When times get tough, sometimes "boring" is the best place to be. Add to that the fact that Brown Shoe
Folks considering this stock certainly don't have to fear for being elbowed aside by the growth crowd. Revenue grew all of 5% this quarter, and although reported operating income more than doubled, that was assisted in part by some year-ago charges. All the same, double-digit growth in the Famous Footwear and Wholesale divisions is nothing to sneeze at.
So, what about Brown Shoe makes me think that it could be a worthwhile investment?
For starters, Brown Shoe is oriented toward the non-high-end parts of the shoe market. Famous Footwear is a sizable part of the business and competes with other value-oriented retailers like Payless
Moreover, Brown Shoe is to some extent all grown up. There will continue to be new store openings on the docket, but overall capital expenditures on expansion should be heading relatively lower over time. Hopefully, then, that will mean the potential for better free cash flow leverage and better returns on capital.
Speaking of those returns on capital, I note that Brown Shoe is once again talking about restructuring operations. Now, that's fine as far as it goes, and some of the moves make a lot of sense (sourcing from Brazil and China instead of Italy, for instance). All in all, though, I'd rather hear more talk about a firm commitment to maximizing economic profit.
For more fashion-forward Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).