BROWN SHOE COMPANY, INC.
(Exact name of registrant as specified in its charter)
|
|
New York
(State or other jurisdiction of incorporation or organization)
|
|
1-2191
(Commission File Number)
|
43-0197190
(IRS Employer Identification Number)
|
8300 Maryland Avenue
St. Louis, Missouri
(Address of principal executive offices)
|
63105
(Zip Code)
|
(314) 854-4000
(Registrant's telephone number, including area code)
|
|
(c)
|
Exhibit
|
|
99.1
|
Press Release issued March 7, 2012
|
|
BROWN SHOE COMPANY, INC.
|
||
(Registrant)
|
||
Date: March 7, 2012
|
/s/ Michael I. Oberlander
|
|
Michael I. Oberlander
|
||
Senior Vice President, General Counsel and
Corporate Secretary
|
Exhibit Number
|
Description
|
|
99.1
|
Press Release dated March 7, 2012
|
News
|
Contacts: | |
Media and Investors | |
Peggy Reilly Tharp, Brown Shoe Company | |
(314) 854-4134, ptharp@brownshoe.com |
US$M, except per share (unaudited)
|
13 Weeks
|
52 Weeks
|
||||
4Q’11
|
4Q’10
|
Change
|
4Q’11
|
4Q’10
|
Change
|
|
Famous Footwear
|
352.4
|
355.5
|
(0.9%)
|
1,456.3
|
1,486.5
|
(2.0%)
|
Wholesale Operations
|
205.1
|
173.9
|
17.9%
|
870.9
|
754.4
|
15.4%
|
Specialty Retail
|
71.4
|
75.1
|
(5.0%)
|
255.6
|
263.2
|
(2.9%)
|
Consolidated net sales
|
$628.9
|
$604.5
|
4.0%
|
$2,582.8(1)
|
$2,504.1
|
3.1%
|
Gross profit
|
238.6
|
235.3
|
1.4%
|
996.6
|
1,003.6
|
(0.7%)
|
Margin
|
37.9%
|
38.9%
|
-100 bps
|
38.6%
|
40.1%
|
-150 bps
|
SG&A expenses
|
230.0
|
226.9
|
1.3%
|
937.3
|
923.0
|
1.6%
|
% of net sales
|
36.6%
|
37.5%
|
-90 bps
|
36.3%
|
36.9%
|
-60 bps
|
Net restructuring, other special charges
|
16.5
|
2.5
|
n/m
|
23.7
|
7.9
|
n/m
|
Operating earnings (loss)
|
(7.9)
|
5.9
|
(233.2%)
|
35.6
|
72.7
|
(51.1%)
|
% of net sales
|
(1.3%)
|
1.0%
|
-230 bps
|
1.4%
|
2.9%
|
-150 bps
|
Net interest expense
|
(5.8)
|
(5.3)
|
9.8%
|
(26.5)
|
(19.5)
|
36.3%
|
Earnings (loss) from continuing operations before income tax
|
(13.7)
|
0.6
|
n/m
|
9.1
|
53.2
|
(83.0%)
|
Discontinued operations
|
(1.4)
|
-
|
n/m
|
15.7
|
-
|
n/m
|
Net earnings (loss)
|
(8.2)
|
3.4
|
(345.2%)
|
24.6
|
37.2
|
(34.0%)
|
Per share
|
($0.21)
|
$0.08
|
(362.5%)
|
$0.56
|
$0.85
|
(34.1%)
|
Adjusted per share
|
$0.10
|
$0.11
|
(9.1%)
|
$0.70
|
$0.97
|
(27.8%)
|
Metric
|
FY’12
|
Consolidated net sales
|
$2.55 to $2.58 billion
|
Famous Footwear same-store sales
|
Flat to up low single-digits
|
Wholesale Operations net sales
|
Down low single-digits, reflecting brand exits
|
Gross profit margin
|
Up 70 to 100 basis points
|
SG&A
|
$925 to $930 million
|
Non-recurring costs related to portfolio realignment
|
$12 to $15 million
|
Net interest expense
|
$23 to $25 million
|
Effective tax rate
|
37% to 38%
|
Earnings per diluted share
|
$0.57 to $0.75
|
Adjusted earnings per diluted share
|
$0.78 to $0.92
|
Depreciation and amortization
|
$59 to $61 million
|
Capital expenditures
|
$56 to $58 million
|
SCHEDULE 1
|
||||||||||||||||
