Why Brown Shoe Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of the Brown Shoe Co. (NYSE: BWS  ) were stepping up to the next level today, climbing as much as 16% after beating earnings estimates in its quarterly report.

So what: The footwear maker turned in an adjusted per-share profit of $0.32, better than estimates of just $0.22. Interestingly, earnings per share grew from $0.23 a year ago, despite a decline in revenue as sales fell 1.6% to $588.7 million, well off estimates of $609.1 million. Bad weather in February and March seemed to hamper sales as same-store sales at its core Famous Footwear chain were up 1.1% for the quarter but jumped 14.2% in April once weather improved.

Now what: While the company's wholesale business declined in the quarter, the strong comparable-sales growth in April seems to indicate that revenue declines shouldn't be a problem going forward. Also, accounting for brands the company exited in the previous year, sales were essentially flat. The cost-cutting and margin improvement are encouraging and seem to indicate the restructuring process is going effectively, but I'd wait to see evidence of revenue growth before investing.

Want more on Brown Shoe Co.? Add the company to your Watchlist here.


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