Brown Shoe Company Reports Third Quarter 2012 Results

  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

Business Wire

ST. LOUIS -- November 20, 2012

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.

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      13 Weeks                        39 Weeks                            52 Weeks
per share
(unaudited)       3Q’12    3Q’11    Change    3Q’12      3Q’11      Change    3Q’12      3Q’11      Change  
Consolidated        $732.2   $713.8   2.6%        $1,957.9   $1,953.9   0.2%        $2,586.8   $2,558.5   1.1%    
net sales
Famous              436.8      416.2      4.9%        1,134.2      1,103.9      2.7%        1,486.7      1,459.4      1.9%    
Footwear
Wholesale           232.6      233.6      (0.4%)      650.7        665.8        (2.3%)      855.8        839.7        1.9%    
Operations
Specialty           62.8       64.0       (1.8%)      172.9        184.3        (6.2%)      244.3        259.4        (5.8%)  
Retail
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        35.2%        36.5%        -130    
                                                                                 bps                                   bps
Net
restructuring,      2.3        4.7                   21.3         7.1                     37.8         9.6                 
other special
charges
Impairment of
intangible          --         --         --          5.8          --           --          5.8          --           --      
assets
Operating           41.1       32.4       27.1%       51.1         43.4         17.6%       43.2         49.4         (12.5%) 
earnings
% of net sales      5.6%       4.5%       110 bps     2.6%         2.2%         40 bps      1.7%         1.9%         -20 bps 
Net interest        5.4        6.6        (17.5%)     17.2         20.6         (16.8%)     23.0         26.0         (11.3%) 
expense
Earnings
before income       35.7       25.8       38.5%       33.9         22.8         48.8%       20.2         23.4         (13.8%) 
tax
Tax rate            31.9%      31.7%                 31.6%        32.0%                   18.5%        19.9%               
Net earnings
from                --         16.1                  --           17.1                    (1.4)        17.1                
discontinued
operations
Net earnings        $24.3      $33.7      (28.0%)     $23.5        $32.8        (28.5%)     $15.2        $36.2        (57.9%) 
Per diluted         $0.56      $0.79      (29.1%)     $0.55        $0.75        (26.7%)     $0.36        $0.82        (56.1%) 
share
Adjusted net        $25.9      $21.9      18.3%       $42.7        $26.2        63.1%       $46.8        $31.1        50.5%   
earnings
Per diluted       $0.60    $0.51    17.6%     $1.00      $0.60      66.7%     $1.09      $0.71      53.5%   
share
                                                                                                                               

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          $1.06 to $1.10                      
share
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,        October 27,     October 29,     October 27,       October 29,       October 27,       October 29,
except per         2012            2011            2012              2011              2012              2011
share data)
                                                                                                         
Net sales          $ 732,169       $ 713,788       $ 1,957,889       $ 1,953,933       $ 2,586,780       $ 2,558,457
Cost of goods       446,387       437,290       1,199,229       1,195,866       1,589,547       1,565,084 
sold
                                                                                                         
Gross profit        285,782       276,498       758,660         758,067         997,233         993,373   
                                                                                                         
Selling and
administrative       242,317         239,422         680,492           707,476           910,435           934,401
expenses
Restructuring
and other            2,342           4,715           21,288            7,148             37,811            9,602
special
charges, net
Impairment of
intangible          -             -             5,777           -               5,777           -         
assets
                                                                                                         
Operating           41,123        32,361        51,103          43,443          43,210          49,370    
earnings
                                                                                                         
Interest             (5,513  )       (6,685  )       (17,428   )       (19,903   )       (23,666   )       (25,312   )
expense
Loss on early
extinguishment       -               -               -                 (1,003    )       -                 (1,003    )
of debt
Interest            76            98            236             248             632             338       
income
                                                                                                         
Earnings
before income
taxes from          35,686        25,774        33,911          22,785          20,176          23,393    
continuing
operations
                                                                                                         
Income tax          (11,399 )      (8,180  )      (10,710   )      (7,294    )      (3,742    )      (4,655    )
provision
                                                                                                         
Net earnings
from                24,287        17,594        23,201          15,491          16,434          18,738    
continuing
operations
                                                                                                         
