Collective Brands reports lower 3Q profit

AP News
Posted: Dec 02, 2009 7:04 PM

Shoe retailer Collective Brands Inc. said Wednesday its third-quarter profits fell 22 percent but its sales rose slightly thanks to factors including a plug from Oprah Winfrey.

The results from the operator of the Payless ShoeSource and Stride Rite chains topped Wall Street's forecasts and its shares jumped 7 percent in after-hours trading.

Collective Brands, which is based in Topeka, Kan., reported earning $36.9 million, or 57 cents per share, in the quarter that ended Oct. 31. During the same period a year ago, the company earned $47.5 million, or 74 cents per share.

Excluding one-time items, it said it would have earned 61 cents per share in the latest quarter _ easily topping the 49 cents per share expected by analysts polled by Thomson Reuters.

Revenue rose to $867 million in this year's third quarter from $862.7 million last year. Analysts had expected sales of $847.6 million.

The company reported its earnings after the close of regular-session trading Wednesday. Its shares jumped $1.45 to $21.62 in after-hours dealings.

CEO Matt Rubel said strong operating margins, cool October weather, back-to-school purchases and expanded product lines including more accessories helped the company outperform expectations.

Rubel also noted the unprecedented impact of Winfrey's offer on her Oct. 29 show to make half-off coupons available through the following day to Payless ShoeSource shoppers on all purchases. The offer was a tie-in with former "Project Runway" winner Christian Siriano's unveiling on Winfrey's show of his Payless line of shoes and handbags.

"We sold well over a million pairs of shoes in one day," Rubel said in a conference call with analysts. "It was our biggest unit day in the history of the company."

The event contributed significantly to a 5.4 percent increase in sales at Payless ShoeSource stores in the U.S. over the third quarter of 2008, Rubel said. That increase, along with stronger sales of Saucony and Sperry TopSider shoes, drove the higher revenue.

Rubel declined to offer earnings guidance but said he expects consumers to remain careful with their cash in light of high unemployment.

"Let's all be cautious: This is not a recovering economy," he said. "It may not be a sinking one, but it's not a recovering one yet."