Famous Footwear 2003 Annual Report Download - page 2

Parts I and II.
Portions of the proxy statement for the annual meeting of shareholders to be held May 22, 2003, are incorporated by
reference into Part III.
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The Company, founded in 1878 and incorporated in 1913, operates in the footwear industry. In 1999, the Company changed its name
from Brown Group, Inc., to Brown Shoe Company, Inc. Current activities include the operation of retail shoe stores and the sourcing and
marketing of footwear for women, men and children. The Company's business is seasonal in nature due to consumer spending patterns,
with higher back-to-school, Easter and Christmas holiday season sales. Traditionally, the third fiscal quarter accounts for a substantial portion
of the Company's earnings for the year.
During 2002, categories of footwear sales were approximately 59% women's, 27% men's and 14% children's. This composition has
remained relatively constant over the past few years. Approximately 69% of 2002 footwear sales were made at retail compared to 71% in
2001 and 73% in 2000. See Note 6 of Notes to Consolidated Financial Statements on page 40 of the Annual Report to Shareholders for the
year ended February 1, 2003, which is incorporated herein by reference, for additional information regarding the Company's business
segments.
In 2001, the Company launched a set of initiatives to improve the performance of the Company. These initiatives included the closing of
97 under-performing domestic Naturalizer Retail stores, optimizing the investment in inventory at the Famous Footwear division, installing
a new management team at Famous Footwear, and consolidating the Company's divisional information systems, finance and human
resources functions into a Shared Services platform. In the fourth quarter of 2001, a charge was taken to implement these initiatives along
with the costs associated with other nonrecurring events, including the costs of calling and restructuring certain of its debt. In fiscal 2002, the
Company substantially completed each of these initiatives. In the case of closing Naturalizer stores, the number of stores closing under this
program was increased to 106, and the total closing costs were less than originally anticipated.
The Company has approximately 12,000 full-time and part-time employees. Approximately 120 employees engaged in the warehousing
of footwear in the United States are employed under a union contract, which will expire in September 2005. In Canada, the Company
employs approximately 275 factory and warehouse employees under a union contract, which expires in October 2003.
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The Company's retail operations at February 1, 2003 included 1,307 retail shoe stores in the United States and Canada, operating
primarily under the Famous Footwear, Naturalizer and F.X. LaSalle names.
A summary of retail footwear stores operated by the Company at the end of each of the last three fiscal years is as follows:
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2002 2001 2000
Famous Footwear
Family footwear stores which feature a wide selection of brand-name, value-
priced footwear; located in shopping centers, outlet malls and regional malls
in the U.S. 918 920 925
Naturalizer
Stores selling the Naturalizer brand of women's footwear; located in regional
malls, shopping centers and outlet malls in the U.S. and Canada. 373 440 465
F. X. LaSalle
Stores selling women's and men's better-grade branded footwear in major
regional malls in Canada. 16 16 16
Total 1,307 1,376 1,406
With many organizations operating retail shoe stores and departments, the Company competes in a highly fragmented market.