Famous Footwear 2013 Annual Report Download - page 21

2013 BROWN SHOE COMPANY, INC. FORM 10-K 19
If we are unable to maintain working relationships with our major branded suppliers, our business, results of operations,
financial condition, and cash flows may be adversely impacted.
Our Famous Footwear segment purchases a substantial portion of its footwear products from major branded suppliers.
As is common in the industry, we do not have any long-term contracts with our suppliers. In addition, the success of our
financial performance is dependent on the ability of Famous Footwear to obtain products from our suppliers on a timely
basis and on acceptable terms. While we believe our relationships with our current suppliers are good, the loss of any of
our major suppliers or product developed exclusively for Famous Footwear could have a material adverse eect on our
business, financial condition, and results of operations. In addition, negative trends in global economic conditions may
adversely impact our suppliers. If these third parties do not perform their obligations or are unable to provide us with the
materials and services we need at prices and terms that are acceptable to us, our ability to meet our consumers’ demand
could be adversely aected.
Our quarterly sales and earnings may fluctuate, and securities analysts may not accurately estimate our financial results,
which may result in volatility in, or a decline in, our stock price.
Our quarterly sales and earnings can vary due to a number of factors, many of which are beyond our control,
including the following:
• Our Famous Footwear retail business is seasonally weighted to the back-to-school season, which falls in our third
fiscal quarter. As a result, the success of our back-to-school oering, which is aected by our ability to anticipate
consumer demand and fashion trends, could have a disproportionate impact on our full year results.
• In our wholesale business, sales of footwear are dependent on orders from our major customers, and they may
change delivery schedules, change the mix of products they order, or cancel orders without penalty.
• Our wholesale customers set the delivery schedule for shipments of our products, which could cause shifts of sales
between quarters.
• Our estimated annual tax rate is based on projections of our domestic and international operating results for the year,
which we review and revise as necessary each quarter.
• Our earnings are also sensitive to a number of factors that are beyond our control, including manufacturing and
transportation costs, changes in product sales mix, geographic sales trends, weather conditions, consumer sentiment,
and currency exchange rate fluctuations.
As a result of these specific and other general factors, our operating results will vary from quarter to quarter, and the
results for any particular quarter may not be indicative of results for the full year. Any shortfall in sales or earnings from
the levels expected by investors or securities analysts could cause a decrease in the trading price of our common stock.
In addition, various securities analysts follow our financial results and issue reports on us. These reports include information
about our historical financial results as well as the analysts’ estimates of our future performance. The analysts’ estimates
are based upon their own opinions and are often dierent from our estimates or expectations. If our operating results are
below the estimates or expectations of public market analysts and investors, our stock price could decline.
Changes in tax laws, policies, and treaties could result in higher taxes, lower profitability, and increased volatility in our
financial results.
Our financial results are significantly impacted by our eective tax rates, for both domestic and international operations.
Our eective income tax rate could be adversely aected by factors such as changes in the mix of earnings in countries
with diering statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in permitted
deductions, changes in tax laws, interpretations, policies and treaties, the outcome of income tax audits in various
jurisdictions, and any repatriation of earnings from our international operations. The occurrence of such events may
result in higher taxes, lower profitability, and increased volatility in our financial results.
Transitional challenges with business acquisitions or divestitures could result in the inability to achieve our strategic and
operating goals.
Periodically, we pursue acquisitions of other companies or businesses and divestitures of businesses. In either case, we
may not achieve our strategic and operating goals through such activity. For example, although we review the records of
acquisition candidates, the review may not reveal all existing or potential problems. As a result, we may not accurately
assess the value of the business and may, accordingly, ultimately assume unknown adverse operating conditions and/or
unanticipated liabilities. In addition, the acquired business may not perform as well as expected. We face the risk that the
returns on acquisitions will not support the expenditures or indebtedness incurred to acquire or launch such businesses.
We also face the risk that we will not be able to integrate acquisitions into our existing operations eectively. Integration
of new businesses may be hindered by, among other things, diering procedures, including internal controls, business
practices, and technology systems. We may need to allocate more management resources to integration than we planned,
which may adversely aect our ability to pursue other profitable activities. In addition, divesting a business may impede
progress toward strategic and operating goals. In connection with a divestiture, we may not successfully divest a business