Brown Shoe Company Reports Fourth Quarter and Full Year 2013 Results

  Brown Shoe Company Reports Fourth Quarter and Full Year 2013 Results            Wholesale Operations sales up 13.5% and 5.3%, respectively  Famous Footwear delivers record 2013 operating earnings of $107.1 million, up                                     13.8%  Business Wire  ST. LOUIS -- March 14, 2014  Brown Shoe Company (NYSE: BWS) (brownshoe.com) today reported fourth quarter 2013 financial results, with net sales of $600.0 million down 3.0% versus fourth quarter 2012 net sales of $618.7 million. Fourth quarter 2013 net earnings of $6.2 million, or $0.14 per diluted share, were slightly ahead of company expectations. In the fourth quarter of the prior year, net earnings were $4.0 million, or $0.09 per diluted share. Fourth quarter 2012 results included $2.9 million of costs related to the company’s portfolio realignment efforts ($1.8 million on an after-tax basis, or $0.05 per diluted share).  For full year 2013, net sales of $2,513.1 million were up 1.4% compared to $2,477.8 million in 2012. Net earnings for 2013 were $38.1 million, or $0.88 per diluted share, versus $27.5 million, or $0.64 per diluted share, in 2012. Earnings for 2013 included portfolio realignment costs of $30.7 million, while earnings for 2012 included portfolio realignment, organization change and integration related costs of $32.9 million. On an adjusted basis, 2013 net earnings of $61.5 million, or $1.41 per diluted share, were up 26.5% compared to $48.6 million, or $1.13 per diluted share, in 2012.  Gross profit margin for the fourth quarter of 2013 improved to 40.2% from 40.0% in the fourth quarter of 2012. For the full year, it improved to 40.4% from 39.9% in 2012.  “Brown Shoe Company delivered a successful fourth quarter and 2013. We reported year-over-year operating earnings growth of 32.4%, while delivering a 2.9% increase in 2013 Famous Footwear same-store-sales. Our wholesale brands continued to make progress, growing sales 13.5% in the fourth quarter and 5.3% in 2013,” said Diane Sullivan, CEO, president and chairman of Brown Shoe Company. “We are looking forward to continuing to execute against our strategies to deliver increasing shareholder value, as we grow our retail and wholesale businesses in 2014.”  US$M, except    13 Weeks  14      4Q        52 Weeks  53 Weeks  FY per share                   Weeks (unaudited)      4Q’13      4Q’12    Change     FY’13      FY’12      Change Consolidated    $600.0    $618.7  (3.0%)    $2,513.1  $2,477.8  1.4% net sales Famous          347.4     380.1   (8.6%)    1,527.5   1,514.3   0.9% Footwear Wholesale       196.3     173.0   13.5%     763.7     724.9     5.3% Operations Specialty       56.2      65.6    (14.3%)   221.9     238.5     (7.0%) Retail Gross profit    241.4     247.3   (2.4%)    1,014.3   988.6     2.6% Margin          40.2%     40.0%   20 bps    40.4%     39.9%     50 bps SG&A            231.2     232.2   (0.5%)    909.7     891.7     2.0% % of net sales  38.5%     37.6%   90 bps    36.2%     36.0%     20 bps Restructuring and other       -         2.8     (100.0%)  1.3       22.4      (94.4%) special charges, net Operating       10.2      12.3    (17.1%)   98.6      74.5      32.4% earnings % of net sales  1.7%      2.0%    (30 bps)  3.9%      3.0%      90 bps Net interest    (5.0)     (5.8)   (14.0%)   (20.9)    (22.7)    (7.8%) expense Earnings from continuing operations,     5.2       6.5     (19.8%)   77.7      51.8      50.0% before income taxes Tax rate        (14.8%)   21.4%   n/m       30.6%     32.1%     (150                                                                       bps) Net earnings (loss) from     0.2       (1.1)   119.4%    (16.1)    (8.0)     (101.9%) discontinued operations Net earnings    $6.2      $4.0    52.6%     $38.1     $27.5     38.5% Per diluted     $0.14     $0.09   55.6%     $0.88     $0.64     37.5% share Adjusted net    $6.2      $5.9    5.1%      $61.5     $48.6     26.5% earnings Per diluted     $0.14     $0.14   --        $1.41     $1.13     24.8% share  Fourth Quarter Highlights  Famous Footwear fourth quarter 2013 sales of $347.4 million were down 8.6% year-over-year, with same-store-sales^(1) down 1.8%. Performance in the quarter was impacted by severe winter weather, which hurt running shoe sales while helping to drive boot sales. During the quarter, 13 stores were closed or relocated and nine new stores were added.  Wholesale sales of $196.3 million were up 13.5% in the fourth quarter. For the Healthy Living platform, wholesale sales of $107.2 million were up 4.3%, led by a double-digit improvement in Naturalizer. The company’s Contemporary Fashion wholesale sales of $89.1 million were up 28.2% in the fourth quarter,  with double-digit growth from key brands Sam Edelman and Franco Sarto.  Consolidated gross profit of $241.4 million was down 2.4% in the fourth quarter, while gross margin increased by 20 basis points to 40.2%. SG&A for the fourth quarter was $231.2 million, or 38.5% of net sales, which was up 90 basis points from 37.6% of net sales in the prior year. For the quarter, operating margins declined by 30 basis points year-over-year to 1.7%.  Inventory at the end of the fourth quarter was $547.5 million, up 8.7% from $503.7 million in the prior year. Wholesale inventory was up 8.7%, while Famous Footwear inventory was up 8.6%.  At quarter-end, Brown Shoe Company had $7.0 million of borrowings against its revolving credit facility and $82.5 million in cash and equivalents. Net of short term borrowings, cash and equivalents were $75.5 million, an improvement of $112.3 million versus 2012. The company’s debt-to-capital ratio improved to 30.1% from 41.6% in the fourth quarter of 2012.  Full Year Highlights  Famous Footwear reported full year 2013 sales of $1,527.5 million, a 0.9% year-over-year improvement, while annual operating earnings of $107.1 million were up 13.8%. For 2013, same-store-sales^(1) were up 2.9% over 2012. During the year, 62 stores were closed or relocated and 51 new stores were added, as average revenue per square foot improved to $207.  