SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 19, 1996
BROWN GROUP, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
1-2191 43-0197190
(Commission File Number) (IRS Employer Identification Number)
8300 Maryland Avenue
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
(314) 854-4000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Page 1 of 9 Pages
Item 5. Other Events
------------
On November 19, 1996, Brown Group, Inc. announced its
operating results for the thirteen weeks ended
November 2, 1996, and for the nine months ended
November 2, 1996. Attached as an exhibit to this report
is a copy of a press release issued on November 19,
1996, which press release is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Information and Exhibits
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Exhibit No. Description of Exhibit
----------- ----------------------
99.1 Press release dated November 19, 1996.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
BROWN GROUP, INC.
(Registrant)
By /s/ H. E. Rich
-----------------------------
Executive Vice President and
Chief Financial Officer and on
Behalf of the Corporation as
the Principal Financial Officer
Date: November 19, 1996
Exhibit 99.1
FOR IMMEDIATE RELEASE
BROWN GROUP THIRD QUARTER EARNINGS RISE 32.8 PERCENT
ST. LOUIS, MISSOURI, November 19, 1996 . . . Brown Group, Inc.
(NYSE: BG) reported net earnings in the third fiscal quarter
ended November 2, 1996 of $12,905,000 or 73 cents per share,
compared to $9,715,000 or 55 cents per share in the 1995 third
quarter, an increase of 32.8 percent.
Consolidated net sales for the third quarter were $420,347,000
compared to $406,921,000 in 1995, an increase of 3.3 percent.
For the first nine months of fiscal 1996, earnings were
$18,946,000 or $1.07 per share, compared to a loss for the first
nine months of fiscal 1995 of $3,077,000 or 17 cents per share,
which included a net charge of $4,012,000 or 23 cents per share
related to factory closings.
Consolidated net sales for the first nine months of fiscal 1996
were $1,166,115,000 compared to $1,107,224,000 in 1995, an
increase of 5.3 percent.
Announcement of these results was made by B. A. Bridgewater, Jr.,
Chairman of the Board, President and Chief Executive Officer, who
said:
"We are pleased to report a 32.8 percent earnings increase
on moderately higher sales in the very important third
quarter, reflecting strong back-to-school results at Famous
Footwear and continued improvement at our wholesale
operations.
"Operating earnings at Famous Footwear, our largest
division, increased 46.0 percent to $14,300,000 in the third
quarter. Sales were up 8.9 percent to $223,300,000. Same-
store sales were up 10.4 percent in the back-to-school month
of August, but declined in September and October, resulting
in a same-store sales increase of 2.9 percent for the
quarter. Through the first two weeks in November, Famous
Footwear has returned to a pattern of same-store sales
increases.
"Famous Footwear's third quarter operating earnings
improvement reflects higher margin rates and better
leveraging of the expense base as the more than 350 stores
opened since the beginning of 1994 begin to mature.' For
the first nine months of fiscal 1996, operating earnings are
up 49.5 percent to $26,400,000. Year-to-date sales are
$607,500,000, an increase of 10.2 percent over last year,
with same-store sales up 1.1 percent. There were 783 stores
in operation at quarter-end.
"Sales at Naturalizer Retail were also higher in the third
quarter; however lower margins resulted in an operating loss
compared to a slight operating profit last year. Same-store
sales were up 2.2 percent for the quarter. There were 352
stores in operation at the end of the third quarter.
"Although sales were slightly lower at the company's
wholesale operations -- Brown Shoe Company and Pagoda --
operating earnings doubled to $8,800,000 (excluding last
year's $4,950,000 LIFO recovery related to plant closings.)
This gain reflects a continuing strong turnaround at Brown
Shoe Company, where operating earnings in the quarter
increased by $5,100,000. Sales of the company's leading
brands were higher overall for the quarter, led by an
outstanding performance by Life Stride; margins improved and
expenses were lower.
"Pagoda's operating earnings declined by $700,000 to
$4,400,000 in the quarter, reflecting sales gains at Pagoda
U.S.A. offset by higher expenses related to International
operations.
"During the third quarter, Pagoda signed a licensing
agreement with Lucas Films to produce footwear featuring
characters from the Star Wars trilogy. The trilogy films
are planned for re-release in February 1997. Limited
quantities of the company's Star Wars footwear already are
available at retail, with Pagoda expecting strong sales
beginning in the first quarter of 1997.
"The company's Canadian Operations reported operating
earnings of $1,900,000, a 3.7 percent increase on slightly
lower sales of $17,700,000 in the third quarter. Strong
gains were reported by the retail operations, with a 4.7
percent increase in same-store sales, improved margins and a
lower expense rate. Operating earnings were slightly lower
at wholesale due to lower margins from the sale of imported
children's footwear.
