Curse Wall Street and its occasional bouts of rationality. I mean, was it really too much to hope that folks would look at Brown Shoe's (NYSE:BWS) earnings, see a year-over-year decline in operating results, and flee? Apparently so.

While folks not too familiar with Brown Shoe's business might wonder why I lament not owning these shares, the earnings take a little bit of explaining. Revenue was up 10%, and that's pretty self-explanatory, as was the 1.9% comp-store growth for Famous Footwear and the 0.6% comp-store growth in the specialty business.

Why, though, did the gross and operating margins decline? Don't good companies post higher margins? Well, the thing to remember here is that the wholesale business is growing in its significance, and as its name might suggest, that business doesn't carry the same margins. Once things reach a "steady state," though, I would expect the company to start climbing back up in terms of profitability.

Perusing the results, a few other things leap out at me. The athletics category didn't do so well, which is probably not a great thing for a company like Nike (NYSE:NKE). Other casual fashions seem all right, so maybe that's an incremental piece of good (or at least non-bad) news for the likes of Skechers (NYSE:SKX) and K-Swiss (NASDAQ:KSWS). Last but not least, traffic seemed a little soft, so investors in rival retailers like DSW (NYSE:DSW), Payless (NYSE:PSS), and Shoe Carnival (NASDAQ:SCVL) may want to compare and contrast that experience with their investments.

When I see a company willing to scale back on a struggling franchise (like Brown Shoe is doing with Naturalizer) as opposed to just throwing money at it, I like that. As I'm pretty sure I've said before, this company understands where it operates and looks to make the most of it. Along those lines, I would imagine that if the Bass brand doesn't start performing better, management will let the license from Phillips-Van Heusen (NYSE:PVH) expire at the end of the year.

All in all, then, you have to like a company with a management team capable of not only growing the business but knowing when to fish and when to cut bait.

For more well-heeled Foolishness:

Check out our suite of investing newsletters with a 30-day free trial to the newsletter service of your choice.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).