Collective Brands reports larger Q4 loss on impairment charges, lower sales

Topeka, Kan. Collective Brands said Tuesday its fourth-quarter loss more than tripled as sales fell and it wrote down the value of its 2007 acquisition of the Stride Rite chain.

The company, which also operates the Payless ShoeSource chain, reported losing $144 million, including a $130.2 million write-down linked to Stride Rite. The company also recorded $2.5 million in charges, not including insurance recoveries due to litigation.

By comparison, the company lost $46.6 million during the same period a year ago.

Quarterly revenue declined 5.4% to $735.2 million, from $776.8 million, missing analysts' expectations for $767 million in sales. Sales for stores open for at least a year, considered a key barometer of retail health, fell 6.6% during the quarter.

For the year, the company said it lost $68.7 million, compared with a profit of $42.7 million in 2007. Annual revenue increased 13% to $3.4 billion.

The company didn't provide revenue or earnings guidance for the new year, but said it does expect to lose a net of 60 stores, most of them from the Payless chain. Collective Brands now operates 4,877 stores.

During a conference call with analysts, CEO Matt Rubel said the company would not see $78 million in annual revenue from Tommy Hilfiger-branded products since it did not renew a licensing agreement in December.

But Rubel said the company is taking steps to cut costs, such as reducing its corporate head count by 200 people, and expects to see more purchases by consumers -- especially parents -- looking for cheaper-priced shoes.

"In this current environment we are managing for cash, watching our inventories and capital spending and taking appropriate action where needed," Rubel said. "We are confident that we will deliver strong free cash flow and operating profit in 2009 and thereby deliver shareholder value."