"In October, Brown Group completed a $100 million financing
to pay down short-term bank debt and enable bank borrowing
to be used principally to meet seasonal requirements. The
9-1/2 percent senior notes are due October 15, 2006. Brown
Group's balance sheet is thus positioned to support long-term
growth, investment in operations, and a continued focus
on building shareholder value.
"In summary, Brown Group has made good progress to-date in
fiscal 1996. The third quarter is our seasonally strongest
period, and the results announced today confirm the leverage
provided by the operating improvements we have made
throughout the company.
"We are particularly encouraged by the progress at our
wholesale operations, including the turnaround and return to
profitability at Brown Shoe Company this year. The
wholesale businesses should continue to show improvement,
with substantially higher unfilled order positions at both
Brown Shoe and Pagoda, and strong branded and licensed
product sales worldwide at Pagoda. Although the marketplace
will continue to be highly competitive, Brown Group is well-
positioned for continued improvements in the fourth quarter
and in fiscal 1997."
Safe Harbor Statement Under the Private Securities Litigation Act
of 1995: This press release contains certain forward-looking
statements that are subject to various risks and uncertainties
that could cause actual results to differ materially. These
include general economic conditions, competition, consumer
apparel and footwear buying trends, and political and economic
conditions in Brazil and China, which are significant footwear
sourcing countries. The Company's reports to the Securities and
Exchange Commission from time to time contain detailed
information relating to such factors.
Brown Group, Inc. is a $1.6 billion footwear company with
worldwide operations. The company operates the Famous Footwear,
Naturalizer and F. X. LaSalle chains of footwear retail stores
and markets leading brands including Naturalizer, Life Stride
NaturalSport, the Larry Stuart Collection, le coq sportif
athletic footwear, and licensed brands including Dr. Scholl's and
Disney character footwear.
BROWN GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per share) Three Months Ended Nine Months Ended
-------------------- -----------------
Nov. 2, Oct. 28, Nov. 2, Oct. 28,
1996 1995 1996 1995
--------- -------- ----------- ------------
Net Sales $ 420,347 $ 406,921 $ 1,166,115 $ 1,107,224
Cost of Goods Sold 264,160 262,912 729,530 726,511
--------- --------- ----------- -----------
Gross Profit 156,187 144,009 436,585 380,713
Selling and Administrative Expenses 134,061 125,004 395,531 370,345
Interest Expense 4,445 3,858 13,700 11,738
Other (Income) Expense (672) (2,364) (812) 1,058
--------- --------- ----------- -----------
Earnings (Loss) Before Income Taxes 18,353 17,511 28,166 (2,428)
Income Tax 5,448 7,796 9,220 649
--------- --------- ----------- -----------
Net Earnings (Loss) $ 12,905 $ 9,715 $ 18,946 $ (3,077)
========= ========= =========== ===========
Net Earnings (Loss) per Common Share $ .73 $ .55 $ 1.07 $ (. 17)
========= ========= =========== ===========
Average Shares of Common
Stock Outstanding 17,702 17,584 17,651 17,590
Note: Results for 1995 include the cost of factory closings; results for 1995
and 1996 include credits from associated LIFO inventory liquidation. The
effect on the third quarter of 1995 was an aftertax credit of $3,218,000 or
18 cents per share. For the nine months ended November 2, 1996, liquidation
of LIFO inventory resulted in an aftertax credit of $2,500,000, or 14 cents
per share; there was no effect on the quarter ended November 2, 1996. The
effect on the nine month period of 1995 was a net aftertax charge of
$4,012,000 or 23 cents per share.
BROWN GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
November 2, October 28,
ASSETS 1996 1995
----------- -----------
Cash and Cash Equivalents $ 28,091 $ 28,662
Receivables, Net 87,425 94,420
Inventories (less reserve for valuation to last-in,
first-out cost at November 2, 1996 of $19,646
and October 28, 1995 of $29,682) 408,813 356,340
Other Current Assets 39,378 47,907
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Total Current Assets 563,707 527,329
Property, Plant and Equipment - Net 84,782 94,784
Other Assets 71,653 64,447
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$ 720,142 $ 686,560
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LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable and Current Maturities
of Long-Term Debt $ 44,000 $ 109,256
Other Current Liabilities 211,253 209,658
--------- ---------
Total Current Liabilities 255,253 318,914
Long-Term Debt and Capitalized Leases 199,023 107,469
Other Liabilities 25,446 29,873
Shareholders' Equity 240,420 230,304
--------- ---------
$ 720,142 $ 686,560
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