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BROWN SHOE INC NEW
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Brown Shoe Company Reports Fourth Quarter and Full Year 2012 Results

2013-03-15 07:00 ET - News Release

Famous Footwear same-store-sales up 4.4% in fourth quarter

Record breaking 52-week sales and operating profit at Famous Footwear


ST. LOUIS -- (Business Wire)

Brown Shoe Company, Inc. (NYSE: BWS, brownshoe.com) today reported fourth quarter 2012 financial results, with net sales of $640.2 million versus fourth quarter 2011 net sales of $628.9 million. Results for both the fourth quarter of 2012 and 2011 included sales of $2.8 million and $16.5 million, respectively, from brands and businesses the company has exited. Excluding exited brands, year-over-year net sales were up 4.8% in the quarter.

Net earnings were $4.0 million, or $0.09 per diluted share, in the fourth quarter of 2012 versus a loss of ($8.2) million, or ($0.21) per diluted share, in the prior year. Fourth quarter 2012 results included portfolio realignment costs of $2.9 million, while earnings for the fourth quarter of 2011 included portfolio realignment and integration related costs of $18.5 million. On an adjusted* basis, net earnings of $5.9 million, or $0.14 per diluted share, improved 43.0% compared to $4.1 million, or $0.10 per diluted share, in the prior year.

For full year 2012, net sales of $2,598.1 million compared to $2,582.8 million in 2011. Results for both 2012 and 2011 included sales from exited brands and businesses of $42.5 million and $92.5 million, respectively. Excluding exited brands, 2012 sales were up 2.6% over 2011. Full year 2012 includes 53 weeks, compared to 52 weeks in 2011, with the additional week occurring in the fourth quarter. The 53rd week increased net sales by $21.2 million and had an immaterial impact on fourth quarter 2012 earnings.

Net earnings for 2012 were $27.5 million, or $0.64 per diluted share, versus $24.6 million, or $0.56 per diluted share, in 2011. Earnings for 2012 included portfolio realignment, organization change and integration related costs of $32.9 million, while earnings for 2011 included portfolio realignment and integration related costs of $30.8 million, which were partially offset by a $20.6 million gain on the sale of AND 1. On an adjusted basis, 2012 net earnings of $48.6 million, or $1.13 per diluted share, improved 60.4% compared to $30.3 million, or $0.70 per diluted share, in 2011.

Gross profit margin for the fourth quarter of 2012 improved to 39.3% from 37.9% in 2011. For the full year, it improved to 38.9% from 38.6% in 2011.

“In 2012, we hit several milestones at Famous Footwear, by achieving record-breaking sales for the 52-week year, as well as our highest annual operating profit,” said Diane Sullivan, president and chief executive officer of Brown Shoe Company. “We also strengthened our balance sheet, by reducing short term borrowings by nearly $100 million and reduced our SG&A expenses by $18.3 million. Thanks to the hard work of the entire Brown Shoe Company team, we ended 2012 on a high note, as our share price increased by 106% over the course of calendar 2012.”

                         

US$M, except per share (unaudited)

  14 Weeks   13 Weeks   4Q   53 Weeks   52 Weeks   FY
  4Q’12   4Q’11   Change   4Q’12   4Q’11   Change
Consolidated net sales   $640.2   $628.9   1.8%   $2,598.1   $2,582.8   0.6%
Famous Footwear   380.1   352.4   7.9%   1,514.3   1,456.3   4.0%
Wholesale Operations   194.5   205.1   (5.2%)   845.2   870.9   (3.0%)
Specialty Retail   65.6   71.4   (8.1%)   238.5   255.6   (6.7%)
Gross profit   251.7   238.6   5.5%   1,010.4   996.6   1.4%
Margin   39.3%   37.9%   140 bps   38.9%   38.6%   30 bps
SG&A   238.5   230.0   3.7%   919.0   937.3   (2.0%)
% of net sales   37.3%   36.6%   70 bps   35.4%   36.3%   - 90 bps
Net restructuring, other special charges   2.7   16.5   (83.5%)   24.0   23.7   1.5%
Impairment of intangible assets   --   --   --   5.8   --   --
Operating earnings (loss)   10.5   (7.9)   n/m   61.6   35.6   73.3%
% of net sales   1.6%   (1.3%)   290 bps   2.4%   1.4%   100 bps
Net interest expense   5.9   5.8   0.4%   23.1   26.5   (13.0%)
Earnings (loss) before income tax   4.6   (13.7)   n/m   38.5   9.1   325.9%
Tax rate   13.7%   50.7%       29.4%   3.6%    
Net earnings (loss) from discontinued operations   --   (1.4)   --   --   15.7   --
Net earnings (loss)   $4.0   ($8.2)   149.1%   $27.5   $24.6   11.8%
Per diluted share   $0.09   ($0.21)   142.9%   $0.64   $0.56   14.3%
Adjusted net earnings   $5.9   $4.1   43.0%   $48.6   $30.3   60.4%
Per diluted share   $0.14   $0.10   40.0%   $1.13   $0.70   61.4%
 

