Brown Shoe Company Reports Third Quarter 2012 Results

Record third quarter sales at Famous Footwear, with same-store-sales up 6.8%

Contemporary Fashion and Healthy Living third quarter wholesale sales up 5.2% and 2.1%, respectively

ST. LOUIS--()--Brown Shoe Company, Inc. (NYSE: BWS) (brownshoe.com) today reported its third quarter 2012 financial results, with net sales of $732.2 million versus third quarter 2011 net sales of $713.8 million. Results for both the third quarter of 2012 and 2011 included sales of $15.6 million and $25.8 million, respectively, from brands and businesses the company has exited. Excluding exited brands, net sales were up 4.2% year-over-year.

“With the third quarter, we delivered not only solid back-to-school results, but also overall strong quarterly same-store-sales growth of 6.8% at Famous Footwear”

Net earnings were $24.3 million, or $0.56 per diluted share, in the third quarter of 2012 versus $33.7 million, or $0.79 per diluted share, in 2011. Third quarter 2012 results included portfolio realignment charges of $2.6 million. Earnings for the third quarter of 2011 included a $21.6 million gain on the sale of AND 1, which was partially offset by portfolio realignment and integration related costs of $5.6 million. On an adjusted* basis, net earnings of $25.9 million, or $0.60 per diluted share, improved 18.3% compared to $21.9 million, or $0.51 per diluted share, in the prior year. Gross profit margin for the third quarter of 2012 improved to 39.0% from 38.7% in 2011.

“With the third quarter, we delivered not only solid back-to-school results, but also overall strong quarterly same-store-sales growth of 6.8% at Famous Footwear,” said Diane Sullivan, president and chief executive officer of Brown Shoe Company. “We also saw improvement in sales for both our contemporary fashion and healthy living brand portfolios, as we continued to deliver trend-right products that are must-haves for consumers.”

   

US$M, except per share
(unaudited)

     

13 Weeks

   

39 Weeks

   

52 Weeks

      3Q’12     3Q’11     Change     3Q’12     3Q’11    

Change

    3Q’12     3Q’11     Change  
Consolidated net sales   $732.2     $713.8     2.6% $1,957.9     $1,953.9     0.2% $2,586.8     $2,558.5     1.1%  
Famous Footwear   436.8 416.2 4.9% 1,134.2 1,103.9 2.7% 1,486.7 1,459.4 1.9%  
Wholesale Operations   232.6 233.6 (0.4%) 650.7 665.8 (2.3%) 855.8 839.7 1.9%  
Specialty Retail   62.8 64.0 (1.8%) 172.9 184.3 (6.2%) 244.3 259.4 (5.8%)  
Gross profit   285.8 276.5 3.4% 758.7 758.1 0.1% 997.2 993.4 0.4%  
Margin   39.0% 38.7% 30 bps 38.7% 38.8% -10 bps 38.6% 38.8% -20 bps  
SG&A   242.4 239.4 1.2% 680.5 707.6 (3.8%) 910.4 934.4 (2.6%)  
% of net sales   33.1% 33.5%

-40 bps

34.7% 36.2% -150 bps 35.2% 36.5% -130 bps  
Net restructuring, other special charges   2.3 4.7   21.3 7.1   37.8 9.6    
Impairment of intangible assets   -- -- -- 5.8 -- -- 5.8 -- --  
Operating earnings   41.1 32.4 27.1% 51.1 43.4 17.6% 43.2 49.4 (12.5%)  
% of net sales   5.6% 4.5% 110 bps 2.6% 2.2% 40 bps 1.7% 1.9% -20 bps  
Net interest expense   5.4 6.6 (17.5%) 17.2 20.6 (16.8%) 23.0 26.0 (11.3%)  
Earnings before income tax   35.7 25.8 38.5% 33.9 22.8 48.8% 20.2 23.4 (13.8%)  
Tax rate   31.9% 31.7%   31.6% 32.0%   18.5% 19.9%    

Net earnings from discontinued operations

  -- 16.1   -- 17.1   (1.4)

17.1

   
Net earnings   $24.3 $33.7 (28.0%) $23.5 $32.8 (28.5%) $15.2 $36.2 (57.9%)  
Per diluted share   $0.56 $0.79 (29.1%) $0.55 $0.75 (26.7%) $0.36 $0.82 (56.1%)  
Adjusted net earnings   $25.9 $21.9 18.3% $42.7 $26.2 63.1% $46.8 $31.1 50.5%  
Per diluted share       $0.60     $0.51     17.6%     $1.00     $0.60     66.7%     $1.09     $0.71     53.5%  
 

