St. Louis, Missouri-based Brown Shoe Company (BWS) has been manufacturing shoes for the American family for over 130 years.
Those who used to get their Saturday morning entertainment over the radio remember the lyrics to the Buster Brown Shoe song including the “…all God’s children got shoes” line that became one of the most successful branding tag lines in history.
Brown is best known today for its Famous Footwear and Naturalizer brands. In addition to the ownership and operation of the Famous Footwear and Naturalizer stores, Brown also sells numerous store brand and other label shoes in department stores and outlets.
Brown reported fourth-quarter earnings that were impacted by the slowdown in consumer spending. Revenues were down from the full 2007 year by $80 million, declining from $2.36 billion to $2.28 billion. Weighed down by charges related to staff reductions and consolidation of functions at its headquarters, the company reported a loss of $153 million, or $3.68 per share.
Excluding extraordinary items, the loss was 28 cents per share, 9 cents better than analysts at Thomson Reuters had forecast. Ron Fromm, chairman and Chief Executive Officer, described the quarter as “one of the most challenging quarters in the company’s 130 year history.
During the quarter Brown renewed its credit facility for five additional years and increased the amount available to $380 million. Brown has current assets as of the end of the year totaling $683 million and current liabilities of $404 million. The current ratio is a favorable 1.7, indicating that the company has adequate liquidity to address any issues arising from the recession.
Brown also has minimal long term debt of $150 million versus equity of $394 million. At this level, Brown’s debt to equity ratio is among the best in the business.
BWS is currently trading near its low for the preceding 52 weeks. The high for the period came in September when the stock traded at $18.44. The low of $3.09 was reached this week.
Brown will certainly be impacted by consumers deferring their spending. Footwear, however, is among the necessities that a family must plan for as children grow and sizes change. With a healthy balance sheet and a history of surviving difficult environments, Brown is in the position to recover quickly once consumers start spending again.
This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.
