ST. LOUIS, May 28 /PRNewswire/ -- Brown Group, Inc. (NYSE: BG) reported
net earnings of $3,871,000 or 22 cents per diluted share for the first fiscal
quarter ended May 2, 1998 compared to net earnings of $1,542,000 or 9 cents
per diluted share in the 1997 first quarter, an increase of 151.0 percent.
Consolidated net sales for the first quarter of 1998 were $402,309,000
compared to $391,815,000 in last year's first quarter, an increase of
2.7 percent. These results include a reduction in sales at the Pagoda
International Division of $11,849,000. Sales in the balance of the company
increased 6.0 percent.
Announcement of the first quarter results was made at the annual meeting
of the Company's shareholders held in St. Louis, Missouri, by B. A.
Bridgewater, Jr., Chairman of the Board, President and Chief Executive
Officer, who said:
"We are very pleased with Brown Group's sales gain and substantial
earnings improvement in the first quarter of fiscal 1998. These better-than-
planned results were led by Famous Footwear's record first quarter sales and
operating earnings. They also reflect good expense control and leverage,
continuing momentum from the solid performance of Brown Shoe Company and our
Canadian Operations in 1997, progress in the Pagoda International
restructuring, and very good balance sheet management.
"Famous Footwear is off to a very encouraging start in 1998. First
quarter sales of $212.3 million were up 6.2 percent from last year, and sales
from footwear retailing operations were 8.2 percent higher, reflecting the
disposition of Famous Footwear's fixtures shop. Same-store sales for the
first quarter increased 3.8 percent, and have increased at a 4.1 percent rate
to-date in May. Famous Footwear achieved a 54.9 percent increase in operating
earnings to a record $10.4 million for the quarter.
"These earnings reflect continued improvements in operating execution,
including significantly reduced inventory shrinkage costs, and very good
expense control. Women's and men's casual footwear sold particularly well
during the quarter, offsetting athletic shoe demand which has declined
slightly. The shift had a positive impact on Famous Footwear's margins for
the quarter. There were 812 stores in operation at quarter-end.
"Brown Shoe Company's wholesale divisions -- Brown Branded Marketing and
Pagoda USA -- achieved combined sales of $127.3 million for the quarter, a
5.8 percent increase from last year. Operating earnings were up 32.2 percent
to $8.3 million. Sales of the brands were led by NaturalSPORT, which
increased 21 percent in the quarter, and the sell-through of the Brown Branded
Marketing brands at retail was strong, reflecting good consumer acceptance of
Naturalizer, NaturalSPORT and Life Stride product.
"The chronic over-supply of footwear persists in the marketplace, however,
and this continues to impact the rate and timing of orders from our wholesale
customers as we move into the second quarter. In addition, results at Pagoda
USA's Children's division have been adversely affected by lower-than-planned
orders.
"At Naturalizer Retail, sales were up 10.4 percent to $34.2 million in the
first quarter, with same-store sales increasing 7.6 percent, including gains
in each month of the quarter. After substantial losses early in the quarter,
Naturalizer Retail achieved significant sales gains and improved operating
earnings in the March/April period. That momentum has continued to date in
May, reflecting strong sales of Naturalizer's and NaturalSPORT's spring
lines. The division reported an operating loss of $1.1 million for the
period, slightly better than last year's loss. There were 337 Naturalizer
stores in operation at quarter-end.
"In Canada, the Retail division achieved an 8.4 percent same-store sales
gain in the quarter. Overall sales for the Canadian Operations were
$18.5 million, about flat with the prior year. Operating earnings were
$1.3 million, about even with last year, but better than planned.
"We are on-track with the restructuring of the Pagoda International
marketing division, which is now expected to be essentially completed by
year-end. In Latin America, along with the recognition and early resolution
of restructuring issues, the reduction in inventories continues to be well
ahead-of-schedule. In the European operations, the move to a 'first cost'
business is on schedule. First quarter results include a loss of $2.9 million
at Pagoda International, in part reflecting early recognition of certain
license-related costs, and we continue to plan on losses of between $5.0 and
$6.0 million for the year.
"Brown Group's cash flow was better than planned in the quarter and
balance sheet management continues to be very good. Inventories are
tightly-controlled, ending the quarter well below plan and 7.6 percent lower
than last year's level. The company's cash and short-term investments at the
quarter's end exceeded short-term borrowings for the first time in a decade,
and this favorable position is expected to continue for the balance of the
year. Net debt as a percent of total capital was reduced to 48.5 percent. At
its meeting held today, the Board of Directors declared a regular quarterly
dividend of $0.10 cents per share, payable July 1, 1998 to shareholders of
record on June 8, 1998. This will be the company's 302nd consecutive
quarterly dividend.
"Looking ahead, the momentum at Famous Footwear is particularly
encouraging and sell through of our brands at retail has been excellent. We
are pleased with the continued improvements in the strength of Brown Group's
balance sheet and the improved earnings achieved through tight management of
our operations. We are enthusiastic about the progress in the first quarter
and we expect continued improvements in Brown Group's results during 1998 as
we emerge from the problems at Pagoda International."
In other business at the annual shareholders' meeting, three directors
were elected to serve three-year terms: Julie C. Esrey, Richard A. Liddy and
John Peters MacCarthy. B. A. Bridgewater, Jr. was elected to serve a one-year
term . Six other directors continue in office: Joseph L. Bower, Harry E.
Rich, Jerry E. Ritter, John D. Macomber, William E. Maritz and General Edward
C. Meyer, Retired.
Also at the meeting, shareholders ratified and approved the Brown Group,
Inc. 1998 Stock Option and Restricted Stock Plan and the allocation of
750,000 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
from time to time 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, le coq sportif athletic footwear, 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. information 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 2 May 3
1998 1997
Net Sales $ 402,309 $ 391,815
Cost of Goods Sold 246,985 245,982
Gross Profit 155,324 145,833
Selling and Administrative Expenses 142,782 138,007
Interest Expense 5,632 5,765
Other Income (48) (436)
Earnings Before Income Taxes 6,958 2,497
Income Tax Provision (3,087) (955)
Net Earnings $ 3,871 $ 1,542
Basic Net Earnings per Common Share $ .22 $ .09
Diluted Net Earnings per Common Share $ .22 $ .09
BROWN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
May 2 May 3
ASSETS 1998 1997
Cash and Cash Equivalents $ 36,602 $ 28,168
Receivables, Net 71,259 87,312
Inventories (less reserve for valuation
to last-in, first-out cost at
May 2, 1998 of $ 15,199 and
May 3, 1997 of $17,578) 370,438 401,123
Other Current Assets 30,300 39,257
Total Current Assets 508,599 555,860
Property, Plant and Equipment - Net 80,366 84,226
Other Assets 74,574 71,784
$ 663,539 $ 711,870
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable $ 30,000 $ 53,000
Trade Accounts Payable 118,155 122,431
Accrued Expenses 82,232 74,417
Income Taxes 13,603 5,891
Current Maturities of Long-Term Debt 15,000 2,000
Total Current Liabilities 258,990 257,739
Long-Term Debt and Capitalized Leases 182,028 197,025
Other Liabilities 20,388 24,490
Shareholders' Equity 202,133 232,616
$ 663,539 $ 711,870
SOURCE Brown Group, Inc.
 back to top
Related links:
http://www.browngroup.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804. ext. 109435
CONTACT:
Mary Siverts of Brown Group, 314-854-4093
|