BROWN SHOE COMPANY, INC.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
13 Weeks Ended
|
52 Weeks Ended
|
|||||||||||||||
(Thousands, except per share data)
|
January 28, 2012
|
January 29, 2011
|
January 28, 2012
|
January 29, 2011
|
||||||||||||
Net sales
|
$ | 628,891 | $ | 604,524 | $ | 2,582,824 | $ | 2,504,091 | ||||||||
Cost of goods sold
|
390,318 | 369,219 | 1,586,184 | 1,500,537 | ||||||||||||
Gross profit
|
238,573 | 235,305 | 996,640 | 1,003,554 | ||||||||||||
Selling and administrative expenses
|
229,943 | 226,924 | 937,419 | 922,976 | ||||||||||||
Restructuring and other special charges, net
|
16,523 | 2,454 | 23,671 | 7,914 | ||||||||||||
Operating (loss) earnings
|
(7,893 | ) | 5,927 | 35,550 | 72,664 | |||||||||||
Interest expense
|
(6,238 | ) | (5,409 | ) | (26,141 | ) | (19,647 | ) | ||||||||
Loss on early extinguishment of debt
|
- | - | (1,003 | ) | - | |||||||||||
Interest income
|
396 | 90 | 644 | 203 | ||||||||||||
(Loss) earnings from continuing operations before income taxes
|
(13,735 | ) | 608 | 9,050 | 53,220 | |||||||||||
Income tax benefit (provision)
|
6,968 | 2,639 | (326 | ) | (16,160 | ) | ||||||||||
Net (loss) earnings from continuing operations
|
(6,767 | ) | 3,247 | 8,724 | 37,060 | |||||||||||
Discontinued operations:
|
||||||||||||||||
Earnings from operations of AND 1, net of tax of $1,312
|
- | - | 1,701 | - | ||||||||||||
(Loss) gain on sale of subsidiary, net of tax of $474 and $6,670, respectively
|
(1,409 | ) | - | 13,965 | - | |||||||||||
Net (loss) earnings from discontinued operations
|
(1,409 | ) | - | 15,666 | - | |||||||||||
Net (loss) earnings
|
(8,176 | ) | 3,247 | 24,390 | 37,060 | |||||||||||
Net earnings (loss) attributable to noncontrolling interests
|
46 | (106 | ) | (199 | ) | (173 | ) | |||||||||
Net (loss) earnings attributable to Brown Shoe Company, Inc.
|
$ | (8,222 | ) | $ | 3,353 | $ | 24,589 | $ | 37,233 | |||||||
Basic (loss) earnings per common share:
|
||||||||||||||||
From continuing operations
|
$ | (0.17 | ) | $ | 0.08 | $ | 0.20 | $ | 0.85 | |||||||
From discontinued operations
|
(0.04 | ) | - | 0.37 | - | |||||||||||
Basic (loss) earnings per comment share attributable to Brown Shoe Company, Inc. shareholders
|
$ | (0.21 | ) | $ | 0.08 | $ | 0.57 | $ | 0.85 | |||||||
Diluted (loss) earnings per common share:
|
||||||||||||||||
From continuing operations
|
$ | (0.17 | ) | $ | 0.08 | $ | 0.20 | $ | 0.85 | |||||||
From discontinued operations
|
(0.04 | ) | - | 0.36 | - | |||||||||||
Diluted (loss) earnings per comment share attributable to Brown Shoe Company, Inc. shareholders
|
$ | (0.21 | ) | $ | 0.08 | $ | 0.56 | $ | 0.85 | |||||||
Basic number of shares
|
40,098 | 42,372 | 41,126 | 42,156 | ||||||||||||
Diluted number of shares
|
40,098 | 42,838 | 41,668 | 42,487 | ||||||||||||
SCHEDULE 2
|
||||||||
BROWN SHOE COMPANY, INC.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
(Thousands)
|