Wholesale Operations sales of $763.7 million (including $1.6 million of sales from exited brands) were up 5.3% over $724.9 million in 2013. In the Healthy Living portfolio, wholesale sales of $421.3 million were up 2.4% in 2013. For Contemporary Fashion, wholesale sales of $340.8 million were up 12.7%.  For 2013, gross margin of 40.4% improved 50 basis points over 2012. SG&A for 2013 was $909.7 million, or 36.2% of net sales up 20 basis points from 36.0% in the prior year. Operating earnings improved 32.4% to $98.6 million from $74.5 million in 2012. For the year, operating margins improved by 90 basis points to 3.9%. Capital expenditures of $49.2 million were down 22.8% from $63.7 million in the prior year.  Financial Review and 2014 Outlook  “At Brown Shoe Company, we executed on our strategy in 2013 and improved our operating performance, delivering steady improvement toward our long term financial goals by driving sustainable profitability,” said Russ Hammer, chief financial officer of Brown Shoe Company. “For 2014, we expect to continue to deliver toward our long term goals, while balancing our realistic outlook in terms of the economy, the consumer and the weather -- especially this early in the year. As a result, we believe we will deliver 2014 earnings per share of $1.45 to $1.55, or a 3% to 10% increase over 2013.”  Guidance Metric                  FY’14 Consolidated net sales           $2.58 to $2.60 billion Famous Footwear same-store sales Up low-single digits Specialty Retail net sales       Down low-single digits Wholesale Operations net sales   Up low- to mid-single digits Gross margin                     Up approximately 10 bps SG&A                             $920 to $930 million Net interest expense             $20 to $21 million Effective tax rate               33% to 35% Earnings per diluted share       $1.45 to $1.55 Depreciation and amortization    $51 to $54 million Capital expenditures             $53 to $57 million  Investor Conference Call  Brown Shoe Company will webcast an investor conference call at 9:00 a.m. ET today, March 14, 2014. The webcast and slides will be available at investor.brownshoe.com/news/events. 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 55795350.  A replay will be available for a limited period at investor.brownshoe.com/news/events/archive. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 55795350 through Friday, March 28, 2014.  (1) Same-Store-Sales: For comparability purposes, same-store-sales for the fourth quarter of 2013 are calculated based on retail sales for weeks 40 through 52 in 2013 as compared to weeks 41 through 53 in 2012. This adjustment is due to the impact of the 53^rd week of sales in the fourth quarter of fiscal 2012. The calculation for the fourth quarter of 2013 appropriately reflects the change in same-store-sales on a true retail calendar basis. For the full year, same-store-sales are based on weeks one to 52 for 2013 versus weeks two to 53 for 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 gross profit, 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. Reconciliations to the applicable GAAP financial measures have been included in the attached schedules.  Definitions: All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings 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 and other countries, where Brown Shoe Company relies 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 Feb. 2, 2013, 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 $2.5 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 over 1,200 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, LifeStride and Ryka. Our Contemporary Fashion brands — Via Spiga, 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)                 (Unaudited)                        13 Weeks     14 Weeks     52 Weeks       53 Weeks                        Ended         Ended         Ended           Ended (Thousands, except     February 1,   February 2,   February 1,     February 2, per share data)        2014          2013          2014            2013                                                                     Net sales              $ 599,962     $ 618,735     $ 2,513,113     $ 2,477,796 Cost of goods sold      358,555     371,403     1,498,825     1,489,221                                                                      Gross profit            241,407     247,332     1,014,288     988,575                                                                        Selling and administrative           231,229       232,289       909,749         891,666 expenses Restructuring and other special charges,   -             2,771         1,262           22,431 net Impairment of assets    -           -           4,660         -          held for sale                                                                     Operating earnings      10,178      12,272      98,617        74,478                                                                         Interest expense         (5,087  )     (5,894  )     (21,254   )     (22,973   ) Interest income         95          86          377           322                                                                            Earnings before income taxes from continuing   5,186       6,464       77,740        51,827     operations                                                                     Income tax benefit      765         (1,381  )    (23,758   )    (16,656   ) (provision)                                                                     Net earnings from continuing              5,951       5,083       53,982        35,171     operations                                                                     Discontinued operations: Earnings (loss) from discontinued operations, net of tax   210           (1,080  )     (4,574    )     (4,437    ) of $134, $748, $5,922 and $3,066, respectively Disposition/impairment of discontinued operations, net of tax  -           -           (11,512   )    (3,530    ) of $0, $0, $0 and $2,247, respectively                                                                     Net earnings (loss) from discontinued       210         (1,080  )    (16,086   )    (7,967    ) operations                                                                     Net earnings            6,161       4,003       37,896        27,204                                                                         Net loss attributable to noncontrolling       (3      )    (36     )    (177      )    (287      ) interests                                                                     Net earnings attributable to Brown  $ 6,164      $ 4,039      $ 38,073       $ 27,491     Shoe Company, Inc.                                                                     