Discontinued
operations:
Earnings from
operations of
subsidiary,
net of tax of        -               725             -                 1,701             -                 1,701
$0, $595, $0,
$1,285, $0 and
$1,285,
respectively
Gain (loss) on
sale of
subsidiary,
net of tax of       -             15,374        -               15,374          (1,409    )      15,374    
$0, $6,196,
$0, $6,196,
$474, $6,196
                                                                                                         
Net earnings
(loss) from         -             16,099        -               17,075          (1,409    )      17,075    
discontinued
operations
                                                                                                         
Net earnings        24,287        33,693        23,201          32,566          15,025          35,813    
                                                                                                         
Net loss
attributable
to                  (5      )      (39     )      (251      )      (245      )      (205      )      (351      )
noncontrolling
interests
                                                                                                         
Net earnings
attributable       $ 24,292       $ 33,732       $ 23,452         $ 32,811         $ 15,230         $ 36,164    
to Brown Shoe
Company, Inc.
                                                                                                         
Basic earnings
(loss) per
common share:
From
continuing         $ 0.57          $ 0.42          $ 0.55            $ 0.36            $ 0.39            $ 0.44
operations
From
discontinued        -             0.38          -               0.40            (0.03     )      0.39      
operations
Basic earnings
per common
share
attributable
to
Brown Shoe
Company, Inc.      $ 0.57         $ 0.80         $ 0.55           $ 0.76           $ 0.36           $ 0.83      
shareholders
                                                                                                         
Diluted
earnings
(loss) per
common share:
From
continuing         $ 0.56          $ 0.41          $ 0.55            $ 0.36            $ 0.39            $ 0.43
operations
From
discontinued        -             0.38          -               0.39            (0.03     )      0.39      
operations
Diluted
earnings per
common share
attributable
to
Brown Shoe
Company, Inc.      $ 0.56         $ 0.79         $ 0.55           $ 0.75           $ 0.36           $ 0.82      
shareholders
                                                                                                         
Basic number         40,745          40,079          40,618            41,469            40,488            41,695
of shares
Diluted number      40,935        40,610        40,721          42,005          40,769          42,192    
of shares
                                                                                                                     


SCHEDULE 2
                                                          
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                 
                             (Unaudited)
(Thousands)                  October 27,       October 29,       January 28,
                             2012              2011              2012
ASSETS
                                                                 
Cash and cash                $  40,884         $  41,951         $  47,682
equivalents
Receivables, net                138,562           155,754           154,022
Inventories, net                539,359           580,154           561,797
Prepaid expenses and           34,680           32,948           51,637
other current assets
Total current assets           753,485          810,807          815,138
                                                                 
Property and equipment,         141,048           137,590           131,471
net
Goodwill and intangible         134,377           142,544           140,590
assets, net
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             $  110,000        $  222,000        $  201,000
agreement
Trade accounts payable          183,422           177,521           190,611
Other accrued expenses         150,056          138,074          132,969
Total current                  443,478          537,595          524,580
liabilities
                                                                 
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.                   431,138           418,600           412,669
shareholders’ equity
Noncontrolling interests       799              993              1,047
Total equity                   431,937          419,593          413,716
Total liabilities and        $  1,164,104      $  1,227,758      $  1,227,476
equity
                                                                    


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          (889      )         371
share-based plans
Loss on disposal of facilities and           2,177               850
equipment
Impairment charges for facilities            2,481               1,067
and equipment
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           17,852              28,879
and noncurrent assets
Trade accounts payable                       (7,213    )         415
Accrued expenses and other                   18,113              (44,410     )
liabilities
Other, net                                  (1,431    )        (814        )
Net cash provided by operating              143,525           12,618      
activities
                                                              
INVESTING ACTIVITIES:
Capital expenditures                         (44,517   )         (30,982     )
Acquisition cost                             (5,000    )         (156,636    )
Cash recognized on initial                   -                   3,121
consolidation
Net proceeds from sale of subsidiary        -                 55,350      
Net cash used for investing                 (49,517   )        (129,147    )
activities
                                                              
FINANCING ACTIVITIES:
Borrowings under revolving credit            582,000             1,410,500
agreement
Repayments under revolving credit            (673,000  )         (1,386,500  )
agreement
Proceeds from issuance of 2019               -                   198,586
Senior Notes
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               (1,860    )         734
share-based plans, net
Tax benefit (deficiency) related to         889               (371        )
share-based plans
Net cash (used for) provided by             (100,980  )        31,902      
financing activities
Effect of exchange rate changes on          174               30          
cash and cash equivalents
Decrease in cash and cash                    (6,798    )         (84,597     )
equivalents
Cash and cash equivalents at                47,682            126,548     
beginning of period
                                                              