January 28, 2012
|
January 29, 2011
|
||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 47,682 | $ | 126,548 | ||||
Receivables, net
|
154,022 | 113,937 | ||||||
Inventories, net
|
561,797 | 524,250 | ||||||
Deferred income taxes
|
14,432 | 4,503 | ||||||
Income Taxes
|
5,145 | 10,195 | ||||||
Prepaid expenses and other current assets
|
32,060 | 28,848 | ||||||
Total current assets
|
815,138 | 808,281 | ||||||
Property and equipment, net
|
131,471 | 135,632 | ||||||
Goodwill and intangible assets, net
|
140,590 | 70,592 | ||||||
Other assets
|
140,277 | 133,538 | ||||||
Total assets
|
$ | 1,227,476 | $ | 1,148,043 | ||||
LIABILITIES AND EQUITY
|
||||||||
Borrowings under revolving credit agreement
|
$ | 201,000 | $ | 198,000 | ||||
Trade accounts payable
|
190,611 | 167,190 | ||||||
Other accrued expenses
|
132,969 | 146,715 | ||||||
Total current liabilities
|
524,580 | 511,905 | ||||||
Long-term debt
|
198,633 | 150,000 | ||||||
Deferred rent
|
32,361 | 34,678 | ||||||
Deferred income taxes
|
31,136 | 11,534 | ||||||
Other liabilities
|
27,050 | 24,017 | ||||||
Total other liabilities
|
289,180 | 220,229 | ||||||
Total Brown Shoe Company, Inc. shareholders’ equity
|
412,669 | 415,080 | ||||||
Noncontrolling interests
|
1,047 | 829 | ||||||
Total equity
|
413,716 | 415,909 | ||||||
Total liabilities and equity
|
$ | 1,227,476 | $ | 1,148,043 | ||||
SCHEDULE 3
|
||||||||
BROWN SHOE COMPANY, INC.
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
52 Weeks Ended
|
||||||||
(Thousands)
|
January 28, 2012
|
January 29, 2011
|
||||||
OPERATING ACTIVITIES:
|
||||||||
Net earnings
|
$ | 24,390 | $ | 37,060 | ||||
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
|
||||||||
Depreciation and amortization
|
59,111 | 50,322 | ||||||
Amortization of debt issuance costs
|
2,338 | 2,195 | ||||||
Loss on early extinguishment of debt
|
1,003 | - | ||||||
Share-based compensation expense
|
5,633 | 6,144 | ||||||
Tax (benefit) deficiency related to share-based plans
|
(1,000 | ) | 87 | |||||
Loss on disposal of facilities and equipment
|
1,560 | 1,089 | ||||||
Impairment charges for facilities and equipment
|
1,871 | 2,762 | ||||||
Deferred rent
|
(2,317 | ) | (4,191 | ) | ||||
Deferred income taxes (benefit) provision
|
(112 | ) | 27,229 | |||||
Provision for doubtful accounts
|
1,284 | 516 | ||||||
Gain on sale of subsidiary, net
|
(13,965 | ) | - | |||||
Changes in operating assets and liabilities, net of acquired and discontinued operations:
|
||||||||
Receivables
|
(26,298 | ) | (30,088 | ) | ||||
Inventories
|
3,502 | (66,568 | ) | |||||
Prepaid expenses and other current and noncurrent assets
|
2,286 | (9,440 | ) | |||||
Trade accounts payable
|
13,660 | (10,754 | ) | |||||
Accrued expenses and other liabilities
|
(35,117 | ) | 2,668 | |||||
Income taxes
|
12,512 | (5,993 | ) | |||||
Other, net
|
(2,255 | ) | (5,350 | ) | ||||
Net cash provided by (used for) operating activities
