Without the footwear division, U.S. Shoe will be composed of two specialty retailing operations: women’s apparel, which includes the Casual Corner, Petite Sophisticate and Caren Charles chains. The company also owns Lens Crafters, a chain of optical stores. The company said that it planned to change its name to reflect those businesses as soon as the sale was completed.

The company’s prospects remain clouded, however, by the poor performance of its women’s apparel division. Analysts in large part attributed its $5 million loss in the first nine months of 1988 to sluggish sales of women’s clothing, and noted that the unit had continued to lose market share to competitors that specialize in private-label sportswear, like the Limited Inc.

”The specialty retailing division has had problems in the past, and those problems were worsened by the lackluster environment for women’s clothes last year,” said Elizabeth A. Armstrong, an analyst with Johnson Redbook Service in New York. ”The environment is now much better, but I’m not sure whether they’ve solved their problems.”

Analysts said the company’s Casual Corner chain sharply cut the prices of its merchandise in the third quarter of 1988, reflecting weak sales and an unsuccessful new merchandise mix. For the first nine months of last year, the specialty retailing division’s operating earnings declined 48 percent from a year earlier.

Yet, Mr. Barach said, the fourth-quarter performance of the women’s apparel division could signal the start of a turnaround for the struggling unit. Based on preliminary and unaudited figures, the unit’s operating earnings are up more than 60 percent for the quarter. Strong Sales at Lens Crafters

He also said that Lens Crafters, with almost 300 stores and annual sales of more than $400 million, posted strong sales in the fourth quarter. Its operating earnings should be ”substantially above” that of the period a year earlier, he added. Lens Crafters is now the country’s largest chain of optical stores.

The proceeds from the sale of the footwear division will be used to increase the company’s dividend from 46 cents a share, to $1 a share, and reduce its debt. The company is also considering buying back some of its stock, acquiring other eyewear retailers, and expanding the Lens Crafters chain in 1989 by opening 75 stores. AT A GLANCE: U.S. SHOE All dollar amounts in thousands, except per share data $ Three months ended Oct. 29 1988 1987 Revenues $587,113 $536,411 Net income 1,282 12,174 Earnings per share $0.03 $0.27 Year ended Dec. 31 1988 1987 Revenues $2,167,554 $2,003,246 Net income 52,065 25,472 Earnings per share $1.16 $0.57 Main Lines of Business Contribution to 1987 revenues Footwear 34% Specialty Retailing 66% Total assets, Jan. 30, 1988 $1,100,631 Current assets * 583,868 Current liabilities * 369,253 Long-term debt * 142,655 Book value per share, Jan. 30, 1988 $11.75 Stock price, Feb. 27, 1988 N.Y.S.E. consolidated close 20 Stock price, 52-week range 29-16 3/8 Employees, Jan. 30, 1988 40,000 Headquarters Cincinnati

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