Famous Footwear 2004 Annual Report Download - page 25

Table of Contents
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
NATURALIZER RETAIL
2003 2002 2001
% of % of % of
($ millions, except sales per square foot) Net Sales Net Sales Net Sales
Operating Results
Net sales $189.2 100.0% $195.4 100.0% $206.9 100.0%
Cost of goods sold 98.9 52.3% 99.0 50.7% 109.9 53.1%
Gross profit 90.3 47.7% 96.4 49.3% 97.0 46.9%
Selling and administrative expenses 94.3 49.8% 95.0 48.6% 115.8 56.0%
Operating earnings (loss) $(4.0) (2.1)% $1.4 0.7% $(18.8) (9.1)%
Key Metrics
Same-store sales % change — United States 1.1% 4.3% 3.8%
Same-store sales % change — Canada (4.1)% (6.0)% 6.3%
Same-store sales $ change $(1.2) $2.4 $8.2
Sales decline from net fewer stores $(13.2) $(13.8) $(2.3)
Impact of changes in Canadian exchange rate on sales $8.2 $(0.1) $(2.5)
Sales per square foot $318 $301 $ 290
Square footage (thousand sq. ft.) 572 582 676
Stores opened 4 22 26
Stores closed 15 89 51
Ending stores 378 389 456
Net Sales
Our Naturalizer Retail division operates stores throughout the United States and Canada, primarily under the Naturalizer and F.X. LaSalle
names.
Net sales decreased $6.2 million, or 3.2%, to $189.2 million in fiscal year 2003 and decreased $11.5 million, or 5.6%, to $195.4 million in
fiscal year 2002. The 2003 sales were below expectations and declined as a result of lower same-store sales in Canada and fewer stores
open in the United States, partially offset by the effect of changes in the Canadian dollar exchange rate. Same-store sales decreased in
Canada by 4.1%, but increased in the United States by 1.1%, led by sales at the division’s outlet stores. The Canadian stores’ sales declined
as a result of a difficult retail climate and additional markdowns as efforts were begun to transition from a substantial inventory position in
Canadian produced footwear to more fashionable imports. In 2003, the division opened 4 stores and closed 15 and operated 36 fewer average
stores in 2003 than in 2002. The decline in the number of stores to 378 at the end of 2003, from 389 at the end of 2002 and 456 at the end of
2001, reflects the program to close a large number of underperforming domestic stores. Sales per square foot increased to $318 in 2003 from
$301 in 2002 and $290 in 2001. However, using constant exchange rates for the Canadian stores’ sales, sales per square foot were flat in
2003 compared to 2002. Total square footage declined 1.7% to 0.6 million.
During 2002, Naturalizer Retail experienced lower sales primarily due to fewer stores open, partially offset by a 4.3% increase in same-store
sales in the ongoing domestic stores, led by gains in the division’s outlet stores and catalog/ Internet business. Canadian same-store sales
declined 6.0%. The division substantially completed its program to close 106 under-performing domestic stores near the end of 2002. During
2002, Naturalizer Retail opened 22 stores and closed 89, and square footage declined 13.9% to 0.6 million in 2002 from 0.7 million in 2001.
Sales per square foot increased 3.8% to $301 in 2002 from $290 in 2001.
Gross Profit
Gross profit as a percent of sales decreased to 47.7% in 2003 from 49.3% in 2002, or a difference of 1.6%. This decline, as a percent of
sales, is principally due to a 0.5% decline in initial markups, a 0.9% increase in markdowns, a 0.1% increase in inbound freight costs and a
0.1% increase in shrinkage. The increase in markdowns is principally a result of the transition from a substantial inventory position in
Canadian produced footwear to imports.
Gross profit as a percent of sales increased to 49.3% in 2002 from 46.9% in 2001, or a difference of 2.4%. This improvement, as a percent
of sales, is principally due to a 1.8% decrease in markdowns, a 0.3% improvement in shrinkage and a 0.3% improvement in initial
markups. The decrease in markdowns in 2002 was primarily due to the
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