Fourth Quarter Highlights

Famous Footwear reported record fourth quarter 2012 sales of $380.1 million, a 7.9% year-over-year improvement, with good growth in athletic shoes, boat shoes and women’s boots. On a 52 week same-store-sales basis, the fourth quarter was up 4.4%over the prior year. During the quarter, the company closed or relocated 18 stores and added 12 new stores, and average revenue per square foot improved 6.9% year-over-year.

Contemporary Fashion platform wholesale sales were up slightly in the fourth quarter, with the company’s Sam Edelman and Franco Sarto brands delivering strong performance. In the Healthy Living portfolio, wholesale sales were up 1.8%, with contribution from LifeStride, Ryka and Dr. Scholl’s Shoes. Excluding exited brands, Wholesale Operations sales were up 1.6% year-over-year in the fourth quarter.

Consolidated gross profit was up in the fourth quarter, while gross profit margin of 39.3% improved by approximately 140 basis points versus the prior year. SG&A for the fourth quarter was $238.5 million, or 37.3% of net sales, up approximately 70 basis points from 36.6% of net sales in the prior year. For the quarter, adjusted operating earnings improved 39.0% to $13.4 million from $9.7 million in the fourth quarter of 2011.

Inventory at the end of the fourth quarter was $533.3 million, down 5.1% compared to $561.8 million in the prior year. Wholesale inventory was down 21.6%, while Famous Footwear inventory was up 2.3%.

At quarter-end, Brown Shoe Company had $380.6 million in availability under its revolving credit facility and $68.2 million in cash and cash equivalents. The company’s debt-to-capital ratio declined to 41.6% from 49.1% in the fourth quarter of 2011.

Full Year Highlights

Famous Footwear reported full year 2012 sales of $1,514.3 million, a 4.0% year-over-year improvement, with adjusted annual operating earnings topping $100 million. On a 52-week basis, same-store-sales in 2012 were up 4.5% over 2011. During the year, the company closed or relocated 89 stores and added 55 new stores, and average revenue per square foot improved to $199.

Contemporary Fashion platform wholesale sales were up 11.0% in 2012, with the company’s Sam Edelman brand closing in on the $100 million sales threshold. In the Healthy Living portfolio, wholesale sales were down 3.5%. Excluding exited brands, Wholesale Operations sales were up 1.6% year-over-year in 2012.

Consolidated gross profit was up in 2012, while gross profit margin of 38.9% improved by approximately 30 basis points over 2011. SG&A for 2012 was $919.0 million, or 35.4% of net sales versus 36.3% in the prior year. For 2012, adjusted operating earnings improved 44.6% to $94.5 million from $65.4 million in 2011.

Financial Review and 2013 Outlook

“We’re pleased to have wrapped up a strong 2012, with adjusted diluted EPS of $1.13, up more than 60% over the prior year,” said Russ Hammer, chief financial officer of Brown Shoe Company. “However, like many other peers, we are beginning to see the effect on our consumers of recent payroll tax changes and other fiscal events. As a result, we remain cognizant about the potential for changes in consumer discretionary spending in 2013 and any related impact on our results.”

