UPDATE 2-Brown Shoe profit down; shares fall as outlook cut
(Recasts with share move; Adds executive and analyst comments, byline)
NEW YORK Aug 27 (Reuters) - Brown Shoe Co Inc (BWS.N) posted a lower-than-expected quarterly profit and cut its full-year outlook and store growth plans as shoppers curb spending, sending its shares down more than 6 percent.
The maker of shoe brands such as Naturalizer and Via Spiga also cited higher commodity costs that raised its expenses for the quarter, saying it sought to reduce those costs.
Brown Shoe, like other shoe and apparel companies, has seen results suffer as shoppers allocate more money for necessities such as food and gasoline, as those prices rise in a weak U.S. economy.
"The consumer environment remains difficult," Chief Financial Officer Mark Hood said on a conference call on Wednesday, adding the company was less optimistic with its outlook for the rest of 2008.
Net profit fell to $2.2 million, or 5 cents per share, in its fiscal second quarter that ended Aug. 2, from $9.8 million, or 22 cents per share, a year earlier. Profit for the second quarter included a charge of 15 cents per share tied to the relocation of its Famous Footwear unit's headquarters.
Sales fell 1.3 percent to $569.2 million.
Analysts, on average, expected earnings of 6 cents a share on sales of $589.9 million, according to Reuters Estimates.
While Brown Shoe has taken steps like raising prices to fight commodity pressures, costs remain a concern, said Susquehanna Financial analyst Christopher Svezia.
"Increasing costs coming out of southern China and other third party markets certainly adds pressure to their P&L (profit and loss)," Svezia said.
Brown Shoe President and COO Diane Sullivan said the company was working to reduce cost pressures from China.
Brown Shoes shares were down 4.1 percent at $15.22. They fell as low as $14.39, earlier on the New York Stock Exchange. Fashion shoe company Steven Madden (SHOO.O) fell 2.5 percent to $24.86 on the Nasdaq.
Retail customers for Brown Shoe and its rivals have seen weak sales trends, and have been placing fewer orders to better cope with less demand.
Brown Shoe said it now expects full-year earnings to range between $1.12 and $1.29 a share, and sales in the range of $2.38 billion to $2.40 billion.
Previously, it had forecast fiscal 2008 per-share earnings between $1.29 and $1.53, and sales of $2.43 billion to $2.48 billion.
"(The) outlook is certainly reflective of what's going on in the marketplace. (It is) somewhat disappointing but potentially the proper view to take given what's going on," Svezia said.
Brown Shoe said it plans to open 90 Famous Footwear stores for the full year, down from its previous plan to open 100 to 110 stores.
For the third quarter, Brown Shoe expects sales of $650 million to $660 million and per-share earnings of 31 cents to 41 cents. (Editing by Dave Zimmerman and Maureen Bavdek)
- Washington, DC city council raises minimum wage to $11.50/hr in 2016
- Winning ticket sold in California for Mega Millions lottery: official
- UPDATE 5-Mega Millions lottery winning tickets sold in California, Georgia -Officials
- India removes barriers to U.S. embassy as anger grows over diplomat's arrest
- U.N. told up to 500 killed in South Sudan clashes: diplomats