the name of the company to Brown Shoe Company, Inc., effective immediately.
Also at the meeting, shareholders ratified and approved the Incentive and Stock Compensation Plan of 1999 and the allocation of 900,000 shares of the company's Common Stock to the Plan.
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 $1.6 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, Barbie, 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 news also is available on the Company's web site at http://www.browngroup.com.
BROWN GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per share) Thirteen Weeks Ended
May 1 May 2
1999 1998
Net Sales $ 396,826 $ 402,309
Cost of Goods Sold 239,019 246,985
Gross Profit 157,807 155,324
Selling and Administrative Expenses 141,649 142,782
Interest Expense 4,683 5,632
Other (Income) Expense 1,295 (48)
Earnings Before Income Taxes 10,180 6,958
Income Tax Provision 3,864 3,087
Net Earnings $ 6,316 $ 3,871
Basic Net Earnings per Common Share $ .36 $ .22
Diluted Net Earnings per Common Share $ .35 $ .22
Basic Number of Shares 17,765 17,625
Diluted Number of Shares 17,976 17,886
BROWN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
May 1 May 2
1999 1998
ASSETS
Cash and Cash Investments $ 26,926 $ 36,602
Receivables, Net 76,852 71,259
Inventories (less reserve for valuation to
last-in, first-out cost at May 1, 1999
of $13,097 and May 2, 1998 of $15,199) 389,181 370,438
Other Current Assets 21,936 30,300
Total Current Assets 514,895 508,599
Property, Plant and Equipment - Net 84,762 80,366
Other Assets 77,229 74,574
$ 676,886 $ 663,539
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable $ 28,000 $ 30,000
Trade Accounts Payable 131,805 118,155
Accrued Expenses 82,501 82,232
Income Taxes 8,387 13,603
Current Maturities of Long-Term Debt 10,000 15,000
Total Current Liabilities 260,693 258,990
Long-Term Debt and Capitalized Leases 172,031 182,028
Other Liabilities 20,354 20,388
Shareholders' Equity 223,808 202,133
$ 676,886 $ 663,539