     
Metric   FY’13
Consolidated net sales   $2.55 to $2.58 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 10 to 40 basis points
SG&A   $900 to $910 million
Non-recurring costs   $1.0 to $2.0 million
Net interest expense   $21 to $23 million
Effective tax rate   33% to 35%
Earnings per diluted share   $1.16 to $1.23
Adjusted earnings per diluted share   $1.18 to $1.25
Depreciation and amortization   $54 to $56 million
Capital expenditures   $50 to $55 million
 

Investor Conference Call

Brown Shoe Company will webcast an investor conference call at 9:00 a.m. ET today, Mar. 15, 2013. The webcast and accompanying slides will be available at investor.brownshoe.com. 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 17574957. 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 17574957 through Mar. 29, 2013.

* 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) the ability to recruit and retain senior management and other key associates; (vii) the ability to attract, retain and maintain good relationships with licensors and protect intellectual property rights; (viii) the ability to secure/exit leases on favorable terms; (ix) the ability to maintain relationships with current suppliers; (x) compliance with applicable laws and standards with respect to lead content in paint and other product safety issues; (xi) the ability to source product at a pace consistent with increased demand for footwear; and (xii) the impact of rising prices in a potentially inflationary global environment. 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 whose shoes are worn by people of all ages, from all walks of life. Our products are available virtually everywhere — in the nearly 1,300 Famous Footwear and Naturalizer retail stores we operate, in hundreds of major department and specialty stores, on 14 branded ecommerce sites, and on many additional third-party retail websites. Through our broad range of products, we serve three key market segments. Our Family brands — Famous Footwear, Famous.com, and shoes.com — are one-stop-shopping destinations for high quality, affordable styles for a family’s every occasion. Active people who want comfort, style and performance can look to our Healthy Living brands — Naturalizer, Dr. Scholl's Shoes, LifeStride, Avia and Ryka. Our Contemporary Fashion brands — Via Spiga, Vera Wang, Vince, Sam Edelman, Franco Sarto, Carlos Santana and Fergie Footwear — keep fashionistas in step with the latest trends. At Brown Shoe Company, we inspire people to feel good and live better... feet first!

SCHEDULE 1        
 
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS            
 
(Unaudited)
14 Weeks Ended   13 Weeks Ended 53 Weeks Ended   52 Weeks Ended
(Thousands, except per share data) February 2, 2013 January 28, 2012 February 2, 2013 January 28, 2012
 
Net sales $ 640,176 $ 628,891 $ 2,598,065 $ 2,582,824
Cost of goods sold   388,477     390,318     1,587,706     1,586,184  
 
Gross profit   251,699     238,573     1,010,359     996,640  
 
Selling and administrative expenses 238,465 229,943 918,957 937,419
Restructuring and other special charges, net 2,730 16,523 24,018 23,671
Impairment of intangible assets   -     -     5,777     -  
 
Operating earnings (loss)   10,504     (7,893 )   61,607     35,550  
 
Interest expense (5,954 ) (6,238 ) (23,382 ) (26,141 )
Loss on early extinguishment of debt - - - (1,003 )
Interest income   86     396     322     644  
 
Earnings (loss) before income taxes from continuing operations   4,636     (13,735 )   38,547     9,050  
 
Income tax (provision) benefit   (633 )   6,968     (11,343 )   (326 )
 
Net earnings (loss) from continuing operations   4,003     (6,767 )   27,204     8,724  
 
Discontinued operations:
Earnings from operations of subsidiary, net of tax of $1,312 in 2011 - - - 1,701
(Loss) gain on sale of subsidiary, net of tax of $474 and $6,670 in 2011, respectively   -     (1,409 )   -     13,965  
 
Net (loss) earnings from discontinued operations   -     (1,409 )   -     15,666  
 
Net earnings (loss)   4,003     (8,176 )   27,204     24,390  
 
Net (loss) earnings attributable to noncontrolling interests   (36 )   46     (287 )   (199 )
 
Net earnings (loss) attributable to Brown Shoe Company, Inc. $ 4,039   $ (8,222 ) $ 27,491   $ 24,589  
 