|
48,086 | (2,312 | ) | |||||
INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(38,564 | ) | (54,827 | ) | ||||
Acquisition cost
|
(156,636 | ) | - | |||||
Cash recognized on initial consolidation
|
3,121 | - | ||||||
Net proceeds from sale of subsidiary
|
55,350 | - | ||||||
Net cash used for investing activities
|
(136,729 | ) | (54,827 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Borrowings under revolving credit agreement
|
1,595,500 | 1,051,500 | ||||||
Repayments under revolving credit agreement
|
(1,592,500 | ) | (948,000 | ) | ||||
Proceeds from issuance of 2019 Senior Notes
|
198,633 | - | ||||||
Redemption of 2012 Senior Notes
|
(150,000 | ) | - | |||||
Dividends paid
|
(12,076 | ) | (12,254 | ) | ||||
Debt issuance costs
|
(6,428 | ) | (2,636 | ) | ||||
Acquisition of treasury stock
|
(25,484 | ) | - | |||||
Proceeds from stock options exercised
|
918 | 926 | ||||||
Tax benefit (deficiency) related to share-based plans
|
1,000 | (87 | ) | |||||
Contributions by noncontrolling interest
|
378 | 527 | ||||||
Acquisition of noncontrolling interest
|
- | (32,692 | ) | |||||
Net cash provided by financing activities
|
9,941 | 57,284 | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(164 | ) | 570 | |||||
(Decrease) increase in cash and cash equivalents
|
(78,866 | ) | 715 | |||||
Cash and cash equivalents at beginning of period
|
126,548 | 125,833 | ||||||
Cash and cash equivalents at end of period
|
$ | 47,682 | $ | 126,548 | ||||
SCHEDULE 4
|
||||||||||||||||
BROWN SHOE COMPANY, INC.
|
||||||||||||||||
Reconciliation of Net Earnings and Diluted (Loss) Earnings Per Share (GAAP Basis) to Adjusted Net Earnings and Diluted Earnings Per Share (Non-GAAP Basis)
|
||||||||||||||||
13 Weeks Ended
January 28, 2012
|
13 Weeks Ended
January 29, 2011
|
|||||||||||||||
(Thousands, except per share data)
|
Net (Loss)
Earnings
Attributable to
Brown Shoe
Company, Inc.
|
Diluted (Loss)
Earnings Per
Share
|
Net Earnings
Attributable to
Brown Shoe
Company, Inc.
|
Diluted
Earnings Per
Share
|
||||||||||||
GAAP (loss) earnings
|
$ | (8,222 | ) | $ | (0.21 | ) | $ | 3,353 | $ | 0.08 | ||||||
Charges/Other Items:
|
||||||||||||||||
Portfolio realignment
|
||||||||||||||||
Business exits and cost reductions
|
9,285 | 0.23 | - | - | ||||||||||||
Gain on sale of subsidiary
|
1,409 | 0.04 | - | - | ||||||||||||
ASG acquisition and integration-related costs
|
1,629 | 0.04 | 724 | 0.01 | ||||||||||||
IT initiatives
|
- | - | 893 | 0.02 | ||||||||||||
Total charges/other items
|
12,323 | 0.31 | 1,617 | 0.03 | ||||||||||||
Adjusted earnings
|
$ | 4,101 | $ | 0.10 | $ | 4,970 | $ | 0.11 | ||||||||
52 Weeks Ended
January 28, 2012
|
52 Weeks Ended
January 29, 2011
|
|||||||||||||||
(Thousands, except per share data)
|
Net Earnings
Attributable to
Brown Shoe
Company, Inc.
|
Diluted
Earnings Per
Share
|
Net Earnings
Attributable to
Brown Shoe
Company, Inc.