Third Quarter Highlights

Famous Footwear reported record third quarter 2012 sales of $436.8 million, a 4.9% year-over-year improvement, with good growth in boat shoes, running shoes and accessories. On a same-store-sales basis, the third quarter was up 6.8% over the prior year, with the back-to-school season up 5.5%. During the quarter, the company closed or relocated 11 stores and added 18 new stores, and average revenue per square foot improved 10.3% year-over-year.

Contemporary Fashion platform wholesale sales were up 5.2% in the third quarter, with the company’s Sam Edelman, Franco Sarto and Fergie brands all delivering strong performance. In the Healthy Living portfolio, wholesale sales were up 2.1%, with contribution from LifeStride, Ryka and Dr. Scholl’s Shoes. Excluding exited brands, Wholesale Operations sales were up 3.3% year-over-year in the third quarter.

Consolidated gross profit was up in the third quarter, while gross profit margin improved by approximately 30 basis points. SG&A for the third quarter was $242.4 million, or 33.1% of net sales down approximately 40 basis points from 33.5% of net sales in the prior year. For the quarter, adjusted operating earnings improved 15.0% to $43.7 million from $38.0 million in the third quarter of 2011.

Inventory at the end of the third quarter was $539.4 million, down 7.0% compared to $580.2 million in the prior year. Wholesale inventory was down 23.0%, while Famous Footwear inventory was flat.

At quarter-end, Brown Shoe Company had approximately $380.9 million in availability under its revolving credit facility and $40.9 million in cash and cash equivalents. The company’s debt-to-capital ratio declined to 41.7% from 50.1% in the third quarter of 2011.

Financial Review and 2012 Outlook

“In the third quarter, we continued to deliver against our 2012 guidance, with strong revenue and earnings. As a result, we are raising our adjusted earnings per diluted share guidance range to $1.06 to $1.10 for 2012,” said Russ Hammer, chief financial officer of Brown Shoe Company. “While we are confident in our ability to meet the lower end of our guidance range, we remain cautious about the potential impact from political and macroeconomic conditions beyond our control.”

   
Metric         FY’12  
Consolidated net sales         $2.57 to $2.59 billion  
Famous Footwear same-store sales     Up low-single digits  
Wholesale Operations net sales     Down low- to mid-single digits, reflecting brand exits  
Gross profit margin     Up 20 to 40 basis points  
SG&A     $917 to $920 million  
Non-recurring costs     ~$34 million  
Net interest expense     $23 to $24 million  
Effective tax rate     32% to 35%  
Earnings per diluted share     $0.55 to $0.59  
Adjusted earnings per diluted share     $1.06 to $1.10  
Depreciation and amortization     $55 to $56 million  
Capital expenditures         $63 to $65 million  
   

Investor Conference Call

Brown Shoe Company will webcast an investor conference call at 9:30 a.m. ET today, Nov. 20, 2012. The webcast and accompanying slides will be available at brownshoe.com/investor. A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 69647407. A replay will be available on the website for a limited period. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 69647407 through Dec. 4, 2012.

*Non-GAAP Financial Measures

In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic and estimated future operating earnings, net earnings and earnings per diluted share adjusted to exclude certain gains, charges and recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings (loss) attributable to Brown Shoe Company, Inc. and diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changing consumer demands, which may be influenced by consumers’ disposable income, which in turn can be influenced by general economic conditions; (ii) intense competition within the footwear industry; (iii) rapidly changing fashion trends and purchasing patterns; (iv) customer concentration and increased consolidation in the retail industry; (v) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China, where ASG has manufacturing facilities and both ASG and Brown Shoe Company rely heavily on third-party manufacturing facilities for a significant amount of their inventory; (vi) Brown Shoe Company’s ability to utilize its new information technology system to successfully execute its strategies, including integrating ASG’s business; (vii) the ability to recruit and retain senior management and other key associates; (viii) the ability to attract, retain and maintain good relationships with licensors and protect intellectual property rights; (ix) the ability to secure/exit leases on favorable terms; (x) the ability to maintain relationships with current suppliers; (xi) compliance with applicable laws and standards with respect to lead content in paint and other product safety issues; (xii) the ability to source product at a pace consistent with increased demand for footwear; (xiii) the impact of rising prices in a potentially inflationary global environment; and (xiv) the ability of Brown Shoe Company to execute its portfolio realignment. The company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended January 28, 2012, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

