Brown Shoe Company, Inc. (BWS)
Q3 2012 Earnings Call
November 20, 2012 9:30 a.m. ET
Diane Sullivan - President and Chief Executive Officer
Richard Ausick - Division President, Famous Footwear
Russ Hammer - Senior Vice President and Chief Financial Officer
Peggy Reilly Tharp - Vice President, Investor Relations
Scott Krasik - BB&T Capital Markets
Jeffrey Stein - Northcoast Research
Steven Marotta - CL King & Associates
Jill Caruthers - Johnson Rice & Company
Christopher Svezia - Susquehanna Financial Group
Carla Casella - JPMorgan
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Peggy Reilly Tharp
Good morning and thank you for participating in the Brown Shoe Company’s third quarter 2012 earnings call, which is being made available to the public via webcast. I am Peggy Reilly Tharp, Vice President of Investor Relations for Brown Shoe Company. Earlier today, we distributed a press release with detailed financial tables which is available on our website at brownshoe.com. In addition, slides are available on our website for you to reference during today’s call.
Please be aware that today's discussion contains forward-looking statements which are not historical facts and are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors including but not limited to, the factors disclosed in the company's Form 10-K and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors that could impact forward-looking statements. Copies of these reports are available online. The company undertakes no obligation to update any information discussed in this call.
Joining us on the call today are Diane Sullivan, President and Chief Executive Officer; Russ Hammer, Chief Financial Officer; and Rick Ausick, President, Famous Footwear. Today we will begin with a strategy review from Diane, followed by a financial summary from Russ before turning the call back over for Q&A.
I would now like to turn the call over to Diane Sullivan.
Thanks, Peggy. Good morning and thanks for joining us. I am very pleased to report sales of $732.2 million and adjusted earnings per share of $0.60. As our company grew the top line, managed expenses and improved the balance sheet and continued to see positive results from our portfolio realignment effort. Year-to-date adjusted EPS is now at $1 a share.
As I have said over the past couple of quarters, Famous Footwear would be the leading indicator of our turnaround. And this business delivered another outstanding quarter with record third quarter sales of $436.8 million and a back-to-school same store sales comp of 5.5%. But the good news didn’t end with the start of the school year. We continued to see good sales growth in October resulting in a total third quarter same store sales improvement of 6.8%.
But the story is built on more than just improved sales. Our Famous Footwear real estate strategy continues to deliver as well. Stores we opened in the first nine months of the year are averaging sales of more than $205 square foot, better than our expectations. We also saw a terrific return on our marketing investments in the third quarter with our shift to digital offers from paper tabs driving record sales performance. We also saw improvements in same store traffic, up 2%, conversions, up 3.4%, while footwear AUR were up 1.3%.
We had positive same store comps across channels and geographies from coast to coast and border to border, regardless of climate. This allowed us to deliver close to a 25% increase in operating profit in the quarter versus last year. In terms of products, we saw good strength in a variety of styles. Running continued its strong trend, up 13.4% over the prior year. Boat shoes were also strong, up 118%. And we had increases across men’s, women’s and kids in that category. Sandal sales were good in each of the quarter for a total increase of slightly over 8%.
Women’s boots were up 13.4% in the quarter and we feel good about casual boot sales for the fourth quarter. Unfortunately we, like others, closed out a great quarter and started the next with the advent of Hurricane Sandy. While most important is that none of our associates were injured, however, many of them are still working to sort through the damage to their homes and their personal property. Sandy shuttered as many as 230 of our stores following landfall. Although, we had all but four stores up and running within nine days, we still expect to see a fourth quarter sales impact of a little more than $2.5 million.
Now in our wholesale operations third quarter net sales were up 3.3%, excluding brands we have exited over the past 12 months. Our contemporary fashion brands performed well in the quarter, up 5.2%, with very strong contribution from our Sam Edelman, Franco Sarto and Fergie brands. And I just have to give a special call out to Sam Edelman and his team and congratulate them on being named brand of the year by Footwear News. Sam just has this incredible understanding of the consumer, all you have to do is walk through the footwear floors and you will see what I mean. He knows what's relevant to her, he knows how she thinks and feels about fashion, and we are really happy for them that they won brand of the year. So congratulations to the entire team.