Famous Footwear 2004 Annual Report Download - page 22

Table of Contents
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
Geographic Results
We have both domestic and international operations. Domestic operations include the wholesale distribution of footwear to numerous retail
customers and the nationwide operation of the Famous Footwear and Naturalizer chains of footwear stores. Foreign operations primarily
consist of wholesale sourcing operations in the Far East and wholesaling and other retailing operations in Canada. The Far East operations
include “first-cost” transactions, where footwear is sold at foreign ports to customers who then import the footwear into the United States and
other countries. The breakdown of domestic and foreign sales and pretax earnings were as follows:
2003 2002 2001
Pretax Pretax Pretax
Earnings Earnings Earnings
($ millions) Net Sales (Loss) Net Sales (Loss) Net Sales (Loss)
Domestic $1,500.9 $44.7 $1,494.5 $31.3 $1,429.6 $(42.9)
Foreign 331.2 20.0 346.9 30.2 326.2 29.7
$1,832.1 $64.7 $1,841.4 $61.5 $1,755.8 $(13.2)
The pretax profitability on foreign sales is higher than on domestic sales because of a lower cost structure and the inclusion in domestic
earnings of the unallocated corporate administrative and other costs.
Foreign earnings declined in 2003 as compared to 2002 due to a reduction in first-cost sales and lower earnings in Canada, including the
special charge to close the last Canadian manufacturing facility. Domestic earnings increased in 2003 as a result of increased earnings by
Famous Footwear and domestic wholesale divisions as well as lower interest costs.
The domestic loss in 2001 included the pretax special charges of $49.0 million related to closing underperforming domestic Naturalizer
stores, the write-down of inventory at Famous Footwear to improve inventory turns, severance costs related to our new shared-services
platform, the write-off of goodwill related to Shoes.com, the write-off of debt issuance costs and call premium related to the early
extinguishment of debt and certain management transition costs at our Famous Footwear division.
FAMOUS FOOTWEAR
2003 2002 2001
% of % of % of
($ millions, except sales per square foot) Net Sales Net Sales Net Sales
Operating Results
Net sales $1,073.6 100.0% $1,075.2 100.0% $1,044.4 100.0%
Cost of goods sold 593.6 55.3% 612.7 57.0% 636.5 60.9%
Gross profit 480.0 44.7% 462.5 43.0% 407.9 39.1%
Selling and administrative expenses 427.0 39.8% 416.2 38.7% 399.1 38.3%
Operating earnings $53.0 4.9% $46.3 4.3% $8.8 0.8%
Key Metrics
Same-store sales % change (2.4)% (1.3)% (5.7)%
Same-store sales $ change $(24.3) $(12.7) $(54.4)
Sales from net new stores $22.7 $43.5 $65.1
Sales per square foot $172 $177 $183
Square footage (thousand sq. ft.) 6,216 6,163 5,942
Stores opened 57 53 66
Stores closed 82 55 71
Ending stores 893 918 920
Net Sales
Net sales decreased $1.6 million, or 0.1%, to $1,073.6 million in fiscal year 2003 and increased $30.8 million, or 2.9%, to $1,075.2 million
in fiscal year 2002.
Famous Footwear’s lower sales reflect a decline in same-store sales of 2.4% and an average of 12 fewer stores open. The same-store sales
decline is a result of lower store traffic. Same-store sales declined $24.3 million, partially offset
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