TOPEKA, Kan.-
Shoe retailer Payless ShoeSource Inc. said Tuesday it swung to a fourth-quarter profit on stronger sales and the release of income tax reserves.
The company also announced it is buying Denver-based brand development and licensing company Collective International LP for $91 million, although it said it didn’t expect the purchase to affect its fiscal year 2007 earnings.
For the November-January period, the Topeka-based retailer reported earning $24.6 million, or 37 cents per share. By comparison, it lost $5.6 million, or 8 cents per share, during the same period a year ago.
Payless said its current quarter numbers were helped after releasing $14.3 million, or 22 cents per share, in reserves set aside for various income tax audits that are now closed.
Revenues for the quarter rose 13 percent from $611 million to $693 million. Sales at stores open for at least a year, an important gauge of retail health, rose 6.8 percent during the period.
Analysts surveyed by Thomson Financial had expected earnings of 7 cents per share on $639.6 million in sales.
For the year, Payless said it earned $122 million, or $1.82 per share, compared with $66.4 million, or 98 cents per share, during 2005.
Annual revenue increased 5 percent from $2.67 billion to $2.79 billion, with sales at stores open for at least a year increasing 3.5 percent.
Analysts had expected annual profits of $1.55 per share on $2.74 billion in sales.
Looking ahead, the company said it expected “low single-digit” growth in same-store sales and a “mid-teen” percentage growth in earnings per share.
Analysts are expecting annual earnings of $1.66 per share on $2.82 billion in sales.
Collective International owns a number of youth footwear labels, including Airwalk, which Payless has sold since 2003. Chief Executive Officer Matt Rubel said the acquisition, expected to be completed in the first half of the fiscal year, plays into the company’s goal of building a network of in-house brands, as opposed to its history of more generic footwear.
Payless reported its earnings after the markets closed. Its shares, which have traded in a 52-week range of $20.36 to $35.14, gained 96 cents in trading Tuesday on the New York Stock Exchange.
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