|
Diluted
Earnings Per
Share
|
||||||||||||
GAAP earnings
|
$ | 24,589 | $ | 0.56 | $ | 37,233 | $ | 0.85 | ||||||||
Charges/Other Items:
|
||||||||||||||||
Portfolio realignment
|
||||||||||||||||
Gain on sale of subsidiary
|
(13,965 | ) | (0.32 | ) | - | - | ||||||||||
Business exits and cost reductions
|
12,036 | 0.28 | - | - | ||||||||||||
ASG acquisition and integration-related costs
|
4,519 | 0.11 | 724 | 0.02 | ||||||||||||
ASG cost of goods sold adjustment (1)
|
2,477 | 0.05 | - | - | ||||||||||||
Loss on early extinguishment of debt
|
638 | 0.02 | - | - | ||||||||||||
IT initiatives
|
- | - | 4,536 | 0.10 | ||||||||||||
Total charges/other items
|
5,705 | 0.14 | 5,260 | 0.12 | ||||||||||||
Adjusted earnings
|
$ | 30,294 | $ | 0.70 | $ | 42,493 | $ | 0.97 | ||||||||
(1) In accordance with GAAP, purchase accounting rules require the company to record inventory at fair value (i.e., expected selling price less costs to sell) on the acquisition date. This results in lower than typical gross margins when the acquired inventory is sold. This adjustment reflects the elimination of the unfavorable impact of lower gross margins for ASG product sold in the first half of 2011.
|
||||||||||||||||
SCHEDULE 5
|
||||||||||||
BROWN SHOE COMPANY, INC.
|
||||||||||||
OPERATING RESULTS BY MAJOR SEGMENT
|
||||||||||||
Famous Footwear
|
Wholesale Operations
|
Specialty Retail
|
||||||||||
($ millions)
|
13 Weeks Ended
|
13 Weeks Ended
|
13 Weeks Ended
|
|||||||||
January 28,
|
January 29,
|
January 28,
|
January 29,
|
January 28,
|
January 29,
|
|||||||
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
|||||||
Net Sales
|
$ 352.4
|
$ 355.5
|
$ 205.1
|
$ 173.9
|
$ 71.4
|
$ 75.1
|
||||||
Gross Profit
|
$ 151.3
|
$ 158.5
|
$ 59.7
|
$ 46.3
|
$ 27.6
|
$ 30.5
|
||||||
Gross Profit Rate
|
42.9%
|
44.6%
|
29.1%
|
26.6%
|
38.7%
|
40.6%
|
||||||
Operating Earnings (Loss)
|
$ 7.9
|
$ 14.3
|
$ (1.8)
|
$ 0.8
|
$ (0.9)
|
$ (1.0)
|
||||||
Operating Earnings (Loss) %
|
2.2%
|
4.0%
|
(0.9)%
|
0.5%
|
(1.3)%
|
(1.3)%
|
||||||
Same-store Sales %
|
(0.8)%
|
4.9%
|
-
|
-
|
4.7%
|
3.2%
|
||||||
Number of Stores
|
1,089
|
1,110
|
-
|
-
|
234
|
259
|
||||||
Famous Footwear
|
Wholesale Operations
|
Specialty Retail
|
||||||||||
52 Weeks Ended
|
52 Weeks Ended
|
52 Weeks Ended
|
||||||||||
January 28,
|
January 29,
|
January 28,
|
January 29,
|
January 28,
|
January 29,
|
|||||||
($ millions)
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
||||||
Net Sales
|
$ 1,456.3
|
$ 1,486.5
|
$ 870.9
|
$ 754.4
|
$ 255.6
|
$ 263.2
|
||||||
Gross Profit
|
$ 635.2
|
$ 669.0
|
$ 256.3
|
$ 222.0
|
$ 105.1
|
$ 112.5
|
||||||
Gross Profit Rate
|
43.6%
|
45.0%
|
29.4%
|
29.4%
|
41.1%
|
42.8%
|
||||||
Operating Earnings (Loss)
|
$ 62.5
|
$ 90.4
|
$ 16.7
|
$ 32.2
|
$ (7.6)
|
$ (6.0)
|
||||||
Operating Earnings (Loss) %
|
4.3%
|
6.1%
|
1.9%
|
4.3%
|
(3.0)%
|
(2.3)%
|
||||||
Same-store Sales %
|
(1.2)%
|
10.5%
|
-
|
-
|
1.7%
|
6.6%
|