Famous Footwear 2012 Annual Report Download - page 11

2012 BROWN SHOE COMPANY, INC. FORM 10-K 9
Famous Footwear stores are located in strip shopping centers as well as outlet and regional malls in all 50 states and Guam.
The breakdown by venue is as follows at the end of each of the last three fiscal years:
2012 2011 2010
Strip centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726 744 762
Outlet malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 169 174
Regional malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 176 174
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,055 1,089 1,110
Stores open at the end of 2012 and 2011 averaged approximately 6,800 and 6,900 square feet, respectively. Total square
footage at the end of 2012 decreased 3.7% to 7.2 million square feet compared to 7.5 million at the end of 2011. We expect
to open approximately 55 new stores and close approximately 60 stores in 2013. New stores typically experience an initial
start-up period characterized by lower sales and operating earnings than what is generally achieved by more mature stores
or the division as a whole. While the duration of this start-up period may vary by type of store, economic environment and
geographic location, new stores typically reach a normal level of profitability within approximately four years.
Sales per square foot were $199 in 2012, which was up from $186 in 2011. Same-store sales increased 4.5% during 2012, on
a 52-week basis. Same-store sales changes are calculated by comparing the sales in stores that have been open at least
13 months. Relocated stores are treated as new stores, and closed stores are excluded from the calculation. Sales change
from new and closed stores, net, reflects the change in net sales due to stores that have been opened or closed during the
period and are thereby excluded from the same-store sales calculation. E-commerce sales for those e-commerce websites
that function as an extension of a retail chain are included in the same-store sales calculation.
Famous Footwear relies on merchandise allocation systems and processes that use allocation criteria, consumer
segmentation and inventory data in an eort to ensure stores are adequately stocked with products and to dierentiate the
needs of each store based on location, consumer segmentation and other factors. Famous Footwear’s distribution systems
allow for merchandise to be delivered to each store weekly, or on a more frequent basis, as needed. Famous Footwear also
utilizes regional third-party pooled distribution sites across the country. Famous Footwear’s in-store point-of-sale systems
provide detailed sales transaction data to our corporate oce for daily update and analysis in the perpetual inventory
and merchandise allocation systems. Certain of these systems also are used for training employees and communication
between the stores and corporate oce.
Famous Footwear’s marketing programs include national television, print, digital marketing and social networking, in-
store advertisements and radio, all of which are designed to further develop and reinforce the Famous Footwear concept
and strengthen our connection with consumers. We believe the success of our campaigns is attributable to highlighting
key categories and tailoring the timing of such messaging to adapt to seasonal shopping patterns. In 2012, we spent
approximately $55.9 million to advertise and market Famous Footwear to our target consumer, a portion of which was
recovered from suppliers. Famous Footwear has a robust loyalty program (“Rewards”), which informs and rewards frequent
consumers with product previews, earned incentives based upon purchase continuity and other periodic promotional
oers. In 2012, approximately 66% of our Famous Footwear net sales were generated by our Rewards members. During the
year, we expanded our eorts to connect with and engage our customers to build a strong brand preference for Famous
Footwear through our loyalty program. In 2013, we will continue to seek new and expand existing channels for consumers
to connect with Famous Footwear (beyond email, Facebook, Twitter, YouTube and proprietary mobile applications) to drive
our fans from the digital world into profitable and loyal consumers in our omni-channel selling environments.
Specialty Retail
Our Specialty Retail segment, composed of 222 stores as of February 2, 2013, includes the following retail concepts, Shoes.com
and our other e-commerce businesses, with the exception of Famous.com, which is included in the Famous Footwear segment.
Naturalizer
Naturalizer retail stores are a showcase for our Naturalizer brand of women’s shoes. These stores are designed and
merchandised to appeal to the Naturalizer consumer, who is style and comfort conscious and seeks quality and value in her
footwear selections. The Naturalizer stores oer a selection of women’s footwear styles, including casual, dress, sandals and
boots, primarily under the Naturalizer brand. Retail price points typically range from $69 for shoes to $199 for boots. The
majority of products sold in our retail stores are purchased from our Wholesale Operations segment at a customary gross
profit rate.
At the end of 2012, we operated 100 Naturalizer stores in the United States (including a store in Guam) and 90 Naturalizer
stores in Canada. Of the total 190 stores, approximately 55% are located in regional malls, with a few stores having street
locations, and average approximately 1,200 square feet in size. The other 45% of stores are located in outlet malls and