About Brown Shoe Company

Brown Shoe Company is a $2.6 billion, global, footwear company that puts consumers and their needs first, by targeting the strategic Family, Healthy Living and Contemporary Fashion platforms. We have more than 130 years of experience, passion and product innovation and operate more than 1,300 Famous Footwear and Naturalizer retail stores across the United States, Canada and China. We also design, source and market many well-known wholesale shoe brands -- such as Naturalizer, Dr. Scholl’s Shoes, LifeStride, Sam Edelman, Franco Sarto, Via Spiga, Vera Wang, Vince, Avia and Ryka -- across multiple distribution channels. In addition to our retail and wholesale operations, we maintain a strong online presence with our ecommerce sites, Famous.com, Naturalizer.com and Shoes.com. Visit brownshoe.com to learn more about us. Brown Shoe Company: feel good and live better... feet first!

 
SCHEDULE 1
                       
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
13 Weeks Ended 39 Weeks Ended 52 Weeks Ended
(Thousands, except per share data) October 27, 2012 October 29, 2011 October 27, 2012 October 29, 2011 October 27, 2012 October 29, 2011
 
Net sales $ 732,169 $ 713,788 $ 1,957,889 $ 1,953,933 $ 2,586,780 $ 2,558,457
Cost of goods sold   446,387     437,290     1,199,229     1,195,866     1,589,547     1,565,084  
 
Gross profit   285,782     276,498     758,660     758,067     997,233     993,373  
 
Selling and administrative expenses 242,317 239,422 680,492 707,476 910,435 934,401
Restructuring and other special charges, net 2,342 4,715 21,288 7,148 37,811 9,602
Impairment of intangible assets   -     -     5,777     -     5,777     -  
 
Operating earnings   41,123     32,361     51,103     43,443     43,210     49,370  
 
Interest expense (5,513 ) (6,685 ) (17,428 ) (19,903 ) (23,666 ) (25,312 )
Loss on early extinguishment of debt - - - (1,003 ) - (1,003 )
Interest income   76     98     236     248     632     338  
 
Earnings before income taxes from continuing operations   35,686     25,774     33,911     22,785     20,176     23,393  
 
Income tax provision   (11,399 )   (8,180 )   (10,710 )   (7,294 )   (3,742 )   (4,655 )
 
Net earnings from continuing operations   24,287     17,594     23,201     15,491     16,434     18,738  
 
Discontinued operations:
Earnings from operations of subsidiary, net of tax of $0, $595, $0, $1,285, $0 and $1,285, respectively - 725 - 1,701 - 1,701
Gain (loss) on sale of subsidiary, net of tax of $0, $6,196, $0, $6,196, $474, $6,196   -     15,374     -     15,374     (1,409 )   15,374  
 
Net earnings (loss) from discontinued operations   -     16,099     -     17,075     (1,409 )   17,075  
 
Net earnings   24,287     33,693     23,201     32,566     15,025     35,813  
 
Net loss attributable to noncontrolling interests   (5 )   (39 )   (251 )   (245 )   (205 )   (351 )
 
Net earnings attributable to Brown Shoe Company, Inc. $ 24,292   $ 33,732   $ 23,452   $ 32,811   $ 15,230   $ 36,164  
 
Basic earnings (loss) per common share:
From continuing operations $ 0.57 $ 0.42 $ 0.55 $ 0.36 $ 0.39 $ 0.44
From discontinued operations   -     0.38     -     0.40     (0.03 )   0.39  
Basic earnings per common share attributable to
Brown Shoe Company, Inc. shareholders $ 0.57   $ 0.80   $ 0.55   $ 0.76   $ 0.36   $ 0.83  
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.56 $ 0.41 $ 0.55 $ 0.36 $ 0.39 $ 0.43
From discontinued operations   -     0.38     -     0.39     (0.03 )   0.39  
Diluted earnings per common share attributable to
Brown Shoe Company, Inc. shareholders $ 0.56   $ 0.79   $ 0.55   $ 0.75   $ 0.36   $ 0.82  
 