Cash and cash equivalents at end of      $   40,884          $  41,951      
period
                                                                             


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
                        Pre-Tax      Net Earnings                                  Net Earnings
                        Impact       Attributable     Diluted      Pre-Tax         Attributable     Diluted
(Thousands, except      of           to               Earnings     Impact of       to               Earnings
per share data)         Charges/     Brown Shoe       Per          Charges/        Brown Shoe       Per
                        Other        Company,         Share        Other Items     Company,         Share
                        Items        Inc.                                          Inc.
                                                                                                    
GAAP earnings                        $   24,292       $  0.56                      $  33,732        $ 0.79
                                                                                                    
Charges/Other
Items:
Portfolio
realignment
Business exits and      $ 2,556          1,605           0.04      $ 4,505            2,752           0.07
cost reductions
Gain on sale of           -              -               -           (21,570 )        (15,374 )       (0.37 )
subsidiary
ASG
integration-related       -              -               -           1,107            784             0.02
costs
                                                                                               
Total charges/other      2,556         1,605          0.04       (15,958 )       (11,838 )      (0.28 )
items
                                                                                                    
Adjusted earnings                    $   25,897       $  0.60                      $  21,894       $ 0.51  
                                                                                                    
                                                                                                    
                        39 Weeks Ended October 27, 2012            39 Weeks Ended October 29, 2011
                        Pre-Tax      Net Earnings                                  Net Earnings
                        Impact       Attributable     Diluted      Pre-Tax         Attributable     Diluted
(Thousands, except      of           to               Earnings     Impact of       to               Earnings
per share data)         Charges/     Brown Shoe       Per          Charges/        Brown Shoe       Per
                        Other        Company,         Share        Other Items     Company,         Share
                        Items        Inc.                                          Inc.
                                                                                                    
GAAP earnings                        $   23,452       $  0.55                      $  32,811        $ 0.75
                                                                                                    
Charges/Other
Items:
Portfolio
realignment
Business exits and      $ 27,002         17,439          0.41      $ 4,505            2,752           0.07
cost reductions
Gain on sale of           -              -               -           (21,570 )        (15,374 )       (0.37 )
subsidiary
Organizational            2,283          1,395           0.03        -                -               -
change
ASG acquisition and
integration-related       675            441             0.01        3,538            2,890           0.08
costs
ASG cost of goods
sold adjustment           -              -               -           4,190            2,477           0.05
^(1)
Loss on early
extinguishment of         -              -               -           1,003            638             0.02
debt
                                                                                               
Total charges/other      29,960        19,275         0.45       (8,334  )       (6,617  )      (0.15 )
items
                                                                                                    
Adjusted earnings                    $   42,727       $  1.00                      $  26,194       $ 0.60  
                                                                                                    
                                                                                                    
                        52 Weeks Ended October 27, 2012            52 Weeks Ended October 29, 2011
                        Pre-Tax      Net Earnings                                  Net Earnings
                        Impact       Attributable     Diluted      Pre-Tax         Attributable     Diluted
(Thousands, except      of           to               Earnings     Impact of       to               Earnings
per share data)         Charges/     Brown Shoe       Per          Charges/        Brown Shoe       Per
                        Other        Company,         Share        Other Items     Company,         Share
                        Items        Inc.                                          Inc.
                                                                                                    
GAAP earnings                        $   15,230       $  0.36                      $  36,164        $ 0.82
                                                                                                    
Charges/Other
Items:
Portfolio
realignment
Business exits and      $ 41,651         26,723          0.62      $ 4,505            2,752           0.07
cost reductions
Loss (gain) on sale       935            1,409           0.03        (21,570 )        (15,374 )       (0.37 )
of subsidiary
ASG acquisition and
integration-related       3,592          2,071           0.05        4,659            3,613           0.09
costs
Organizational            2,283          1,395           0.03        -                -               -
change
ASG cost of goods
sold adjustment           -              -               -           4,190            2,477           0.05
^(1)
IT initiatives            -              -               -           1,335            893             0.03
Loss on early
extinguishment of         -              -               -           1,003            638             0.02
debt
                                                                                               
