QUOTE AND NEWS
Reuters  Dec 2  Comment 
Footwear retailer Brown Shoe Company Inc is trying to acquire women's luxury shoe retailer Stuart Weitzman Holdings LLC, which could fetch close to $1 billion, three...
Benzinga  Nov 25  Comment 
Dycom Industries, Inc. (NYSE: DY) +18% - Shares are up following the company’s first-quarter financial results, beating top and bottom line estimates. In addition, the company offered upbeat second-quarter outlook. DragonWave, Inc.(USA)...
Benzinga  Oct 30  Comment 
Jay Sole of Morgan Stanley initiated coverage of Brown Shoe Company (NYSE: BWS) with an Underweight rating and $24.50 price target. "Brown Shoe Company's wholesale division is weighed down with deteriorating assets and we think sales will fall...
Market Intelligence Center  Oct 13  Comment 
A covered call identified by MarketIntelligececenter.com's patented algorithm on Brown Shoe (BWS) could yield about 5.80% (16.28% annualized, for comparison purposes only) in 130 days. Pair a long position in the stock with the Feb. '15 $25.00...
SeekingAlpha  Oct 10  Comment 
By Jaxon Research: Introduction It was just over a year ago that Brown Shoe Company (NYSE:BWS) reported its 2Q 2013 earnings and surprised investors with a top and bottom line beat. On top of that, management increased guidance for the year....
StreetInsider.com  Sep 18  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Brown+Shoe+Company+%28BWS%29+Invests+in+Jack+Erwin/9845111.html for the full story.




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Brown Shoe Co. Inc. (NYSE: BWS) founded in 1878 and incorporated in 1913, operates in the footwear industry. Current activities include the operation of retail shoe stores and e-commerce websites as well as the sourcing and marketing of footwear for women, men and children.[1] As of January 29, 2011, the company operated 1,369 retail shoe stores in the US, Canada, China and Guam, of which 1,110 stores are marketed as Famous Footwear and the other 259 are Specialty Retail, which sells footwear under primarily Naturalizer and 4 other premium brand names. For e-commerce, the company owns Shoe.com, which offers footwear and accessories purchased from outside suppliers, Company-branded and licensed footwear, and certain merchandise sold in Famous Footwear stores. For wholesale operations, the company segment designs, sources and markets branded and non-branded casual, dress and athletic footwear for women, men and children at a variety of price points. Footwear is distributed to over 2,000 retailers throughout the US and Canada, and approximately 20 other countries.

Company Business

Retail Operations

As of January 29, 2011, the 1,369 retails shoe stores operated in the US, Canada, China and Guam, includes 1,110 Famous Footwear stores and 259 stores on Specialty Retail, including the brands Naturalizer, Brown Shoe Closet, F.X. LaSalle, Via Spiga and Sam Edelman.

Famous Footwear targets women who buy brand-name fashionable shoes at value-prices for themselves and their families. The stores retail a selection of value-priced brand-name, athletic, casual and dress shoes. Brands include Nike, Skechers, New Balance, Puma, Converse, DC, adidas, Asics, LifeStride, Naturalizer, Vans, Dr. Scholl’s, Rocket Dog, Reebok, Bearpaw, Dockers, Hot Kiss, Connie and Madden Girl. Retail price points typically range from $20 for shoes up to $130 for boots and health and wellness products.[2] The company-owned and licensed products sold by Famous Footwear are supplied by the wholesale operations of the company segment at a profit and represents approximately 15% of the net sales of Famous Footwear. It also operates FamousFootwear.com for internet retailing.


Specialty Retail: The 259 stores of Specialty Retail include 230 Naturalizer retail stores and the rest are various store concepts that sell premium brands, which include Brown Shoe Closet, F.X. LaSalle, Via Spiga and Sam Edelman.

  • Naturalizer targets women who are style- and comfort-conscious, and seeks quality and value in footwear selections.[3]The stores sell casual, dress, boots and sandals primarily under the Naturalizer brand. Retail price point ranges from $59 for shoes to $169 for boots. The company operates 110 Naturalizer in the US and 105 in Canada, and 15 stores in China large cities operated through its majority-owned subsidiary - B&H Footwear. The company also has a joint venture partner(Hongguo International Holdings Limited) in China and plans to expand the number of stores in China in 2011.
  • Other store concepts [4]

15 Brown Shoe Closet retail stores in the US, which is a multi-brand outlet carrying Etienne Aigner, Franco Sarto, Dr. Scholl’s, Carlos by Carlos Santana, Fergie and Nickels, with price points typically ranging from $49 to $89 for shoes and up to $179 for boots.

12 F.X. LaSalle retail stores are operated in Montreal, Canada. They sell better-grade women’s and men’s branded and private-label footwear. Canadian dollar retail price points for this footwear typically range from $110 to $250 per pair.

One Via Spiga concept store in Manhattan’s SoHo neighborhood in New York, sells primarily Via Spiga product including women and men’s footwear, price points ranging from $175 for shoes to $425 for boots.

One Sam Edelman concept store in Palm Beach, Florida, shopping center, exclusively sells Sam Edelman styles with footwear price points ranging from $100 to $250 per pair. The company is planning to close this down and open two same stores in the same neighborhood during 2011.

