Famous Footwear 2013 Annual Report Download - page 34

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32 2013 BROWN SHOE COMPANY, INC. FORM 10-K
Selling and Administrative Expenses
Selling and administrative expenses decreased $4.9 million, or 4.7%, to $99.0 million during 2013 compared to
$103.9 million last year, primarily resulting from the lower Canadian dollar exchange rate, the lower store count,
and additional expenses in 2012 resulting from the inclusion of the 53rd week. As a percentage of net sales, selling
and administrative expenses increased to 44.6% in 2013 compared to 43.5% last year.
Selling and administrative expenses decreased $8.2 million, or 7.4%, to $103.9 million during 2012 compared to
$112.1 million in 2011, primarily resulting from the lower store count, partially oset by higher expected payouts
under both our cash and stock-based incentive plans and the impact of the 53rd week in 2012. As a percentage of
net sales, selling and administrative expenses decreased to 43.5% in 2012 compared to 43.9% in 2011.
Restructuring and Other Special Charges, Net
We incurred no restructuring and other special charges, net during 2013 compared to $3.7 million last year and
$0.6 million in 2011 as a result of closing our Via Spiga, F.X. LaSalle, and Brown Shoe Closet stores as part of our
portfolio realignment initiatives.
Operating Loss
Our operating loss decreased $3.9 million, or 43.9%, to $5.0 million for 2013 compared to $8.9 million last year,
primarily due to decreases in selling and administrative expenses and restructuring and other special charges, net,
partially oset by a decrease in net sales and corresponding gross profit, as described above.
Our operating loss increased $1.3 million, or 16.0%, to $8.9 million for 2012 compared to $7.6 million in 2011, primarily
due to a decrease in net sales and an increase in restructuring and other special charges, net, partially oset by a
decrease in selling and administrative expenses, as described above.
OTHER
The Other segment includes unallocated corporate administrative and other costs and recoveries. The segment reported
costs of $46.7 million, $41.0 million, and $36.1 million in 2013, 2012, and 2011, respectively.
The $5.7 million increase in costs from 2012 to 2013 was primarily a result of an increase in selling and administrative
expenses due to higher consulting fees and higher anticipated payments under our cash and stock-based incentive plans.
There were several factors impacting the $4.9 million increase in costs from 2011 to 2012, as follows:
• Incentive compensation – Our selling and administrative expenses were higher by $6.9 million during 2012,
compared to 2011, due to higher anticipated payments under our cash and stock-based incentive plans.
• Director compensation – Our expenses related to director compensation increased $3.2 million during
2012, compared to 2011, primarily reflecting the impact of the Company’s higher share price on certain of
the variable share-based compensation plans.
• Technology professional services and consulting fees – Our selling and administrative expenses were lower
by $2.0 million during 2012 compared to 2011.
• Organizational changes – We incurred costs of $2.3 million in 2012, related to corporate organizational
changes, with no corresponding costs in 2011.
• Portfolio realignment costs – We incurred costs of $0.9 million during 2012, related to our portfolio
realignment initiatives, as compared to $3.3 million in 2011.
• ERP stabilization – We incurred professional fees of $1.9 million during 2011 to assist with the stabilization
of our ERP platform.
RESTRUCTURING AND OTHER INITIATIVES
During 2013, 2012, and 2011, we recorded portfolio realignment initiative costs of $30.7 million, $29.9 million, and
$19.2 million, respectively. During 2012, we incurred costs of $2.3 million related to an organizational change at our
corporate headquarters, with no corresponding costs in 2013 or 2011. During 2012 and 2011, we incurred acquisition
and integration-related costs of $0.7 million and $6.5 million, respectively, with no corresponding costs in 2013.
See the Financial Highlights section above and Note 2 and Note 4 to the consolidated financial statements for
additional information related to these charges.
IMPACT OF INFLATION AND CHANGING PRICES
While we have felt the eects of inflation on our business and results of operations, it has not had a significant impact on
our business over the last three years. Inflation can have a long-term impact on our business because increasing costs of
materials and labor may impact our ability to maintain satisfactory profit rates. For example, our products are manufactured