Famous Footwear 2002 Annual Report Download - page 5

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Introduced in 1927, Naturalizer is one of the nation's leading women's footwear brands and is the Company's flagship brand.
Naturalizer products emphasize style, quality, value, comfort and fit with classic, relevant and up-to-date styling. This brand is sold in
department stores, independent shoe stores and in the Company's Naturalizer retail stores.
LifeStride is a leading entry-level price point, women's brand in department stores offering contemporary styling.
7
ITEM 1 - BUSINESS (Continued)
The Buster Brown brand of children's footwear includes Buster Brown "classic" footwear offered to department stores and independent
retailers including The May Company and Famous Footwear. The Company is capitalizing on the strength and recognition of the Buster
Brown brand by marketing licensed and branded children's footwear under the Buster Brown & Co. umbrella. These products are sold to
mass merchandisers including Wal-Mart, Payless ShoeSource and Target. Licensed products include Barbie, Mary-Kate and Ashley, Spider-
Man, Bob the Builder and Dragon Tales. The Buster Brown & Co. umbrella provides customers with the comfort and assurance that these
licensed products contain the quality that they are accustomed to receiving from Buster Brown shoes.
In addition to the above mentioned children's licenses, the Company has a long-term license agreement, which is renewable through
2014, to market the Dr. Scholl's brand of affordable casual and work shoes for women and men both in the United States and Canada.
In 2001, the Company's Wholesale division launched a collection of women's shoes - Carlos by Carlos Santana - to major department
stores. This footwear is being marketed under a license agreement with famous guitarist Carlos Santana.
The Company continually seeks and evaluates new license opportunities and has the license to sell Star Wars footwear for the next
movie, scheduled for release in fiscal 2002. The Company also recently has entered into a license agreement for the HOT KISS label for
junior footwear to complement the apparel line with the same name.
Products sold under license agreements, which are generally for an initial term of two or three years and subject to renewal, were
responsible for approximately 5%, 6% and 8% of consolidated sales in fiscal 2001, 2000 and 1999, respectively.
The Company continues to build on and take advantage of the heritage and consumer recognition of its traditional brands. Marketing
teams are responsible for the development and implementation of marketing programs for each brand, both for the Company and its retail
customers. In fiscal 2001, the division invested approximately $18 million in advertising and marketing support primarily for its Naturalizer
and LifeStride brands. The Company continually focuses on enhancing the effectiveness of these marketing efforts through market research,
product development and marketing communications.
8
ITEM 1 - BUSINESS (Continued)
At April 6, 2002, the Company's wholesale operations had a backlog of unfilled orders of approximately $142 million compared to $150
million on April 7, 2001. Within these totals, the unfilled order position for Naturalizer product is up approximately 11% while orders from the
Company's mass merchandiser customers are lower. Most orders are for delivery within the next 90-120 days, and although orders are
subject to cancellation, the Company has not experienced significant cancellations in the past. The backlog at a particular time is affected by a
number of factors, including seasonality, the continuing trend among customers to reduce the lead time on their orders and the timing of
licensed product releases such as movies or sporting events. Accordingly, a comparison of backlog from period to period is not necessarily
meaningful and may not be indicative of eventual actual shipments.
Brown Shoe International
The Brown Shoe International division sources substantially all of the footwear globally for the Company's Wholesale division and the
Naturalizer Retail division, and a portion of the footwear sold by Famous Footwear. The division, which in 2001 sourced 66.8 million pairs of
shoes, has developed a global sourcing capability through its relationships with approximately 100 third-party independent footwear
manufacturers. Management attributes its ability to achieve consistent quality, competitive prices and on-time delivery to the breadth of its
established relationships.
The Company currently maintains sourcing offices in Hong Kong, China, Brazil, Indonesia, Italy, Taiwan and Mexico. This structure
enables the Company to source footwear at various price levels from significant shoe manufacturing regions of the world. In 2001, more than
three-fourths of the footwear sourced by Brown Shoe was from manufacturing facilities in China. The Company has the ability to shift
sourcing to alternative countries, over time, based upon trade conditions, economic advantages, production capabilities and other factors, if
conditions warrant. The following table provides an overview of the Company's foreign sourcing in 2001:
Country
Millions of
Pairs
China 51.6