Q1 2013 Earnings Call Transcript

Transcript Call Date 05/29/2013

Operator: Good morning. My name is Marcus and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q1 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Thank you. Ms. Tharp, you may begin your conference.

Peggy Reilly Tharp - IR: Thank you, Marcus. Good morning and thank you for participating in the Brown Shoe Company's first quarter 2013 earnings call, which is being made available to the public via webcast. I am Peggy Reilly Tharp, Vice President of Investor Relations for Brown Shoe Company. Earlier today, we distributed a press release with detailed financial tables, which is available on our website at In addition, slides are available on our website for you to reference during today's call.

Please be aware that today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors including but not limited to, the factors disclosed in the Company's Form 10-K and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors that could impact forward-looking statements. Copies of these reports are available online. The Company undertakes no obligation to update any information discussed in this call at any time.

Joining us on the call today are Diane Sullivan, President and Chief Executive Officer; Russ Hammer, Chief Financial Officer; and Rick Ausick, President of Famous Footwear. Today we will begin with a strategy review from Diane, followed by a financial summary from Russ before turning the call back over for Q&A.

I would now like to turn the call over to Diane.

Diane M. Sullivan - President and CEO: Thanks, Peggy, and good morning, everyone, for joining us. I'm very pleased to share a terrific first quarter with you, from both a financial and a strategic perspective. On the financial side, we reported first quarter sales of $588.7 million, down slightly year-over-year due to the brands we have exited as part of our portfolio realignment. Excluding sales of these brands in both first quarters consolidated sales were up slightly in 2013.

We also delivered improved adjusted earnings per share of $0.32, up 39%, as we continue to reap the benefits of our portfolio realignment efforts, and we recorded record first quarter operating profit of $29 million at Famous Footwear. On the strategic side, we made significant progress against our portfolio realignment efforts, starting with sale of Avia and Nevados for $74 million. Although we were not actively marketing these brands for sale Galaxy's interest in acquiring them, resulted in an offer, which we believe was in the best interest of our shareholders to accept. This transaction will help us better focus our resources and our efforts as well as strengthen our balance sheet and better position us to take advantage of future opportunities. It also allows us to continue to expand and strengthen the Ryka brand which was the most relevant part of the ASG acquisition for us.

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