Basic earnings (loss) per common share:
From continuing operations $ 0.09 $ (0.17 ) $ 0.64 $ 0.20
From discontinued operations   -     (0.04 )   -     0.37  
Basic earnings (loss) per common share attributable to
Brown Shoe Company, Inc. shareholders $ 0.09   $ (0.21 ) $ 0.64   $ 0.57  
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.09 $ (0.17 ) $ 0.64 $ 0.20
From discontinued operations   -     (0.04 )   -     0.36  
Diluted earnings (loss) per common share attributable to
Brown Shoe Company, Inc. shareholders $ 0.09   $ (0.21 ) $ 0.64   $ 0.56  
 
Basic number of shares 40,774 40,098 40,659 41,126
Diluted number of shares   41,109     40,668     40,794     41,668  
 
   
SCHEDULE 2
 
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS        
 
(Thousands) February 2, 2013 January 28, 2012
ASSETS
 
Cash and cash equivalents $ 68,223 $ 47,682
Receivables, net 125,683 154,022
Inventories, net 533,275 561,797
Deferred income taxes - 14,432
Income taxes 3,069 5,145
Prepaid expenses and other current assets   42,178   32,060
Total current assets   772,428   815,138
 
Property and equipment, net 146,089 131,471
Deferred income taxes 1,461 -
Goodwill and intangible assets, net 132,628 140,590
Other assets   118,653   140,277
Total assets $ 1,171,259 $ 1,227,476
 
LIABILITIES AND EQUITY
 
Borrowings under revolving credit agreement $ 105,000 $ 201,000
Trade accounts payable 222,742 190,611
Deferred income taxes 748 -
Other accrued expenses   140,619   132,969
Total current liabilities   469,109   524,580
 
Long-term debt 198,823 198,633
Deferred rent 33,711 32,361
Deferred income taxes 13,862 31,136
Other liabilities   29,853   27,050
Total other liabilities   276,249   289,180
 
Total Brown Shoe Company, Inc. shareholders’ equity 425,129 412,669
Noncontrolling interests   772   1,047
Total equity   425,901   413,716
Total liabilities and equity $ 1,171,259 $ 1,227,476
 
   
SCHEDULE 3
 
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        
 
53 Weeks Ended   52 Weeks Ended
(Thousands) February 2, 2013 January 28, 2012
OPERATING ACTIVITIES:
Net earnings $ 27,204 $ 24,390
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 54,783 59,111
Amortization of debt issuance costs 2,561 2,338
Loss on early extinguishment of debt - 1,003
Share-based compensation expense 6,489 5,633
Tax benefit related to share-based plans (944 ) (1,000 )
Loss on disposal of facilities and equipment 3,103 1,560
Impairment charges for facilities and equipment 4,132 1,871
Impairment of intangible assets 5,777 -
Deferred rent 1,350 (2,317 )
Deferred income taxes benefit (3,555 ) (112 )
Provision for doubtful accounts 360 1,284
Gain on sale of subsidiary, net - (13,965 )
Changes in operating assets and liabilities, net of acquired and discontinued operations:
Receivables 27,984 (26,298 )
Inventories 28,623 3,502
Prepaid expenses and other current and noncurrent assets (9,169 ) 2,286
Trade accounts payable 32,091 13,660
Accrued expenses and other liabilities 10,436 (35,117 )
Income taxes 2,076 12,512
Other, net   4,636     (2,255 )
Net cash provided by operating activities   197,937     48,086  
 
INVESTING ACTIVITIES:
Capital Expenditures (63,729 ) (38,564 )
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   (68,729 )   (136,729 )
 
FINANCING ACTIVITIES:
Borrowings under revolving credit agreement 805,000 1,595,500
Repayments under revolving credit agreement (901,000 ) (1,592,500 )
Proceeds from issuance of 2019 Senior Notes - 198,633
Redemption of 2012 Senior Notes - (150,000 )
Dividends paid (12,011 ) (12,076 )
Debt issuance costs - (6,428 )
Acquisition of treasury stock - (25,484 )
Issuance of common stock under share-based plans, net (1,700 ) 918
Tax benefit related to share-based plans 944 1,000
Contributions by noncontrolling interest   -     378  
Net cash (used for) provided by financing activities   (108,767 )   9,941  
Effect of exchange rate changes on cash and cash equivalents   100     (164 )
Increase (decrease) in cash and cash equivalents 20,541 (78,866 )
Cash and cash equivalents at beginning of period   47,682     126,548  
 