Basic number of shares 40,745 40,079 40,618 41,469 40,488 41,695
Diluted number of shares   40,935     40,610     40,721     42,005     40,769     42,192  
 
 
SCHEDULE 2
           
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited)
(Thousands) October 27, 2012 October 29, 2011 January 28, 2012
ASSETS
 
Cash and cash equivalents $ 40,884 $ 41,951 $ 47,682
Receivables, net 138,562 155,754 154,022
Inventories, net 539,359 580,154 561,797
Prepaid expenses and other current assets   34,680   32,948   51,637
Total current assets   753,485   810,807   815,138
 
Property and equipment, net 141,048 137,590 131,471
Goodwill and intangible assets, net 134,377 142,544 140,590
Other assets   135,194   136,817   140,277
Total assets $ 1,164,104 $ 1,227,758 $ 1,227,476
 
LIABILITIES AND EQUITY
 
Borrowings under revolving credit agreement $ 110,000 $ 222,000 $ 201,000
Trade accounts payable 183,422 177,521 190,611
Other accrued expenses   150,056   138,074   132,969
Total current liabilities   443,478   537,595   524,580
 
Long-term debt 198,773 198,586 198,633
Deferred rent 30,714 32,829 32,361
Other liabilities   59,202   39,155   58,186
Total other liabilities   288,689   270,570   289,180
 
Total Brown Shoe Company, Inc. shareholders’ equity 431,138 418,600 412,669
Noncontrolling interests   799   993   1,047
Total equity   431,937   419,593   413,716
Total liabilities and equity $ 1,164,104 $ 1,227,758 $ 1,227,476
 
 

SCHEDULE 3

 

BROWN SHOE COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
       
39 Weeks Ended
(Thousands) October 27, 2012 October 29, 2011
OPERATING ACTIVITIES:
Net earnings $ 23,201 $ 32,566
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 40,457 44,523
Amortization of debt issuance costs 1,885 1,757
Loss on early extinguishment of debt - 1,003
Share-based compensation expense 4,776 5,116
Tax (benefit) deficiency related to share-based plans (889 ) 371
Loss on disposal of facilities and equipment 2,177 850
Impairment charges for facilities and equipment 2,481 1,067
Impairment of intangible assets 5,777 -
Deferred rent (1,647 ) (1,849 )
Provision for doubtful accounts 398 562
Gain on sale of subsidiary, net - (15,374 )
Changes in operating assets and liabilities, net of acquired and discontinued operations:
Receivables 15,063 (27,298 )
Inventories 22,523 (14,746 )
Prepaid expenses and other current and noncurrent assets 17,852 28,879
Trade accounts payable (7,213 ) 415
Accrued expenses and other liabilities 18,113 (44,410 )
Other, net   (1,431 )   (814 )
Net cash provided by operating activities   143,525     12,618  
 
INVESTING ACTIVITIES:
Capital expenditures (44,517 ) (30,982 )
Acquisition cost (5,000 ) (156,636 )
Cash recognized on initial consolidation - 3,121
Net proceeds from sale of subsidiary   -     55,350  
Net cash used for investing activities   (49,517 )   (129,147 )
 
FINANCING ACTIVITIES:
Borrowings under revolving credit agreement 582,000 1,410,500
Repayments under revolving credit agreement (673,000 ) (1,386,500 )
Proceeds from issuance of 2019 Senior Notes - 198,586
Redemption of 2012 Senior Notes - (150,000 )
Dividends paid (9,007 ) (9,135 )
Debt issuance costs - (6,428 )
Acquisition of treasury stock - (25,484 )
Issuance of common stock under share-based plans, net (1,860 ) 734
Tax benefit (deficiency) related to share-based plans   889     (371 )
Net cash (used for) provided by financing activities   (100,980 )   31,902  
Effect of exchange rate changes on cash and cash equivalents   174     30  
Decrease in cash and cash equivalents (6,798 ) (84,597 )
Cash and cash equivalents at beginning of period   47,682     126,548  
 
Cash and cash equivalents at end of period $ 40,884   $ 41,951  
 
 
SCHEDULE 4
                       
BROWN SHOE COMPANY, INC.
RECONCILIATION OF NET EARNINGS AND DILUTED EARNINGS PER SHARE (GAAP BASIS) TO ADJUSTED NET EARNINGS AND ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP BASIS)
 