Wholesale Operations

The wholesale operation segments designs, sources and markets branded and non-branded casual, dress and athletic footwear for women, men and children at a variety of price points, and are distributed to over 2,000 retailers including chains, department stores, mass merchandisers, independent retailers, catalogs and online retailers throughout the United States and Canada as well as approximately 50 other countries. TJX Corporation (including TJ Maxx and Marshalls), Retail Ventures (including DSW), Ross Stores and Kohl’s; department stores such as Macy’s, Nordstrom, Dillard’s, Bon-Ton and Belk; and mass merchandisers such as Walmart, Collective Brands, Inc. (including Payless ShoeSource), Target and Sears are its most significant customers. The company also sells products to international retailers and distributors. The company sells to wholesale customers with both landed and first-cost basis. Landed sales generally carried higher margin rate.[5]


Competitive Landscape in terms of Porter’s 5 forces

Supplier Power: Brown Shoe Co relies almost entirely on foreign sourcing, mainly in China and a few in Brazil and other countries. The company does not have long term contract with these sourcing, and thus may subject to risk such as reduction in production capacity and increases in manufacturing costs. Particularly, there exists increasing demand of shoes for domestic consumption in China and thus decreasing manufacturing capacity for exported footwear, while factories are facing labor shortages as well. Although the company could choose to source from other countries in case of the above events occur, quality and cost may not be maintained. This may lead to losing of customers.

Buyer Power: In wholesale operations, the company’s significant sales are to certain national chains, mass merchandisers and large department stores. If one significant customer cut their purchase from Brown Shoe Co, it may have adverse effect on the company’s sales. It is believed that, if one national chain store cut their purchase, the other wholesale customers may observe such business action closely. Secondly, the retail industry has experienced consolidation. So these wholesale customers are more able to seek more favorable terms for their purchase from wholesalers like Brown Shoe Co. Furthermore, currently there is an increasing trend that retailers source more of their products directly from overseas manufacturers, which means less reliance on wholesalers and could affect their business.

Threat of New Entrants: Threat of New Entrants: To establish as a renowned wholesalers requires much financial and technological resources, such as sourcing and inventory system. Brown Shoe Co. has a number of relationships with variety of footwear brands and designers, and also a relatively stable base of larger wholesale customers. This cannot be easily imitated by new entrants. Moreover, Brown Shoe Co. owns some of the established premium brands. While new entrants could easily create their own brand, the chance of hitting established premium brands is relatively low.

Threat of Substitute Products in apparel industry, the possibility that consumers can select competitors product with similar pricing and quality is always high. Moreover, consumers spending are affected by economic conditions and disposable income. They can often choose to purchase fewer products or switch to competitors’ products with lower price. Therefore in facing increasing production costs, the company has limited capacity to charge higher prices accordingly.

Rivalry among Existing Firms There exist several competitors such as Collective Brands Inc, Shoe Carnival, Genesco Inc. and many other footwear retailers and brands. Concluding the above, competition for resources and production capacity and the possibility for both wholesale and retail customers to switch to competitors, make the rivalry among existing firms pretty intense.


Major Competitors

Genesco Inc. (NYSE: GCO), based in Nashville, Tennessee, United States, is a publicly-owned retailer of branded footwear, licensed and branded headwear and licensed sports apparel and accessories and is a wholesaler of branded and licensed footwear. Through its various subsidiaries, Genesco operates 2,276 retail stores throughout the United States, Puerto Rico and Canada and wholesales branded and licensed footwear to more than 900 retail accounts. .[6] Some of its owned or licensed brands include Journey, Johnston & Murphy, and Dockers.

Collective Brands, Inc. (NYSE: PSS), headquarted in Topeka, Kansas, primarily engages in the wholesale and retail of footwear and related accessories worldwide. It operates 4,523 Payless ShoeSource stores which offer footwear, including athletic, casual and dress shoes, sandals, boots and accessories for women, children, and men in the United States, Canada, the Caribbean, Central America, and South America. The products are under various brand names including American Eagle and Champion. The company is also a wholesaler of footwear, selling its products mostly in North America in retail formats including premier department stores, specialty stores, and athletic and sporting good stores. It operates an online store payless.com.[7]

Shoe Carnival, Inc. (NASDAQ: SCVL) is a family footwear retailer. The Company offers customers an assortment of dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. It As of January 30, 2010, it operated 311 stores in 30 states primarily in the Midwest, South and Southeast regions of the United States.[8]

Foot Locker, Inc. (NYSE: FL) is a retailer of athletic footwear and apparel, operating 3,426 primarily mall-based stores in the United States, Canada, Europe, Australia, and New Zealand as of January 29, 2011. The company also operates an online retailing channel, footlocker.com, offering athletic footwear, apparel and equipment. [9]


Financials comparison

Image:Return_on_Equity_-_BWS.JPG

Brown Shoe Co Inc.'s ROE is not particularly outstanding compare to the other 3 chosen competitors for comparison. Since its large decline in 2008, it is still lag behind the other two competitors, indicating it has lower profitability.

Image:BWS_EPS_Beta_PE_Mkt_cap.JPG‎

Brown Shoe Co Inc. has a comparably higher beta, indicating its higher sensitivity to market risks.

References

  1. 2010 Annual Report - Financials (10-K) Pg4
  2. 2010 Annual Report - Financials (10-K) Pg5
  3. 2010 Annual Report - Financials (10-K) Pg6
  4. 2010 Annual Report - Financials (10-K) Pg6
  5. 2010 Annual Report - Financials (10-K) Pg7
  6. [ http://en.wikipedia.org/wiki/Genesco Wikipedia, Genesco]
  7. [ http://216.139.227.101/interactive/pss2010/ Collective Brands Inc. 2010 Annual Report]
  8. [ http://www.google.com/finance?q=NASDAQ:SCVL Google finance – Shoe Carnival, Inc.]
  9. Footlocker about us
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