Collective Brands up on better-than-expected 3Q

AP News
Posted: Dec 03, 2009 12:27 PM

Shares of shoe retailer Collective Brands Inc. rose on Thursday after adjusted third-quarter profit topped Wall Street expectations, and an analyst forecast earnings growth next year.

The stock advanced $1.75, or 8.7 percent, to $21.96, after touching a 52-week high of $22.07.

Collective Brands, which operates the Payless ShoeSource and Stride Rite chains, said Wednesday that quarterly earnings declined 22 percent but topped analysts' estimates when adjusted.

Collective Brands, which is based in Topeka, Kan., also said results were helped by Oprah Winfrey's offer on a recent show to make half-off coupons available through the following day to Payless ShoeSource shoppers on all purchases.

Sales of children's shoes, boots and women's accessories performed "solidly," said Susquehanna Financial Group analyst Christopher Svezia.

Svezia, who rates the shares "Positive," expects these trends to continue in the fourth quarter. Svezia lifted his price target to $24 from $21, implying shares have room to rise nearly 19 percent from Wednesday's close of $20.17.

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"We believe the company should see meaningful earnings growth in fiscal 2010, and management appears to be planning the business appropriately to do so," Svezia wrote in a client note.