13 Weeks Ended October 27, 2012 13 Weeks Ended October 29, 2011
(Thousands, except per share data)

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

 
GAAP earnings $ 24,292 $ 0.56 $ 33,732 $ 0.79
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions

$

2,556 1,605 0.04 $ 4,505 2,752 0.07
Gain on sale of subsidiary - - - (21,570 ) (15,374 ) (0.37 )
ASG integration-related costs - - - 1,107 784 0.02
           
Total charges/other items   2,556   1,605   0.04   (15,958 )   (11,838 )   (0.28 )
 
Adjusted earnings $ 25,897 $ 0.60 $ 21,894   $ 0.51  
 
 
39 Weeks Ended October 27, 2012 39 Weeks Ended October 29, 2011
(Thousands, except per share data)

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

 
GAAP earnings $ 23,452 $ 0.55 $ 32,811 $ 0.75
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions $ 27,002 17,439 0.41 $ 4,505 2,752 0.07
Gain on sale of subsidiary - - - (21,570 ) (15,374 ) (0.37 )
Organizational change 2,283 1,395 0.03 - - -
ASG acquisition and integration-related costs 675 441 0.01 3,538 2,890 0.08
ASG cost of goods sold adjustment (1) - - - 4,190 2,477 0.05
Loss on early extinguishment of debt - - - 1,003 638 0.02
           
Total charges/other items   29,960   19,275   0.45   (8,334 )   (6,617 )   (0.15 )
 
Adjusted earnings $ 42,727 $ 1.00 $ 26,194   $ 0.60  
 
 
52 Weeks Ended October 27, 2012 52 Weeks Ended October 29, 2011
(Thousands, except per share data)

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

 
GAAP earnings $ 15,230 $ 0.36 $ 36,164 $ 0.82
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions $ 41,651 26,723 0.62 $ 4,505 2,752 0.07
Loss (gain) on sale of subsidiary 935 1,409 0.03 (21,570 ) (15,374 ) (0.37 )
ASG acquisition and integration-related costs 3,592 2,071 0.05 4,659 3,613 0.09
Organizational change 2,283 1,395 0.03 - - -
ASG cost of goods sold adjustment (1) - - - 4,190 2,477 0.05
IT initiatives - - - 1,335 893 0.03
Loss on early extinguishment of debt - - - 1,003 638 0.02
           
Total charges/other items   48,461   31,598   0.73   (5,878 )   (5,001 )   (0.11 )
 
Adjusted earnings $ 46,828 $ 1.09 $ 31,163   $ 0.71  
 
 
(1) In accordance with GAAP, purchase accounting rules require the company to record inventory at fair value (i.e., expected selling price less costs to sell) on the acquisition date. This results in lower than typical gross margins when the acquired inventory is sold. This adjustment reflects the elimination of the unfavorable impact of lower gross margins for ASG product sold in the first and second quarters of 2011.
 
 
SCHEDULE 5
                                       
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
 
Net Sales $ 436,812 $ 416,243 $ 232,555 $ 233,590 $ 62,802 $ 63,955 $ - $ - $ 732,169 $ 713,788
 
Gross Profit $ 186,659 $ 178,323 $ 71,172 $ 70,295 $ 27,951 $ 27,880 $ - $ - $ 285,782 $ 276,498
Adjusted Gross Profit $ 186,659 $ 178,323 $ 71,286 $ 71,192 $ 28,051 $ 27,880 $ - $ - $ 285,996 $ 277,395
 
Gross Profit Rate 42.7 % 42.8 % 30.6 % 30.1 % 44.5 % 43.6 % - - 39.0 % 38.7 %
Adjusted Gross Profit Rate 42.7 % 42.8 % 30.7 % 30.5 % 44.7 % 43.6 % - - 39.1 % 38.9 %
 
Operating Earnings (Loss) $ 35,525 $ 28,374 $ 15,397 $ 9,558 $ 1,771 $ 53 $ (11,570 ) $ (5,624 ) $ 41,123 $ 32,361
Adjusted Operating Earnings (Loss) $ 35,881 $ 28,374 $ 17,045 $ 14,063 $ 2,138 $ 53 $ (11,385 ) $ (4,517 ) $ 43,679 $ 37,973
 