Total charges/other      48,461        31,598         0.73       (5,878  )       (5,001  )      (0.11 )
items
                                                                                                    
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          $ 186,659       $ 178,323        $ 71,286        $ 71,192        $ 28,051       $ 27,880        $ -             $ -            $ 285,996       $ 277,395
Profit
                                                                                                                                                                       
Gross Profit Rate         42.7    %       42.8    %        30.6    %       30.1    %       44.5   %       43.6   %        -               -              39.0    %       38.7    %
Adjusted Gross            42.7    %       42.8    %        30.7    %       30.5    %       44.7   %       43.6   %        -               -              39.1    %       38.9    %
Profit Rate
                                                                                                                                                                       
Operating Earnings      $ 35,525        $ 28,374         $ 15,397        $ 9,558         $ 1,771        $ 53            $ (11,570 )     $ (5,624 )     $ 41,123        $ 32,361
(Loss)
Adjusted Operating      $ 35,881        $ 28,374         $ 17,045        $ 14,063        $ 2,138        $ 53            $ (11,385 )     $ (4,517 )     $ 43,679        $ 37,973
Earnings (Loss)
                                                                                                                                                                       
Operating Earnings        8.1     %       6.8     %        6.6     %       4.1     %       2.8    %       0.1    %        -               -              5.6     %       4.5     %
(Loss) %
Adjusted Operating        8.2     %       6.8     %        7.3     %       6.0     %       3.4    %       0.1    %        -               -              6.0     %       5.3     %
Earnings (Loss) %
                                                                                                                                                                       
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        -               -                114             897             100            -               -               -              214             897
cost reductions
                                                                                                                                                              
Total charges/other      -             -              114           897           100          -             -             -            214           897     
items
                                                                                                                                                                       
Adjusted Gross          $ 186,659      $ 178,323       $ 71,286       $ 71,192       $ 28,051      $ 27,880       $ -            $ -           $ 285,996      $ 277,395 
Profit
                                                                                                                                                                       
                                                                                                                                                                       
Operating Earnings      $ 35,525        $ 28,374         $ 15,397        $ 9,558         $ 1,771        $ 53            $ (11,570 )     $ (5,624 )     $ 41,123        $ 32,361
(Loss)
                                                                                                                                                                       
Charges/Other
Items:
Portfolio
realignment
Business exits and        356             -                1,648           4,505           367            -               185             -              2,556           4,505
cost reductions
ASG acquisition and
integration-related       -               -                -               -               -              -               -               1,107          -               1,107
costs
                                                                                                                                                              
Total charges/other      356           -              1,648         4,505         367          -             185           1,107        2,556         5,612   
items
                                                                                                                                                                       
Adjusted Operating      $ 35,881       $ 28,374        $ 17,045       $ 14,063       $ 2,138       $ 53           $ (11,385 )     $ (4,517 )     $ 43,679       $ 37,973  
Earnings (Loss)
                                                                                                                                                                                 

                                      
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          $ 498,718         $ 483,952          $ 190,080       $ 201,746       $ 72,757         $ 77,455         $ -             $ -             $ 761,555         $ 763,153
Profit
                                                                                                                                                                                 
Gross Profit Rate         44.0      %       43.8      %        28.8    %       29.5    %       41.9    %        42.0    %        -               -               38.7      %       38.8      %
Adjusted Gross            44.0      %       43.8      %        29.2    %       30.3    %       42.1    %        42.0    %        -               -               38.9      %       39.1      %
Profit Rate
                                                                                                                                                                                 
Operating Earnings      $ 74,365          $ 54,651           $ 14,828        $ 18,502        $ (7,551  )      $ (6,703  )      $ (30,539 )     $ (23,007 )     $ 51,103          $ 43,443
(Loss)
Adjusted Operating      $ 82,052          $ 54,651           $ 30,023        $ 27,196        $ (3,647  )      $ (6,703  )      $ (27,365 )     $ (19,467 )     $ 81,063          $ 55,677
Earnings (Loss)
                                                                                                                                                                                 