Basic earnings (loss) per common share: From continuing        $ 0.14        $ 0.12        $ 1.25          $ 0.83 operations From discontinued       -           (0.03   )    (0.37     )    (0.19     ) operations Basic earnings per common share attributable to Brown Shoe Company,    $ 0.14       $ 0.09       $ 0.88         $ 0.64       Inc. shareholders                                                                     Diluted earnings (loss) per common share: From continuing        $ 0.14        $ 0.12        $ 1.25          $ 0.83 operations From discontinued       -           (0.03   )    (0.37     )    (0.19     ) operations Diluted earnings per common share attributable to Brown Shoe Company,    $ 0.14       $ 0.09       $ 0.88         $ 0.64       Inc. shareholders                                                                     Basic number of          41,560        40,774        41,356          40,659 shares Diluted number of       41,886      41,109      41,653        40,794     shares                                                              SCHEDULE 2                                                                BROWN SHOE COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                 (Unaudited) (Thousands)                                February 1, 2014   February 2, 2013 ASSETS                                                                Cash and cash equivalents                  $    82,546        $    68,223 Receivables, net                                129,217            111,392 Inventories, net                                547,531            503,688 Prepaid expenses and other current              33,136             44,730 assets Current assets - discontinued operations       119               44,395 Total current assets                           792,549           772,428                                                                Property and equipment, net                     143,560            144,856 Goodwill and intangible assets, net             73,673             79,703 Other assets                                    139,621            119,695 Noncurrent assets - discontinued               -                 54,577 operations Total assets                               $    1,149,403     $    1,171,259                                                                LIABILITIES AND EQUITY                                                                Borrowings under revolving credit          $    7,000         $    105,000 agreement Trade accounts payable                          226,602            213,660 Other accrued expenses                          152,545            139,904 Current liabilities - discontinued             708               10,545 operations Total current liabilities                      386,855           469,109                                                                Long-term debt                                  199,010            198,823 Deferred rent                                   38,593             33,711 Other liabilities                               47,583             36,719 Noncurrent liabilities - discontinued          -                 6,996 operations Total other liabilities                        285,186           276,249                                                                Total Brown Shoe Company, Inc.                  476,699            425,129 shareholders’ equity Noncontrolling interests                       663               772 Total equity                                   477,362           425,901 Total liabilities and equity               $    1,149,403     $    1,171,259                                                                      SCHEDULE 3                                                                                                                 BROWN SHOE COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF                        CASH FLOWS                                            (Unaudited)                                            52 Weeks Ended    53 Weeks Ended (Thousands)                                February 1, 2014   February 2, 2013 OPERATING ACTIVITIES: Net earnings                               $  37,896          $    27,204 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization                 55,329               54,783 Amortization of debt issuance costs and       2,513                2,561 debt discount Share-based compensation expense              5,567                6,489 Tax benefit related to share-based plans      (3,439      )        (944      ) Loss on disposal of facilities and            1,697                3,103 equipment Impairment charges for facilities and         1,636                4,132 equipment Impairment of assets held for sale            4,660                - Disposition/impairment of discontinued        11,512               3,530 operations Net loss on sale of subsidiaries              576                  - Deferred rent                                 4,882                1,350 Provision for doubtful accounts               551                  360 Changes in operating assets and liabilities, net of dispositions: Receivables                                   (17,570     )        27,984 Inventories                                   (44,852     )        28,623 Prepaid expenses and other current and        3,695                12,427 noncurrent assets Trade accounts payable                        12,951               32,091 Accrued expenses and other liabilities        24,888               (6,090    ) Other, net                                   1,540              334        Net cash provided by operating               104,032            197,937    activities                                                                INVESTING ACTIVITIES: Capital