Operating Earnings (Loss) % 8.1 % 6.8 % 6.6 % 4.1 % 2.8 % 0.1 % - - 5.6 % 4.5 %
Adjusted Operating Earnings (Loss) % 8.2 % 6.8 % 7.3 % 6.0 % 3.4 % 0.1 % - - 6.0 % 5.3 %
 
Same-store Sales % 6.8 % (0.4 %) - - 8.4 % (1.9 %) - - - -
 
Number of Stores 1,061 1,121 - - 223 242 - - 1,284 1,363
   
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
 
Gross Profit $ 186,659 $ 178,323 $ 71,172 $ 70,295 $ 27,951 $ 27,880 $ - $ - $ 285,782 $ 276,498
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - 114 897 100 - - - 214 897
                   
Total charges/other items   -     -     114     897     100     -     -     -     214     897  
 
Adjusted Gross Profit $ 186,659   $ 178,323   $ 71,286   $ 71,192   $ 28,051   $ 27,880   $ -   $ -   $ 285,996   $ 277,395  
 
 
Operating Earnings (Loss) $ 35,525 $ 28,374 $ 15,397 $ 9,558 $ 1,771 $ 53 $ (11,570 ) $ (5,624 ) $ 41,123 $ 32,361
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions 356 - 1,648 4,505 367 - 185 - 2,556 4,505
ASG acquisition and integration-related costs - - - - - - - 1,107 - 1,107
                   
Total charges/other items   356     -     1,648     4,505     367     -     185     1,107     2,556     5,612  
 
Adjusted Operating Earnings (Loss) $ 35,881   $ 28,374   $ 17,045   $ 14,063   $ 2,138   $ 53   $ (11,385 ) $ (4,517 ) $ 43,679   $ 37,973  
 
 
SCHEDULE 5 - CONTINUED
                                       
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
 
Net Sales $ 1,134,237 $ 1,103,900 $ 650,724 $ 665,771 $ 172,928 $ 184,262 $ - $ - $ 1,957,889 $ 1,953,933
 
Gross Profit $ 498,718 $ 483,952 $ 187,481 $ 196,660 $ 72,461 $ 77,455 $ - $ - $ 758,660 $ 758,067
Adjusted Gross Profit $ 498,718 $ 483,952 $ 190,080 $ 201,746 $ 72,757 $ 77,455 $ - $ - $ 761,555 $ 763,153
 
Gross Profit Rate 44.0 % 43.8 % 28.8 % 29.5 % 41.9 % 42.0 % - - 38.7 % 38.8 %
Adjusted Gross Profit Rate 44.0 % 43.8 % 29.2 % 30.3 % 42.1 % 42.0 % - - 38.9 % 39.1 %
 
Operating Earnings (Loss) $ 74,365 $ 54,651 $ 14,828 $ 18,502 $ (7,551 ) $ (6,703 ) $ (30,539 ) $ (23,007 ) $ 51,103 $ 43,443
Adjusted Operating Earnings (Loss) $ 82,052 $ 54,651 $ 30,023 $ 27,196 $ (3,647 ) $ (6,703 ) $ (27,365 ) $ (19,467 ) $ 81,063 $ 55,677
 
Operating Earnings (Loss) % 6.6 % 5.0 % 2.3 % 2.8 % (4.4 %) (3.6 %) - - 2.6 % 2.2 %
Adjusted Operating Earnings (Loss) % 7.2 % 5.0 % 4.6 % 4.1 % (2.1 %) (3.6 %) - - 4.1 % 2.8 %
 
Same-store Sales % 4.6 % (1.3 %) - - 3.2 % 0.7 % - - - -
 
Number of Stores 1,061 1,121 - - 223 242 - - 1,284 1,363
   
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
 
Gross Profit $ 498,718 $ 483,952 $ 187,481 $ 196,660 $ 72,461 $ 77,455 $ - $ - $ 758,660 $ 758,067
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - 2,599 897 296 - - - 2,895 897
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
                   
Total charges/other items   -     -     2,599     5,086     296     -     -     -     2,895     5,086  
 
Adjusted Gross Profit $ 498,718   $ 483,952   $ 190,080   $ 201,746   $ 72,757   $ 77,455   $ -   $ -   $ 761,555   $ 763,153  
 
