Brown Shoe Company (NYSE: BWS) (brownshoe.com) today reported first quarter 2015 financial results, with net sales of $602.3 million up 1.9% versus first quarter 2014 net sales of $591.2 million. 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. Gross margin of 41.3% was up approximately 30 basis points year-over-year, while operating margin of 5.0% was up approximately 10 basis points.

“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 Diane Sullivan, CEO, president and chairman of Brown Shoe Company. “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.”

First Quarter Highlights

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, residual boot sales, and spring sandals. During the quarter, 13 stores were closed and 15 new stores were opened.

Brand Portfolio sales of $242.3 million were up 7.9% in the first quarter. Performance in the quarter was driven by a 9.1% improvement in Healthy Living, combined with a 4.9% improvement in Contemporary Fashion sales.

Consolidated gross profit of $248.5 million was up 2.6% in the first quarter, while gross margin of 41.3% was up approximately 30 basis points year-over-year. SG&A for the first quarter was $218.2 million, representing 36.3% of net sales – up approximately 20 basis points versus the prior year. For the quarter, operating margins improved approximately 10 basis points year-over-year to 5.0%.

Inventory at the end of the first quarter was $498.5 million, down 2.8% from $512.8 million in the prior year. Famous Footwear inventory was down 1.2%, excluding Shoes.com, while Brand Portfolio inventory was up 1.0%. At quarter-end, Brown Shoe Company had no borrowings against its revolving credit facility and had $66.3 million of cash and equivalents. The company’s debt-to-capital ratio improved to 26.4% from 28.8% in the first quarter of 2014.

Financial Review and 2015 Outlook

“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.”

Investor Conference Call: Brown Shoe Company will host an investor conference call at 9 a.m. ET today, May 27, 2015. The webcast and slides will be available at investor.brownshoe.com/news/events. A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 42322117. A replay will be available for a limited period at investor.brownshoe.com/news/events/archive. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 42322117 through June 19, 2015.

Definitions: All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to Brown Shoe Company, Inc. and diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions; (ii) rapidly changing fashion trends and purchasing patterns; (iii) intense competition within the footwear industry; (iv) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the Company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (v) the ability to accurately forecast sales and manage inventory levels; (vi) cybersecurity threats or other major disruption to the Company’s information technology systems; (vii) customer concentration and increased consolidation in the retail industry; (viii) a disruption in the Company’s distribution centers; (ix) the ability to recruit and retain senior management and other key associates; (x) foreign currency fluctuations; (xi) compliance with applicable laws and standards with respect to labor, trade and product safety issues; (xii) the ability to secure/exit leases on favorable terms; (xiii) the ability to attract, retain, and maintain good relationships with licensors and protect intellectual property rights; and (xiv) the ability to maintain relationships with current suppliers. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended January 31, 2015, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

About Brown Shoe Company and Caleres

Following its annual shareholder meeting on May 28, 2015, Brown Shoe Company will become Caleres. Caleres is a diverse portfolio of global brands, which fit people’s lives: Family, Healthy Living and Contemporary Fashion. Our products are available virtually everywhere - in the over 1,200 retail stores we operate, in hundreds of major department and specialty stores, on our branded ecommerce sites, and on many additional third-party retail websites. Famous Footwear and Famous.com serve as our Family brands. Our Contemporary Fashion brands include Sam Edelman, Franco Sarto, Vince, Via Spiga, Diane von Furstenberg, Fergie Footwear and Carlos Santana. Naturalizer, Dr. Scholl's, LifeStride, Bzees and Ryka represent our Healthy Living brands. Combined, these brands help make Caleres a company with both a legacy and a mission. Our legacy is our more than 130-years of craftsmanship, our passion for fit and our business savvy, while our mission is to continue to inspire people to live better feet first. Visit caleres.com to learn more about us.

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