The West Nyack, N.Y.-based company, which operates Foot Action and Just for Feet, reported net income tumbled 48 percent, to $9.1 million, or 44 cents a diluted share, compared with $17.5 million, or 85 cents, in the year-ago period.
An aftertax restructuring charge of $3.4 million also took its toll on the bottom line in the period ended Dec. 29. Excluding the charges related to inventory write-downs and severance costs incurred over the closing of 54 Ames stores, Footstar would have reported net income of $12.5 million, or 60 cents a diluted share, in line with analysts’ expectations, as compared to $19.5 million, or 95 cents, in the comparable quarter of 2000.
Sales grew 3.7 percent, to $638 million from $615.3 million last year.
“Footstar’s disappointing performance in the fourth quarter reflects the sizable effect that weather has on our winter footwear business,” said chief executive officer Mickey Robinson in a statement, adding, “Sales of boots and other winter products were well below our expectations.”
Complicating the company’s prospects is the bankruptcy of Kmart, which currently accounts for nearly one-third of the 6,682 licensed footwear departments operated by Footstar’s Meldisco unit. Because Kmart is expected to close a sizable number of its 2114 stores as it restructures, Footstar executives are not making earnings-per-share estimates for the last three quarters of fiscal 2002. Footstar said it is “comfortable” with First Call estimates of 1 cent per share in first-quarter earnings, exclusive of any Kmart-related charges.
Overall, in fiscal 2001, Footstar reported a net loss of $23.5 million, or $1.16 a diluted share, compared with net income of $60.4 million, or $2.97, for fiscal 2000. Figures for last year include $66.9 million in aftertax charges for restructuring and inventory write-downs. Sales for the year increased 10 percent, to $2.46 billion from $2.24 billion last year.