Contrasting fortunes for US footwear giants
Shares in the New York-based footwear wholesaler Footstar fell to an all-time low of $13.30 on the New York Stock Exchange in morning trading yesterday. The development followed the company’s announcement that it had set aside a $9.2 million bad debt allowance to cover the liquidation of the regional discount retailer Ames Department Stores Inc., announced Tuesday. Footstar-operated departments in Ames stores accounted for 4% of all group sales.
In contrast, Payless ShoeSource Inc., the largest U.S. footwear retailer, was able to post a better-than-expected 30% leap in second quarter earnings as the benefits as lower costs, improved inventories and lower tax comfortably outweighed a drop in sales.
Net income for the quarter ended August 3 was $47.2 million, or $2.07 a share, on sales of $776.2 million. Though sales slipped 5.8% on a comparative store basis, profits were well up on the $36.4 million or $1.60 a share recorded the year previous. A lower tax rate, reduced insurance costs and lower net store closing costs associated with the previously announced were the main reasons cited.
"Our challenge for the second half of fiscal 2002 is to build sales momentum by repositioning our core business," including focusing on fresh fashions at its 5,000-store Payless ShoeSource chain, Chief Executive Steven Douglass said in a statement.
At the end of the quarter, Payless had shuttered 71 of the 104 under performing stores it had previously earmarked for closure.
