Brown Shoe to skip promotions in holiday season

Tue Nov 20, 2012 12:52pm EST

(Reuters) - Brown Shoe Co Inc (BWS.N) said it will stay away from promotions in the all-important holiday season as it bets on its Sam Edelman line of women's shoes to boost sales.

Shares of the company, which also reported third-quarter results that beat Wall Street forecasts, rose as much as 8 percent at $16.96 on the New York Stock Exchange on Tuesday.

"We really don't think (promotions are) the way to go ... It's a short-lived strategy and doesn't really engage the customer long-term," Chief Executive Diane Sullivan told Reuters.

The company, which operates Famous Footwear and Naturalizer stores, expects strong sales of its Sam Edelman shoes in the holiday season and increased demand for its casual boots.

Brown Shoe bought the Sam Edelman brand in 2010. It is known for trendy shoes and handbags priced between $65 and $300.

Brown Shoe has been tightly managing its inventory throughout the year, cutting poor-performing brands from its portfolio, to boost margins.

The company would exit another brand in the current quarter, Sullivan said, but declined to give details of the brand. The company would close 19 stores and open 12 stores in the quarter.

Inventory fell 7 percent to $539.4 million and gross margin increased to 39.0 percent from 38.7 percent in the third quarter.

Costs would stabilize in the second half of 2013, Sullivan said. Brown Shoe, which also sells brands such as Nike, Skechers and Dr. Scholl's, is facing rising labor costs and expects prices to rise slightly this year.

The company, which competes with DSW Inc (DSW.N) and Genesco Inc (GCO.N), raised its 2012 adjusted profit view to between $1.06 and $1.10 per share, from its previous forecast of between 85 cents and 95 cents.

Analysts on average were expecting a profit of 92 cents per share, according to Thomson Reuters I/B/E/S.

Brown Shoe also reported a profit that beat analysts' estimates for the third straight quarter on a strong back-to-school season and higher sales at its Famous Footwear stores.

Same-store sales at Famous Footwear rose 6.8 percent, driven by strong demand for boat shoes, running shoes and accessories.

Sales of its boat shoes more than doubled, while sales of running shoes rose 13.4 percent, Sullivan said in a conference call with analysts.

Total revenue rose 3 percent to $732.2 million, above the average market estimate of $703.3 million.

Peer DSW Inc (DSW.N) also reported quarterly results above market estimates on Tuesday, as sales at its stores open for at least a year rose 6.3 percent.

(Reporting By Maria Ajit Thomas in Bangalore; Editing by Maju Samuel and Joyjeet Das)

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