Brown Shoe Company, Inc. (BWS)
F2Q09 Earnings Call
August 26, 2009 9:00 am ET
Ken Golden – Director, Investor Relations
Ronald A. Fromm – Chief Executive Officer
Mark E. Hood – Chief Financial Officer
Diane Sullivan – President & Chief Operating Officer
Joseph W. Wood – President, Brown Shoe Retail
Christopher Svezia - Susquehanna Financial Group
Heather Boksen - Sidoti & Company
Jillian Caruthers – Johnson Rice
Christopher Svezia - Susquehanna Financial Group
Sam Poser - Sterne, Agee & Leach
Previous Statements by BWS
» Brown Shoe Co. Inc. Q3 2009 Earnings Call Transcript
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» Brown Shoe Company, Inc., Q3 2008 Earnings Call Transcript
Good morning everyone. Thanks for joining us today for the Brown Shoe's second quarter 2009 financial results conference call. This call is being made accessible to the public via Web cast in accordance with the SEC's regulation FD.
Before I pass the call over to Ron Fromm, I'd like to remind you of the company's Safe Harbor language. During this conference call, the company will make certain forward-looking statements to help you better understand its financial results and competitive outlook. Discussion of the company's future plans and other statements in this call that are not current or historical facts are forward-looking statements. These involve known and unknown risks and uncertainties that could cause the actual results to materially differ from historical results or from any future results expressed or implied by any forward-looking statements. Factors that could cause actual results to differ materially include those listed in our press release issued this morning and available on our 8-K filed prior to this call and other risk factors listed from time to time in the company's SEC reports. Copies of the company's reports are available online and from the company's Investor Relations Department. The company does not undertake any obligation or plan to update these forward-looking statements even though the situation may change.
Now I’d like to turn the call over to Ronald Fromm, Chairman and CEO of Brown Shoe.
Ronald A. Fromm
Good morning everyone. With me on the call are: Diane Sullivan, our President and Chief Operating Officer; Mark Hood, our Chief Financial Officer: and Joe Wood, the President of Brown Shoe Retail. Following my opening remarks, Mark will discuss our financial performance in more detail and review our outlook, then Diane will provide additional insight into our operating performance. Following this, we will all be available for questions, including Joe Wood, to answer them.
Our earnings performance was in line with our expectations for both the second quarter and the first half of 2009. Though it remains a challenging period for us in the industry, our results are getting progressively better and our outlook is getting progressively better as well.
During the quarter, we continued to run the business based on our core operating principles, managing the controllables and making key investments to give us an opportunity to win in the back half of the year, while continuing to position us for success as this economic climate ends.
Before I touch on the results, I just would like to make a couple of comments about how proud I am of the entire organization for how they have managed through this extremely challenging period and the effort that has been put forth to give us the best chance of success during back-to-school and the fall selling seasons.
In the last twelve months, in addition to coping with a tough economic climate, we successfully relocated our Famous Footwear business from Madison to St. Louis, developed and launched a new distribution center on the West Coast, opened two new design studios in the Far East, and began the implementation of a new information technology platform.
This has required a lot of sacrifice and heavy lifting and I thank them for their continued focus during this time.
Moving on to our results for the second quarter, net sales were $511.6 million, representing a decline of 10.1% from the second quarter last year. With the help of expense savings and margin improvement, we delivered a net loss of $0.10 per diluted share, or $0.07 per diluted share adjusted for $0.03 per diluted share in costs associated with our IT initiatives. This compares to net earnings of $0.05 per diluted share last year, or $0.20 per diluted share adjusted for costs of $0.15 per diluted share in special charges last year.
Our sales decline in the quarter was primarily driven by lower traffic across the industry. Our stores comparable sales performance generally tracked our decline in customer counts with Famous Footwear generating a minus 6.7% same store sales results. And our Wholesale brands continued to be impacted by lower demand and reduced inventory levels across all retail channels as our partners aligned their inventory levels to customers' reduced selling patterns, as well as by the continuing trend of direct sourcing within certain retail channels.
Importantly, the bold and decisive action that we took on early allowed us to manage our expenses this year and remain diligent, allowing us to meet our earnings expectations even while we experienced a greater sales decline that we had planned.
Through the expense and capital containment initiatives that we announced earlier in the year, we now expect to realize over $40.0 million in annual savings.
Yet, while we have stepped up our focus on expenses, we also have continued to make strategic investments to better position our business for success in the back-to-school and fall selling seasons. These include investments in marketing, product and store environment to drive an improved customer experience at Famous Footwear, investments in our "Make Today Famous" campaign, which Diane will discuss in more detail later, and continued investments in design, product development and sourcing.