Cash and cash equivalents at end of period $ 68,223   $ 47,682  
 
           
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)
 
(Unaudited) (Unaudited)
14 Weeks Ended February 2, 2013 13 Weeks Ended January 28, 2012
(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 (Loss)
Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted (Loss)
Earnings Per
Share

 
GAAP earnings (loss) $ 4,039 $ 0.09 $ (8,222 ) $ (0.21 )
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions $ 2,942 1,827 0.05 $ 14,649 9,285 0.23
Loss on sale of subsidiary - - - 935 1,409 0.04
ASG integration-related costs - - - 2,917 1,629 0.04
           
Total charges/other items $ 2,942   1,827   0.05 $ 18,501     12,323     0.31  
 
Adjusted earnings $ 5,866 $ 0.14 $ 4,101   $ 0.10  
 
 
53 Weeks Ended February 2, 2013 52 Weeks Ended January 28, 2012
(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 $ 27,491 $ 0.64 $ 24,589 $ 0.56
 

Charges/Other Items:

Portfolio realignment
Gain on sale of subsidiary $ - - - $ (20,635 ) (13,965 ) (0.32 )
Business exits and cost reductions 29,944 19,266 0.45 19,154 12,036 0.28
Organizational change 2,283 1,395 0.03 - - -
ASG acquisition and integration-related costs 675 441 0.01 6,457 4,519 0.11
ASG cost of goods sold adjustment(1) - - - 4,189 2,477 0.05
Loss on early extinguishment of debt - - - 1,003 638 0.02
           
Total charges/other items $ 32,902   21,102   0.49 $ 10,168     5,705     0.14  
 
Adjusted earnings $ 48,593 $ 1.13 $ 30,294   $ 0.70  
 
 
(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
(Unaudited)                                        
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended
February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28,
(Thousands) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
 
Net Sales $ 380,112 $ 352,414 $ 194,452 $ 205,102 $ 65,612 $ 71,375 $ - $ - $ 640,176 $ 628,891
 
Gross Profit $ 167,376 $ 151,269 $ 58,101 $ 59,686 $ 26,222 $ 27,618 $ - $ - $ 251,699 $ 238,573
Adjusted Gross Profit $ 167,376 $ 151,269 $ 58,229 $ 60,346 $ 26,305 $ 28,000 $ - $ - $ 251,910 $ 239,615
 
Gross Profit Rate 44.0 % 42.9 % 29.9 % 29.1 % 40.0 % 38.7 % - - 39.3 % 37.9 %
Adjusted Gross Profit Rate 44.0 % 42.9 % 29.9 % 29.4 % 40.1 % 39.2 % - - 39.4 % 38.1 %
 
Operating Earnings (Loss) $ 19,731 $ 7,864 $ 2,753 $ (1,763 ) $ (1,299 ) $ (924 ) $ (10,681 ) $ (13,070 ) $ 10,504 $ (7,893 )
Adjusted Operating Earnings (Loss) $ 19,813 $ 10,616 $ 5,315 $ 8,272 $ (1,108 ) $ 69 $ (10,574 ) $ (9,284 ) $ 13,446 $ 9,673
 
Operating Earnings (Loss) % 5.2 % 2.2 % 1.4 % (0.9 %) (2.0 %) (1.3 %) - - 1.6 % (1.3 %)
Adjusted Operating Earnings (Loss) % 5.2 % 3.0 % 2.7 % 4.0 % (1.7 %) 0.1 % - - 2.1 % 1.5 %
 
Same-store Sales % (on a 13-week basis) 4.4 % (0.8 %) - - (7.1 %) 4.7 % - - - -
 
Number of Stores 1,055 1,089 - - 222 234 - - 1,277 1,323
                                       
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended 14 Weeks Ended   13 Weeks Ended
February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28,
(Thousands) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
 
Gross Profit $ 167,376 $ 151,269 $ 58,101 $ 59,686 $ 26,222 $ 27,618 $ - $ - $ 251,699 $ 238,573
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - 128 660 83 382 - - 211 1,042
                   
Total charges/other items   -     -     128     660     83     382     -     -     211     1,042  
 