 
Operating Earnings (Loss) $ 74,365 $ 54,651 $ 14,828 $ 18,502 $ (7,551 ) $ (6,703 ) $ (30,539 ) $ (23,007 ) $ 51,103 $ 43,443
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions 7,687 - 14,520 4,505 3,904 - 891 - 27,002 4,505
Organizational change - - - - - - 2,283 - 2,283 -
ASG acquisition and integration-related costs - - 675 - - - - 3,540 675 3,540
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
                   
Total charges/other items   7,687     -     15,195     8,694     3,904     -     3,174     3,540     29,960     12,234  
 
Adjusted Operating Earnings (Loss) $ 82,052   $ 54,651   $ 30,023   $ 27,196   $ (3,647 ) $ (6,703 ) $ (27,365 ) $ (19,467 ) $ 81,063   $ 55,677  
 
 
SCHEDULE 5 - CONTINUED
                                       
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011

2012

2011 2012 2011 2012 2011
 
Net Sales $ 1,486,651 $ 1,459,421 $ 855,826 $ 839,671 $ 244,303 $ 259,365 $ - $ - $ 2,586,780 $ 2,558,457
 
Gross Profit $ 649,987 $ 642,473 $ 247,167 $ 242,958 $ 100,079 $ 107,942 $ - $ - $ 997,233 $ 993,373
Adjusted Gross Profit $ 649,987 $ 642,473 $ 250,426 $ 248,044 $ 100,757 $ 107,942 $ - $ - $ 1,001,170 $ 998,459
 
Gross Profit Rate 43.7 % 44.0 % 28.9 % 28.9 % 41.0 % 41.6 % - - 38.6 % 38.8 %
Adjusted Gross Profit Rate 43.7 % 44.0 % 29.3 % 29.5 % 41.2 % 41.6 % - - 38.7 % 39.0 %
 
Operating Earnings (Loss) $ 82,229 $ 68,924 $ 13,065 $ 19,328 $ (8,475 ) $ (7,693 ) $ (43,609 ) $ (31,189 ) $ 43,210 $ 49,370
Adjusted Operating Earnings (Loss) $ 92,668 $ 68,924 $ 38,295 $ 28,168 $ (3,578 ) $ (7,693 ) $ (36,649 ) $ (25,341 ) $ 90,736 $ 64,058
 
Operating Earnings (Loss) % 5.5 % 4.7 % 1.5 % 2.3 % (3.5 %) (3.0 %) - - 1.7 % 1.9 %
Adjusted Operating Earnings (Loss) % 6.2 % 4.7 % 4.5 % 3.4 % (1.5 %) (3.0 %) - - 3.5 % 2.5 %
 
Same-store Sales % 3.3 % 0.1 % - - 3.6 % 1.4 % - - - -
 
Number of Stores 1,061 1,121 - - 223 242 - - 1,284 1,363
   
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29 October 27 October 29
(Thousands) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
 
Gross Profit $ 649,987 $ 642,473 $ 247,167 $ 242,958 $ 100,079 $ 107,942 $ - $ - $ 997,233 $ 993,373
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - 3,259 897 678 - - - 3,937 897
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
                   
Total charges/other items   -     -     3,259     5,086     678     -     -     -     3,937     5,086  
 
Adjusted Gross Profit $ 649,987   $ 642,473   $ 250,426   $ 248,044   $ 100,757   $ 107,942   $ -   $ -   $ 1,001,170   $ 998,459  
 
 
Operating Earnings (Loss) $ 82,229 $ 68,924 $ 13,065 $ 19,328 $ (8,475 ) $ (7,693 ) $ (43,609 ) $ (31,189 ) $ 43,210 $ 49,370
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions 10,439 - 22,062 4,505 4,897 - 4,253 - 41,651 4,505
Organizational change - - - - - - 2,283 - 2,283 -
ASG acquisition and integration-related costs - - 3,168 - - - 424 4,659 3,592 4,659
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
IT Initiatives - - - 146 - - - 1,189 - 1,335
                   
Total charges/other items   10,439     -     25,230     8,840     4,897     -     6,960     5,848     47,526     14,688  
 
Adjusted Operating Earnings (Loss) $ 92,668   $ 68,924   $ 38,295   $ 28,168   $ (3,578 ) $ (7,693 ) $ (36,649 ) $ (25,341 ) $ 90,736   $ 64,058  
 
