Collective Brands Reports Higher 2Q Profits

Collective Brands Inc. on Wednesday reported much higher second-quarter profits but still missed Wall Street expectations as diminished consumer spending hurt the shoe retailer and wholesaler.

The company's chief executive, however, said third-quarter sales are strong and lower costs should lead to a more positive second half of the year.

"The second quarter really represented the bottom, and we did indicate that we are seeing solid business with back-to-school," CEO Matt Rubel told analysts during a conference call. "We are seeing tremendous opportunity as we move forward, both on the cost side and an evening of the demand cycle."

The company's shares, which declined 1 cent to $15.77 in trading before the company released its earnings, were down 28 cents, or almost 2 percent, to $15.49 in after-hours trading Wednesday.

The Topeka, Kan.-based operator of the Payless ShoeSource and Stride Rite chains said it earned $18.7 million, or 29 cents per share, for the quarter ended Aug. 1. By comparison, the company earned $8.1 million, or 13 cents per share, during the year-earlier period.

The year-earlier period was hampered by litigation costs, the effects of foreign exchange rates and the final year of a license to sell Tommy Hilfiger adult footwear. Adjusting for those items, the company said second-quarter profits would have declined from $32 million, or 50 cents per share, a year ago.

Analysts surveyed by Thomson Reuters expected second-quarter earnings this year of 33 cents per share.

Revenue during the quarter decreased 8 percent from $911.7 million a year ago to $836.3 million now, short of the $842.7 million expected by analysts.

Sales at stores open for at least a year, a key measure of a retailer's health, fell 7.3 percent from a year ago, with Payless stores losing 6 percent while Stride Rite stores fell 2.7 percent. That was a larger decline than in the first quarter, when comparable sales slipped 4.8 percent.