Adjusted Gross Profit $ 167,376   $ 151,269   $ 58,229   $ 60,346   $ 26,305   $ 28,000   $ -   $ -   $ 251,910   $ 239,615  
 
 
Operating Earnings (Loss) $ 19,731 $ 7,864 $ 2,753 $ (1,763 ) $ (1,299 ) $ (924 ) $ (10,681 ) $ (13,070 ) $ 10,504 $ (7,893 )
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions 82 2,752 2,562 7,542 191 993 107 3,362 2,942 14,649
ASG acquisition and integration-related costs - - - 2,493 - - - 424 - 2,917
                   
Total charges/other items   82     2,752     2,562     10,035     191     993     107     3,786     2,942     17,566  
 
Adjusted Operating Earnings (Loss) $ 19,813   $ 10,616   $ 5,315   $ 8,272   $ (1,108 ) $ 69   $ (10,574 ) $ (9,284 ) $ 13,446   $ 9,673  
 
SCHEDULE 5 - CONTINUED                    
 
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT                                    
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended
February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28,
(Thousands) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
 
Net Sales $ 1,514,349 $ 1,456,314 $ 845,176 $ 870,873 $ 238,540 $ 255,637 $ - $ - $ 2,598,065 $ 2,582,824
 
Gross Profit $ 666,094 $ 635,221 $ 245,582 $ 256,346 $ 98,683 $ 105,073 $ - $ - $ 1,010,359 $ 996,640
Adjusted Gross Profit $ 666,094 $ 635,221 $ 248,309 $ 262,092 $ 99,062 $ 105,455 $ - $ - $ 1,013,465 $ 1,002,768
 
Gross Profit Rate 44.0 % 43.6 % 29.1 % 29.4 % 41.4 % 41.1 % - - 38.9 % 38.6 %
Adjusted Gross Profit Rate 44.0 % 43.6 % 29.4 % 30.1 % 41.5 % 41.3 % - - 39.0 % 38.8 %
 
Operating Earnings (Loss) $ 94,096 $ 62,515 $ 17,581 $ 16,739 $ (8,850 ) $ (7,627 ) $ (41,220 ) $ (36,077 ) $ 61,607 $ 35,550
Adjusted Operating Earnings (Loss) $ 101,865 $ 65,267 $ 35,338 $ 35,468 $ (4,755 ) $ (6,634 ) $ (37,939 ) $ (28,751 ) $ 94,509 $ 65,350
 
Operating Earnings (Loss) % 6.2 % 4.3 % 2.1 % 1.9 % (3.7 %) (3.0 %) - - 2.4 % 1.4 %
Adjusted Operating Earnings (Loss) % 6.7 % 4.5 % 4.2 % 4.1 % (2.0 %) (2.6 %) - - 3.6 % 2.5 %
 
Same-store Sales % (on a 52-week basis) 4.5 % (1.2 %) - - 0.6 % 1.7 % - - - -
 
Number of Stores 1,055 1,089 - - 222 234 - - 1,277 1,323
                                       
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations Specialty Retail Other Consolidated
53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended 53 Weeks Ended   52 Weeks Ended
February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28, February 2, January 28,
(Thousands) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
 
Gross Profit $ 666,094 $ 635,221 $ 245,582 $ 256,346 $ 98,683 $ 105,073 $ - $ - $ 1,010,359 $ 996,640
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - 2,727 1,557 379 382 - - 3,106 1,939
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
                   
Total charges/other items   -     -     2,727     5,746     379     382     -     -     3,106     6,128  
 
Adjusted Gross Profit $ 666,094   $ 635,221   $ 248,309   $ 262,092   $ 99,062   $ 105,455   $ -   $ -   $ 1,013,465   $ 1,002,768  
 
 
Operating Earnings (Loss) $ 94,096 $ 62,515 $ 17,581 $ 16,739 $ (8,850 ) $ (7,627 ) $ (41,220 ) $ (36,077 ) $ 61,607 $ 35,550
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions 7,769 2,752 17,082 12,047 4,095 993 998 3,362 29,944 19,154
Organizational change - - - - - - 2,283 - 2,283 -
ASG acquisition and integration-related costs - - 675 2,493 - - - 3,964 675 6,457
ASG cost of good sold adjustment - - - 4,189 - - - - - 4,189
                   
