Friday, May 18, 2012

Reuters: Global Markets: Shoe retailers to benefit from tight inventory control

Reuters: Global Markets
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Shoe retailers to benefit from tight inventory control
May 18th 2012, 14:03

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A man shops for shoes at a Foot Locker store in New York October 14, 2010. REUTERS/Shannon Stapleton

A man shops for shoes at a Foot Locker store in New York October 14, 2010.

Credit: Reuters/Shannon Stapleton

By Meenakshi Iyer and Arpita Mukherjee

Fri May 18, 2012 10:03am EDT

(Reuters) - The warmest U.S. winter in years fueled higher sales of running shoes and other footwear at Brown Shoe Inc (BWS.N) and Foot Locker Inc (FL.N), and the companies are expected to benefit from tight inventory management in the next few quarters.

Most footwear companies have benefited from a warmer-than-expected winter, including Dick's Sporting Goods Inc (DKS.N), the largest publicly traded U.S. sporting goods retailer, which posted better-than-expected quarterly results earlier this week.

Foot Locker shares were up 10 percent at $30.89, making it the biggest percentage gainer on the New York Stock Exchange, closely followed by shares of Brown Shoe, which were up 9 percent at $9.51.

Foot Locker is likely to benefit from strong demand for footwear in the United States, Canaccord Genuity analyst Camilo Lyon said.

Foot Locker and Brown Shoe have also kept lean inventories, which could boost margins.

"(Inventory management) bodes well for product margins in the second and third quarter," CL King analyst Steven Marotta said about Brown Shoe.

The weather also drove strong quarterly results at sporting goods retailer Hibbett Sports Inc (HIBB.O), which raised its profit forecast for the year.

Foot Locker, which sells branded shoes of Nike (NKE.N), Reebok and Adidas (ADSGn.DE), posted first-quarter net income of 83 cents per share, handily beating analysts' expectations of 74 cents per share, according to Thomson Reuters I/B/E/S.

Brown Shoe, which also owns the Naturalizer brands, posted an adjusted net income of 23 cents per share, while analysts had expected 9 cents per share.

(Reporting by Meenakshi Iyer and Arpita Mukherjee in Bangalore; Editing by Viraj Nair)

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