Famous Footwear 2013 Annual Report Download - page 32

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30 2013 BROWN SHOE COMPANY, INC. FORM 10-K
WHOLESALE OPERATIONS
2013 2012 2011
% of % of % of
($ millions) Net Sales Net Sales Net Sales
Operating Result
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 763.7 100.0% $ 724.9 100.0% $ 722.8 100.0%
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524.5 68.7% 501.1 69.1% 498.6 69.0%
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239.2 31.3% 223.8 30.9% 224.2 31.0%
Selling and administrative expenses . . . . . . . . . . . . . . . . . . 190.2 24.9% 185.7 25.6% 199.5 27.6%
Restructuring and other special charges, net . . . . . . . . . . . . . 1.2 0.2% 7.9 1.1% 13.0 1.8%
Impairment of assets held for sale . . . . . . . . . . . . . . . . . . . 4.7 0.6% – – – –
Operating earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43.1 5.6% $ 30.2 4.2% $ 11.7 1.6%
Key Metric
Unfilled order position at year-end . . . . . . . . . . . . . . . . . . . $ 273.9 $ 274.9 $ 236.3
Net Sales
Net sales increased $38.8 million, or 5.3%, to $763.7 million in 2013 compared to $724.9 million last year. The increase
reflects strong performance from many of our brands, including Sam Edelman, Franco Sarto, LifeStride, and Vince,
partially oset by decreases in Via Spiga, Fergie, and Ryka. Our unfilled order position decreased $1.0 million, or 0.4%,
to $273.9 million at the end of 2013, as compared to $274.9 million at the end of 2012.
Net sales increased $2.1 million, or 0.3%, to $724.9 million in 2012 compared to $722.8 million in 2011. The increase was
primarily attributable to increases in our Franco Sarto, Sam Edelman, Fergie, and LifeStride brands. Our unfilled order
position increased $38.6 million, or 16.3%, to $274.9 million at the end of 2012, as compared to $236.3 million at the end
of 2011, primarily due to strength in our Sam Edelman, Dr. Scholl’s, and LifeStride brands.
 
Gross Profit
Gross profit increased $15.4 million, or 6.9%, to $239.2 million in 2013 compared to $223.8 million last year reflecting
higher sales and a higher gross profit rate due in part to lower inventory markdowns and lower royalty expense.
Our gross profit rate increased to 31.3% in 2013 as compared to 30.9% in 2012 primarily due to a more profitable
brand mix and lower inventory markdowns.
Gross profit decreased $0.4 million, or 0.2%, to $223.8 million in 2012 compared to $224.2 million in 2011 reflecting
higher inventory markdowns. Our gross profit rate of 30.9% in 2012 was relatively consistent with the 31.0% in 2011.
Selling and Administrative Expenses
Selling and administrative expenses increased $4.5 million, or 2.4%, to $190.2 million during 2013 compared to
$185.7 million last year due to an increase in anticipated payments under our cash and stock-based incentive plans
and higher warehouse expenses, partially oset by lower marketing expenses. As a percentage of net sales, selling
and administrative expenses decreased to 24.9% in 2013 from 25.6% last year, reflecting the above named factors.
Selling and administrative expenses decreased $13.8 million, or 6.9%, to $185.7 million during 2012 compared to
$199.5 million in 2011, due in part to our lower cost structure resulting from exiting certain brands under our portfolio
realignment initiatives, partially oset by an increase in anticipated payments under our cash and stock-based
incentive plans and incremental expenses associated with the 53rd week in 2012. As a percentage of net sales, selling
and administrative expenses decreased to 25.6% in 2012 from 27.6% in 2011, reflecting the above named factors.
Restructuring and Other Special Charges, Net
Restructuring and other special charges, net, decreased $6.7 million to $1.2 million compared to $7.9 million last year
as a result of our portfolio realignment initiatives, which were substantially complete in early 2013. Expenses related
to our portfolio realignment initiative declined $5.1 million in 2012 to $7.9 million, from $13.0 million in 2011. Refer to
Note 4 to the consolidated financial statements for additional information related to these charges and recoveries.
Impairment of Assets Held for Sale
During 2013, the Company sold certain of its supply chain and sourcing assets. In conjunction with the sale, the
Company recognized an impairment charge of $4.7 million, representing the dierence between the fair value of
the assets, less costs to sell, and the carrying value of the assets.
Operating Earnings
Operating earnings increased $12.9 million, or 42.6%, to $43.1 million in 2013 compared to $30.2 million last year.
The increase was primarily driven by higher net sales and corresponding gross profit, partially oset by higher
selling and administrative expenses. As a percentage of net sales, operating earnings increased to 5.6% in 2013
compared to 4.2% last year.