expenditures                          (49,203     )        (63,729   ) Net proceeds from sale of subsidiary          69,347               - Acquisition cost                             -                  (5,000    ) Net cash provided by (used for)              20,144             (68,729   ) investing activities                                                                FINANCING ACTIVITIES: Borrowings under revolving credit             1,129,000            805,000 agreement Repayments under revolving credit             (1,227,000  )        (901,000  ) agreement Dividends paid                                (12,105     )        (12,011   ) Issuance of common stock under                804                  (1,700    ) share-based plans, net Tax benefit related to share-based plans      3,439                944 Contributions by noncontrolling interest     50                 -          Net cash used for financing activities       (105,812    )       (108,767  ) Effect of exchange rate changes on cash      (4,041      )       100        and cash equivalents Increase in cash and cash equivalents         14,323               20,541 Cash and cash equivalents at beginning       68,223             47,682     of period                                                                Cash and cash equivalents at end of        $  82,546         $    68,223     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)                                                                                                                    (Unaudited)                        (Unaudited)                            13 Weeks Ended February 1, 2014    14 Weeks Ended February 2, 2013                            Pre-Tax    Net Earnings                        Net Earnings                            Impact     Attributable Diluted    Pre-Tax     Attributable Diluted (Thousands, except per     of        to           Earnings  Impact of   to           Earnings share data)                Charges/   Brown Shoe   Per        Charges/    Brown Shoe   Per                            Other      Company,     Share      Other Items Company,     Share                            Items      Inc.                                Inc.                                                                                         GAAP earnings                         $   6,164    $  0.14                $  4,039     $  0.09                                                                                         Charges/Other Items - Continuing Operations: Portfolio realignment Business exits and cost    $ -            -           -       $ 2,983        1,851        0.05 reductions                                                                                         Charges/Other Items - Discontinued Operations: Portfolio realignment Business exits and cost      -            -           -         (41    )     (24    )     - reductions                                                                                    Total charges/other        $ -        $   -        $  -       $ 2,942    $  1,827      0.05 items                                                                                         Adjusted earnings                     $   6,164    $  0.14                $  5,866    $  0.14                                                                                                                                                                                                            52 Weeks Ended February 1, 2014    53 Weeks Ended February 2, 2013                            Pre-Tax    Net Earnings                        Net Earnings                            Impact     Attributable Diluted    Pre-Tax     Attributable Diluted (Thousands, except per     of        to           Earnings  Impact of   to           Earnings share data)                Charges/   Brown Shoe   Per        Charges/    Brown Shoe   Per                            Other      Company,     Share      Other Items Company,     Share                            Items      Inc.                                Inc.                                                                                         GAAP earnings                         $   38,073   $  0.88                $  27,491    $  0.64                                                                                         Charges/Other Items - Continuing Operations: Portfolio realignment Business exits and cost    $ 1,262        803         0.02    $ 21,855       14,291       0.33 reductions Non-cash                     4,660        4,660       0.11      -            -            - impairments/dispositions Organizational change       -           -          -        2,283      1,395      0.03 Total Continuing             5,922        5,463       0.13      24,138       15,686       0.36 Operations                                                                                         Charges/Other Items - Discontinued Operations: Portfolio realignment Business exits and cost      13,233       6,414       0.13      2,312        1,445        0.04 reductions Non-cash                     11,512       11,512      0.27      5,777        3,530        0.08 impairments/dispositions ASG integration-related     -           -          -        675        441        0.01 costs Total Discontinued           24,745       17,926      0.40      8,764        5,416        0.13 Operations                                                                                    Total charges/other        $ 30,667      23,389     0.53    $ 32,902     21,102     0.49 items                                                                                         Adjusted earnings                     $   61,462   $  1.41                $  48,593   $  1.13                                                                                             SCHEDULE 5                                                                                                                                                                                                                                                                             BROWN SHOE COMPANY, INC. SUMMARY FINANCIAL RESULTS BY SEGMENT (Unaudited)                                                                                                                                                                                                                                                                                                   SUMMARY FINANCIAL RESULTS                                                                                                                                                                   Famous Footwear              Wholesale Operations        Specialty Retail            Other                       Consolidated                  13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks                  Ended          Ended         Ended         Ended         Ended         Ended         Ended         Ended         Ended         Ended                  February       February 2,   February 1,   February 2,   February 1,   February 2,   February 1,   February 2,   February 1,   February 2,                  1, (Thousands)       2014         2013        2014        2013        2014        2013        2014        2013        2014        2013                                                                                                                                                      Net Sales        $ 347,394      $ 380,112     $ 196,336     $ 173,011     $ 56,232      $ 65,612      $ -           $ -           $ 599,962     $ 618,735                                                                                                                                                  Gross Profit     $ 158,095      $ 167,376     $ 60,334      $ 53,734      $ 22,978      $ 26,222      $ -           $ -           $ 241,407     $ 247,332 Adjusted Gross   $ 158,095      $ 167,376     $ 60,334      $ 53,862      $ 22,978      $ 26,305      $ -           $ -           $ 241,407     $ 247,543 Profit                                                                                                                                                  Gross Profit       45.5    %      44.0    %     30.7    %     31.1    %     40.9   %      40.0   %      -             -             40.2    %     40.0    % Rate Adjusted Gross     45.5    %      44.0    %     30.7    %     31.1    %     40.9   %      40.1   %      -             -             40.2    %     40.0    % Profit Rate                                                                                                                                                  Operating Earnings         $ 12,068       $ 19,731      $ 15,043      $ 4,413       $ (2,031 )    $ (1,299 )    $ (14,902 )   $ (10,573 )   $ 10,178      $ 12,272 (Loss) Adjusted Operating        $ 12,068       $ 19,813      $ 15,043      $ 7,123       $ (2,031 )    $ (1,108 )    $ (14,902 )   $ (10,573 )   $ 10,178      $ 15,255 Earnings (Loss)                                                                                                                                                  Operating Earnings           3.5     %      5.2     %     7.7     %     2.6     %     (3.6   %)     (2.0   %)     -             -             1.7     %     2.0     % (Loss) % Adjusted Operating          3.5     %      5.2     %     7.7     %     4.1     %     (3.6   %)     (1.7   %)     -             -             1.7     %     2.5     % Earnings (Loss) %                                                                                                                                                  Same-store Sales % (on a      (1.8    %)     4.4     %     -             -             1.3    %      (7.1   %)     -             -             -             - 13-week basis)                                                                                                                                                  Number of          1,044          1,055         -             -             179           222           -             -             1,223         1,277 Stores                                                                                                                                                                                                                                                                                RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)                                                                                                                                                                   Famous Footwear              Wholesale Operations        Specialty Retail            Other                       Consolidated                  13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks     13 Weeks     14 Weeks                  Ended          Ended         Ended         Ended         Ended         Ended         Ended         Ended         Ended         Ended                  February       February 2,   February 1,   February 2,   February 1,   February 2,   February 1,   February 2,   February 1,   February 2,                  1, (Thousands)       2014         2013        2014        2013        2014        2013        2014        2013        2014        2013                                                                                                                                                      Gross Profit     $ 158,095      $ 167,376     $ 60,334      $ 53,734      $ 22,978      $ 26,222      $ -           $ -           $ 241,407     $ 247,332                                                                                                                                                  Charges/Other Items: Portfolio realignment Business exits and cost           -              -             -             128           -             83            -             -             -             211 reductions                                                                                                                                        Total charges/other     -            -           -           128         -           83          -           -           -           211      items                                                                                                                                                  Adjusted Gross   $ 158,095     $ 167,376    $ 60,334     $ 53,862     $ 22,978     $ 26,305     $ -          $ -          $ 241,407    $ 247,543  Profit                                                                                                                                                                                                                                                                                                   Operating Earnings         $ 12,068       $ 19,731      $ 15,043      $ 4,413       $ (2,031 )    $ (1,299 )    $ (14,902 )   $ (10,573 )   $ 10,178      $ 12,272 (Loss)                                                                                                                                                  Charges/Other Items: Portfolio realignment Business exits and cost           -              82            -             2,710         -             191           -             -             -             2,983 reductions                                                                                                                                        Total charges/other     -            82          -           2,710       -           191         -           -           -           2,983    items                                                                                                                                                  Adjusted Operating        $ 12,068      $ 19,813     $ 15,043     $ 7,123      $ (2,031 )    $ (1,108 )    $ (14,902 )   $ (10,573 )   $ 10,178     $ 15,255   Earnings (Loss)  SCHEDULE 5 -                                                                                                                                                   CONTINUED                                                                                                                                                                           BROWN SHOE COMPANY, INC. SUMMARY FINANCIAL RESULTS BY SEGMENT (Unaudited)                                                                                                                                                                                                                                                                                                              SUMMARY FINANCIAL RESULTS                                                                                                                                                                                            Famous Footwear                    Wholesale Operations           Specialty Retail                 Other                        Consolidated                  52 Weeks Ended    53 Weeks Ended    52 Weeks        53 Weeks        52 Weeks Ended   53 Weeks Ended   52 Weeks        53 Weeks        52 Weeks Ended    53 Weeks                                                      Ended           Ended                                             Ended           Ended                             Ended                  February 1,       February 2,       February 1,     February 2,     February 1,      February 2,      February 1,     February 2,     February 1,       February 2, (Thousands)       2014           2013           2014         2013         2014          2013          2014         2013         2014           2013                                                                                                                                                                                 Net Sales        $ 1,527,537       $ 1,514,349       $ 763,670       $ 724,907       $ 221,906        $ 238,540        $ -             $ -             $ 2,513,113       $ 2,477,796                                                                                                                                                                           Gross Profit     $ 681,117         $ 666,094         $ 239,192       $ 223,798       $ 93,979         $ 98,683         $ -             $ -             $ 1,014,288       $ 988,575 Adjusted Gross   $ 681,117         $ 666,094         $ 239,192       $ 225,125       $ 93,979         $ 99,062         $ -             $ -             $ 1,014,288       $ 990,281 Profit                                                                                                                                                                           Gross Profit       44.6      %       44.0      %       31.3    %       30.9    %       42.4    %        41.4    %        -               -               40.4      %       39.9      % Rate Adjusted Gross     44.6      %       44.0      %       31.3    %       31.1    %       42.4    %        41.5    %        -               -               40.4      %       40.0      % Profit Rate                                                                                                                                                                           Operating Earnings         $ 107,126         $ 94,096          $ 43,130        $ 30,247        $ (4,965  )      $ (8,850  )      $ (46,674 )     $ (41,015 )     $ 98,617          $ 74,478 (Loss) Adjusted Operating        $ 107,126         $ 101,865         $ 49,036        $ 39,445        $ (4,965  )      $ (4,755  )      $ (46,658 )     $ (37,939 )     $ 104,539         $ 98,616 Earnings (Loss)                                                                                                                                                                           Operating Earnings           7.0       %       6.2       %       5.6     %       4.2     %       (2.2    %)       (3.7    %)       -               -               3.9       %       3.0       % (Loss) % Adjusted Operating          7.0       %       6.7       %       6.4     %       5.4     %       (2.2    %)       (2.0    %)       -               -               4.2       %       4.0       % Earnings (Loss) %                                                                                                                                                                           Same-store Sales % (on a      2.9       %       4.5       %       -               -               1.6     %        0.6     %        -               -               -                 - 52-week