Operating Earnings        6.6       %       5.0       %        2.3     %       2.8     %       (4.4    %)       (3.6    %)       -               -               2.6       %       2.2       %
(Loss) %
Adjusted Operating        7.2       %       5.0       %        4.6     %       4.1     %       (2.1    %)       (3.6    %)       -               -               4.1       %       2.8       %
Earnings (Loss) %
                                                                                                                                                                                 
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        -                 -                  2,599           897             296              -                -               -               2,895             897
cost reductions
ASG cost of good          -                 -                  -               4,189           -                -                -               -               -                 4,189
sold adjustment
                                                                                                                                                                        
Total charges/other      -               -                2,599         5,086         296            -              -             -             2,895           5,086     
items
                                                                                                                                                                                 
Adjusted Gross          $ 498,718        $ 483,952         $ 190,080      $ 201,746      $ 72,757        $ 77,455        $ -            $ -            $ 761,555        $ 763,153   
Profit
                                                                                                                                                                                 
                                                                                                                                                                                 
Operating Earnings      $ 74,365          $ 54,651           $ 14,828        $ 18,502        $ (7,551  )      $ (6,703  )      $ (30,539 )     $ (23,007 )     $ 51,103          $ 43,443
(Loss)
                                                                                                                                                                                 
Charges/Other
Items:
Portfolio
realignment
Business exits and        7,687             -                  14,520          4,505           3,904            -                891             -               27,002            4,505
cost reductions
Organizational            -                 -                  -               -               -                -                2,283           -               2,283             -
change
ASG acquisition and
integration-related       -                 -                  675             -               -                -                -               3,540           675               3,540
costs
ASG cost of good          -                 -                  -               4,189           -                -                -               -               -                 4,189
sold adjustment
                                                                                                                                                                        
Total charges/other      7,687           -                15,195        8,694         3,904          -              3,174         3,540         29,960          12,234    
items
                                                                                                                                                                                 
Adjusted Operating      $ 82,052         $ 54,651          $ 30,023       $ 27,196       $ (3,647  )      $ (6,703  )      $ (27,365 )     $ (19,467 )     $ 81,063         $ 55,677    
Earnings (Loss)
                                                                                                                                                                                             

<td class="bwpadl0 *Story too large*
                                
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          $ 649,987         $ 642,473         $ 250,426       $ 248,044       $ 100,757        $ 107,942        $ -             $ -             $ 1,001,170       $ 998,459
Gross Profit
                                                                                                                                                                          
Gross Profit        43.7      %       44.0      %       28.9    %       28.9    %       41.0    %        41.6    %        -               -               38.6      %       38.8      %
Rate
Adjusted
Gross Profit        43.7      %       44.0      %       29.3    %       29.5    %       41.2    %        41.6    %        -               -               38.7      %       39.0      %
Rate
                                                                                                                                                                          
Operating
Earnings          $ 82,229          $ 68,924          $ 13,065        $ 19,328        $ (8,475  )      $ (7,693  )      $ (43,609 )     $ (31,189 )     $ 43,210          $ 49,370
(Loss)
Adjusted
Operating         $ 92,668          $ 68,924          $ 38,295        $ 28,168        $ (3,578  )      $ (7,693  )      $ (36,649 )     $ (25,341 )     $ 90,736          $ 64,058
Earnings
(Loss)
                                                                                                                                                                          
Operating
Earnings            5.5       %       4.7       %       1.5     %       2.3     %       (3.5    %)       (3.0    %)       -               -               1.7       %       1.9       %
(Loss) %
Adjusted
Operating           6.2       %       4.7       %       4.5     %       3.4     %       (1.5    %)       (3.0    %)       -               -               3.5       %       2.5       %
Earnings
(Loss) %
                                                                                                                                                                          
Same-store          3.3       %       0.1       %       -               -               3.6     %        1.4     %        -               -               -                 -
Sales %
                                                                                                                                                                          
Number of           1,061             1,121             -               -               223              242              -               -               1,284             1,363
Stores
                               
                                                                                                                                                                          

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           -                 -                 3,259           897             678              -                -               -               3,937             897
cost
reductions
ASG cost of
good sold           -                 -                 -               4,189           -                -                -               -               -                 4,189
adjustment
                                                                                                                                                                 
Total
charges/other      -               -               3,259         5,086         678            -              -             -             3,937           5,086     
items
                                                                                                                                                                          
Adjusted          $ 649,987        $ 642,473        $ 250,426 
Gross Profit

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