Total charges/other items   7,769     2,752     17,757     18,729     4,095     993     3,281     7,326     32,902     29,800  
 
Adjusted Operating Earnings (Loss) $ 101,865   $ 65,267   $ 35,338   $ 35,468   $ (4,755 ) $ (6,634 ) $ (37,939 ) $ (28,751 ) $ 94,509   $ 65,350  
 
       
SCHEDULE 6
 
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION
 
(Unaudited)
14 Weeks Ended   13 Weeks Ended 53 Weeks Ended   52 Weeks Ended
February 2, January 28, February 2, January 28,
(Thousands, except per share data) 2013 2012 2013 2012
 
Net earnings (loss) attributable to Brown Shoe Company, Inc.:
Net earnings (loss) from continuing operations $ 4,003 $ (6,767 ) $ 27,204 $ 8,724
Net loss (earnings) attributable to noncontrolling interests 36 (46 ) 287 199
Net earnings allocated to participating securities   (199 )   -     (1,365 )   (529 )
Net earnings (loss) from continuing operations   3,840     (6,813 )   26,126     8,394  
 
Net (loss) earnings from discontinued operations - (1,409 ) - 15,666
Net earnings allocated to participating securities   -     -     -     (668 )
Net (loss) earnings from discontinued operations   -     (1,409 )   -     14,998  
 
Net earnings (loss) attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 3,840   $ (8,222 ) $ 26,126   $ 23,392  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 40,774 40,098 40,659 41,126
Dilutive effect of share-based awards for continuing operations and discontinued operations   335     570     135     542  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   41,109     40,668     40,794     41,668  
 
Basic earnings (loss) per share:
From continuing operations $ 0.09 $ (0.17 ) $ 0.64 $ 0.20
From discontinued operations   -     (0.04 )   -     0.37  
Basic earnings (loss) per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.09   $ (0.21 ) $ 0.64   $ 0.57  
 
Diluted earnings (loss) per share:
From continuing operations $ 0.09 $ (0.17 ) $ 0.64 $ 0.20
From discontinued operations   -     (0.04 )   -     0.36  
Diluted earnings (loss) per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.09   $ (0.21 ) $ 0.64   $ 0.56  
 
       
SCHEDULE 7
 
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED ADJUSTED EARNINGS PER SHARE RECONCILIATION
 
(Unaudited)
14 Weeks Ended   13 Weeks Ended 53 Weeks Ended   52 Weeks Ended
February 2, January 28, February 2, January 28,
(Thousands, except per share data) 2013 2012 2013 2012
 
Adjusted net earnings attributable to Brown Shoe Company, Inc.:
Adjusted net earnings from continuing operations $ 5,830 $ 4,147 $ 48,306 $ 28,394
Net loss (earnings) attributable to noncontrolling interests 36 (46 ) 287 199
Net earnings allocated to participating securities   (289 )   (182 )   (2,404 )   (1,234 )
Adjusted net earnings from continuing operations   5,577     3,919     46,189     27,359  
 
Adjusted net earnings from discontinued operations - - - 1,701
Net earnings allocated to participating securities   -     -     -     (73 )
Net earnings from discontinued operations   -     -     -     1,628  
 
Adjusted net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 5,577   $ 3,919   $ 46,189   $ 28,987  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 40,774 40,098 40,659 41,126
Dilutive effect of share-based awards for continuing operations and discontinued operations   335     570     135     542  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   41,109     40,668     40,794     41,668  
 
Basic adjusted earnings per share:
From continuing operations $ 0.14 $ 0.10 $ 1.14 $ 0.67
From discontinued operations   -     -     -     0.04  
Basic adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.14   $ 0.10   $ 1.14   $ 0.71  
 
Diluted adjusted earnings per share:
From continuing operations $ 0.14 $ 0.10 $ 1.13 $ 0.66
From discontinued operations   -     -     -     0.04  
Diluted adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.14   $ 0.10   $ 1.13   $ 0.70  
 

Contacts:

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

Source: Brown Shoe Company, Inc.

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