 
SCHEDULE 6
                       
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION
 
13 Weeks Ended 39 Weeks Ended 52 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29
(Thousands, except per share data) 2012 2011 2012 2011 2012 2011
 
Net earnings (loss) attributable to Brown Shoe Company, Inc.:
Net earnings from continuing operations $ 24,287 $ 17,594 $ 23,201 $ 15,491 $ 16,434 $ 18,738
Net loss attributable to noncontrolling interests 5 39 251 245 205 351
Net earnings allocated to participating securities   (1,212 )   (801 )   (1,166 )   (677 )   (784 )   (780 )
Net earnings from continuing operations   23,080     16,832     22,286     15,059     15,855     18,309  
 
Net earnings (loss) from discontinued operations - 16,099 - 17,075 (1,409 ) 17,075
Net earnings allocated to participating securities   -     (732 )   -     (718 )   -     (699 )
Net earnings (loss) from discontinued operations   -     15,367     -     16,357     (1,409 )   16,376  
 
Net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 23,080   $ 32,199   $ 22,286   $ 31,416   $ 14,446   $ 34,685  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 40,745 40,079 40,618 41,469 40,488 41,695
Dilutive effect of share-based awards for continuing operations and discontinued operations   190     531     103     536     281     497  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   40,935     40,610     40,721     42,005     40,769     42,192  
 
Basic earnings (loss) per share:
From continuing operations $ 0.57 $ 0.42 $ 0.55 $ 0.36 $ 0.39 $ 0.44
From discontinued operations   -     0.38     -     0.40     (0.03 )   0.39  
Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.57   $ 0.80   $ 0.55   $ 0.76   $ 0.36   $ 0.83  
 
Diluted earnings (loss) per share:
From continuing operations $ 0.56 $ 0.41 $ 0.55 $ 0.36 $ 0.39 $ 0.43
From discontinued operations   -     0.38     -     0.39     (0.03 )   0.39  
Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.56   $ 0.79   $ 0.55   $ 0.75   $ 0.36   $ 0.82  
 
 
SCHEDULE 7
                       
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED ADJUSTED EARNINGS PER SHARE RECONCILIATION
 
13 Weeks Ended 39 Weeks Ended 52 Weeks Ended
October 27 October 29 October 27 October 29 October 27 October 29
(Thousands, except per share data) 2012 2011 2012 2011 2012 2011
 
Adjusted net earnings attributable to Brown Shoe Company, Inc.:
Adjusted net earnings from continuing operations $ 25,892 $ 21,130 $ 42,476 $ 24,248 $ 46,623 $ 29,111
Net loss attributable to noncontrolling interests 5 39 251 245 205 351
Net earnings allocated to participating securities   (1,292 )   (962 )   (2,114 )   (1,045 )   (2,308 )   (1,198 )
Adjusted net earnings from continuing operations   24,605     20,207     40,613     23,448     44,520     28,264  
 
Adjusted net earnings from discontinued operations - 725 - 1,701 - 1,701
Net earnings allocated to participating securities   -     (33 )   -     (72 )   -     (68 )
Net earnings from discontinued operations   -     692     -     1,629     -     1,633  
 
Adjusted net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 24,605   $ 20,899   $ 40,613   $ 25,077   $ 44,520   $ 29,897  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 40,745 40,079 40,618 41,469 40,488 41,695
Dilutive effect of share-based awards for continuing operations and discontinued operations   190     531     103     536     281     497  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   40,935     40,610     40,721     42,005     40,769     42,192  
 
Basic adjusted earnings per share:
From continuing operations $ 0.60 $ 0.50 $ 1.00 $ 0.56 $ 1.10 $ 0.68
From discontinued operations   -     0.02     -     0.04     -     0.04  
Basic adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.60   $ 0.52   $ 1.00   $ 0.60   $ 1.10   $ 0.72  
 
Diluted adjusted earnings per share:
From continuing operations $ 0.60 $ 0.50 $ 1.00 $ 0.56 $ 1.09 $ 0.67
From discontinued operations   -     0.01     -     0.04     -     0.04  
Diluted adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.60   $ 0.51   $ 1.00   $ 0.60   $ 1.09   $ 0.71  
 

Contacts

Brown Shoe Company, Inc.
Investors
Peggy Reilly Tharp, 314-854-4134
ptharp@brownshoe.com
or
Media
Kelly Malone, 314-854-4093
kmalone@brownshoe.com

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