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US Shoe Retailers Celebrate Better-Than-Expected First Quarter

Business has been good for shoe retailers in the U.S., according to first-quarter earnings announcements from some leading footwear companies.

Brown Shoe Company

Multibrand shoe manufacturer and retailer Brown Shoe (BWS), which was renamed Caleres after its annual shareholder meeting Thursday, reported better-than-expected first quarter 2015 financial results. Net sales increased 1.9% to $602.3 million from $591.2 million in the first quarter of last year. Gross margin of 41.3% was up approximately 30 basis points year-over-year, while operating margin of 5 percent increased by 10 basis points.

First quarter 2015 net earnings of $19.3 million, or $0.44 per diluted share, were up 24.8% versus $15.4 million, or $0.35 per diluted share, in the prior year period. The current year performance beat analyst expectations of $.36 per share.

“First quarter exceeded our expectations virtually across the board–including sales, margin and earnings—despite a late start to spring and caution around potential west coast port delays,” said president, CEO and chairman Diane Sullivan. “We’re pleased with our first quarter results, which were achieved thanks to strong sales from our Brand Portfolio and exceptional gross margin and operating margin gains at Famous Footwear combined with better than expected same-store-sales.”

Famous Footwear first quarter 2015 sales of $360.0 million were up 1.5% year-over-year, excluding Shoes.com, which was sold in December of 2014. For the quarter, same-store sales were up 3.1%, with performance driven by continued strength in canvas, last-minute boot sales, and spring sandals. During the quarter, 13 stores were closed and 15 new stores were opened.

Brand Portfolio, whose brands include Sam Edelman, Franco Sarto, Vince, Dr. Scholl’s, Ryka and others, saw sales increase 7.9% to $242.3 million in the first quarter.

“We reported a very strong first quarter, which included a relatively uneventful untangling of the west coast port situation,” said Ken Hannah, chief financial officer of Brown Shoe Company. “With the strong sales and margin performance we saw in the first quarter, we feel comfortable raising our diluted EPS guidance range for 2015 to $1.84 to $1.94.”

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Brown Shoe Company (Caleres) operates 1,200 retail stores and is sold in hundreds of major department and specialty stores, as well as on its own branded e-commerce sites.

DSW

Off-price footwear and accessories retailer DSW (DSW) enjoyed a 9.4% increase in first-quarter sales, to $655 million, compared to $599 million last year and beating Wall Street estimates. Comps rose 5.1% compared to last year’s 3.7% decline. Gross profit increased by an impressive 110 basis points, driven primarily by an increase in merchandise margin.

Net income rose 22.6% to $47.4 million, or $0.53 per share, from $38.6 million, or $.42 per share, in the prior year first quarter. Analysts had expected first-quarter earnings per share of $.47.

DSW President and CEO Mike MacDonald said in a statement, “Our first quarter performance was a solid start to the spring season. Athletic footwear provided the strongest sales increase, but all major categories posted solid growth. Healthy regular priced sales and lower clearance inventory than last year drove a significant improvement in our gross profit rate. The West Coast port congestion delayed some receipts, but we released pre-buy merchandise to mitigate the impact on sales.”

Shoe Carnival

Last week, value-priced footwear and accessories retailer Shoe Carnival, Inc. (SCVL) reported positive results for its first quarter ended May 2.

Net sales at the 400-store chain rose 7.2% to $252.8 million in the period, with comps up 3 percent.  The gross margin remained flat at 29.5 percent. SG&A expenses increased $3.3 million to $57.7 million, but edged down slightly to 22.8% of sales.

Net income for the first quarter of fiscal 2015 rose 15.6% to $10.4 million, or $0.52 per diluted share, from $9.2 million, or $0.45 per diluted share, in the prior year period.

The Company raised its earnings guidance for the current fiscal year, and now expects net sales to be in the range of $975 to $990 million, with a comparable store sales increase in the range of 1.5 to 3 percent. Earnings per diluted share for the fiscal year are expected to be in the range of $1.42 to $1.48, up around 15 percent from 2014, and an increase over from 2014 earnings per share of $1.27.

Shoe Carnival expects to open 18 to 19 new stores and close 10 to 14 stores in fiscal 2015.

Cliff Sifford, President and CEO, stated, “We are pleased with our comparable store sales growth and our ability to deliver strong first quarter earnings. While the quarter started off very challenging due to adverse weather, with over 400 days of store closures, the consumer responded favorably to our family footwear assortment, which resulted in a comparable store sales increase across all footwear departments and in each of our geographic regions.”