basis)                                                                                                                                                                           Number of          1,044             1,055             -               -               179              222              -               -               1,223             1,277 Stores                                                                                                                                                                                                                                                                                                                                   RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)                                                                                                                                                                                            Famous Footwear                    Wholesale Operations           Specialty Retail                 Other                          Consolidated                  52 Weeks Ended    53 Weeks Ended    52 Weeks        53 Weeks        52 Weeks Ended   53 Weeks Ended   52 Weeks        53 Weeks        52 Weeks Ended    53 Weeks                                                      Ended           Ended                                             Ended           Ended                             Ended                  February 1,       February 2,       February 1,     February 2,     February 1,      February 2,      February 1,     February 2,     February 1,       February 2, (Thousands)       2014           2013           2014         2013          2014          2013          2014         2013         2014           2013                                                                                                                                                                                 Gross Profit     $ 681,117         $ 666,094         $ 239,192       $ 223,798       $ 93,979         $ 98,683         $ -             $ -             $ 1,014,288       $ 988,575                                                                                                                                                                           Charges/Other Items: Portfolio realignment Business exits and cost           -                 -                 -               1,327           -                379              -               -               -                 1,706 reductions                                                                                                                                                                  Total charges/other     -               -               -             1,327         -              379            -             -             -               1,706      items                                                                                                                                                                           Adjusted Gross   $ 681,117        $ 666,094        $ 239,192      $ 225,125      $ 93,979        $ 99,062        $ -            $ -            $ 1,014,288      $ 990,281    Profit                                                                                                                                                                                                                                                                                                                                                     Operating Earnings         $ 107,126         $ 94,096          $ 43,130        $ 30,247        $ (4,965  )      $ (8,850  )      $ (46,674 )     $ (41,015 )     $ 98,617          $ 74,478 (Loss)                                                                                                                                                                           Charges/Other Items: Portfolio realignment Non-cash impairment         -                 -                 4,660           -               -                -                -               -               4,660             - charges Business exits and cost           -                 7,769             1,246           9,198           -                4,095            16              793             1,262             21,855 reductions Organizational     -                 -                 -               -               -                -                -               2,283           -                 2,283 change                                                                                                                                                                  Total charges/other     -               7,769           5,906         9,198         -              4,095          16            3,076         5,922           24,138     items                                                                                                                                                                           Adjusted Operating        $ 107,126        $ 101,865        $ 49,036       $ 39,445       $ (4,965  )      $ (4,755  )      $ (46,658 )     $ (37,939 )     $ 104,539        $ 98,616     Earnings (Loss)                                                                 SCHEDULE 6                                                                      BROWN SHOE COMPANY, INC. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE RECONCILIATION                                                                                        (Unaudited)                     (Unaudited)                   13 Weeks       14 Weeks       52 Weeks         53 Weeks                   Ended           Ended           Ended             Ended                   February 1,     February 2,     February 1,       February                                                                     2, (Thousands, except per          2014          2013          2014           2013    share data)                                                                      Net earnings attributable to Brown Shoe Company, Inc.: Net earnings from continuing   $  5,951        $  5,083        $  53,982         $ 35,171 operations Net loss attributable to      3               36              177              287 noncontrolling interests Net earnings allocated to        (235    )      (252    )      (2,304   )      (1,757 ) participating securities Net earnings from continuing     5,719         4,867         51,855         33,701  operations                                                                      Net earnings (loss) from          210             (1,080  )       (16,086  )       (7,967 ) discontinued operations Net (earnings) loss allocated to                  (8      )      53            687            392     participating securities Net earnings (loss) from         202           (1,027  )      (15,399  )      (7,575 ) discontinued operations                                                                      Net earnings attributable to Brown Shoe Company, Inc. after             $  5,921       $  3,840       $  36,456        $ 26,126  allocation of earnings to participating securities                                                                                                                                           Basic and diluted common shares attributable to Brown Shoe Company, Inc.: Basic common shares for continuing           41,560          40,774          41,356           40,659 operations and discontinued operations Dilutive effect of share-based awards for continuing          326           335           297            135     operations and discontinued operations Diluted common shares for continuing operations and discontinued        41,886        41,109        41,653         40,794  operations attributable to Brown Shoe Company, Inc.                                                                      Basic earnings (loss) per common share: From continuing   $  0.14         $  0.12         $  1.25           $ 0.83 operations From discontinued        -             (0.03   )      (0.37    )      (0.19  ) operations Basic earnings per common share attributable to   $  0.14        $  0.09        $  0.88          $ 0.64    Brown Shoe Company, Inc. shareholders                                                                      Diluted earnings (loss) per common share: From continuing   $  0.14         $  0.12         $  1.25           $ 0.83 operations From discontinued        -             (0.03   )      (0.37    )      (0.19  ) operations Diluted earnings per common share attributable to   $  0.14        $  0.09        $  0.88          $ 0.64    Brown Shoe Company, Inc. shareholders                                                                       SCHEDULE 7                                                                                                                         BROWN SHOE COMPANY, INC. BASIC AND DILUTED ADJUSTED EARNINGS (LOSS)   PER SHARE RECONCILIATION                                                                                        (Unaudited)                     (Unaudited)                    13 Weeks       14 Weeks       52 Weeks       53 Weeks                    Ended           Ended           Ended           Ended                    February 1,     February 2,     February 1,     February 2, (Thousands, except per share     2014          2013          2014          2013    data)                                                                     Adjusted net earnings attributable to Brown Shoe Company, Inc.: Adjusted net earnings from      $  5,951        $  6,934        $  59,445       $  50,857 continuing operations Net loss attributable to       3               36              177             287 noncontrolling interests Net earnings allocated to         (235    )      (344    )      (2,538  )      (2,529 ) participating securities Adjusted net earnings from        5,719         6,626         57,084        48,615  continuing operations                                                                     Adjusted net earnings (loss) from                  210             (1,104  )       1,840           (2,551 ) discontinued operations Net (earnings) loss allocated       (8      )      55            (79     )      125     to participating securities Net earnings (loss) from          202           (1,049  )      1,761         (2,426 ) discontinued operations                                                                     Adjusted net earnings attributable to Brown Shoe Company, Inc.      $  5,921       $  5,577       $  58,845      $  46,189  after allocation of earnings to participating securities                                                                                                                                         Basic and diluted common shares attributable to Brown Shoe Company, Inc.: Basic common shares for continuing            41,560          40,774          41,356          40,659 operations and discontinued operations Dilutive effect of share-based awards for continuing           326           335           297           135     operations and discontinued operations Diluted common shares for continuing operations and discontinued         41,886        41,109        41,653        40,794  operations attributable to Brown Shoe Company, Inc.                                                                     Basic adjusted earnings (loss) per common share: From continuing    $  0.14         $  0.16         $  1.38         $  1.20 operations From discontinued         -             (0.02   )      0.04          (0.06  ) operations Basic adjusted earnings per common share attributable to    $  0.14        $  0.14        $  1.42        $  1.14    Brown Shoe Company, Inc. shareholders                                                                     Diluted adjusted earnings (loss) per common share: From continuing    $  0.14         $  0.16         $  1.37         $  1.19 operations From discontinued         -             (0.02   )      0.04          (0.06  ) operations Diluted adjusted earnings per common share attributable to    $  0.14        $  0.14        $  1.41        $  1.13    Brown Shoe Company, Inc. shareholders  Contact:  Brown Shoe Company Investors Peggy Reilly Tharp, 314-854-4134 ptharp@brownshoe.com or Media Brown Shoe Company Kelly Malone, 314-854-4093 kmalone@brownshoe.com  
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