Famous Footwear 2013 Annual Report Download - page 11

2013 BROWN SHOE COMPANY, INC. FORM 10-K 9
Famous Footwear stores are located in strip shopping centers as well as outlet and regional malls in all 50 states, Guam,
and Canada. The breakdown by venue at the end of each of the last three fiscal years is as follows:
2013 2012 2011
Strip centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711 726 744
Outlet malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 167 169
Regional malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 162 176
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,044 1,055 1,089
Stores open at the end of 2013 and 2012 averaged approximately 6,800 square feet. Total square footage at the end of
2013 decreased 2.0% to 7.1 million square feet compared to 7.2 million at the end of 2012. We expect to open 50 to 55 new
stores and close approximately 50 stores in 2014. New stores typically experience an initial start-up period characterized
by lower sales and operating earnings than what is generally achieved by more mature stores or the division as a whole.
While the duration of this start-up period may vary by type of store, economic environment, and geographic location,
new stores typically reach a normal level of profitability within approximately four years.
Sales per square foot were $207 in 2013, up from $199 in 2012. Same-store sales increased 2.9% during 2013 on a 52-week
basis. Same-store sales changes are calculated by comparing the sales in stores that have been open at least 13 months.
Relocated stores are treated as new stores, and closed stores are excluded from the calculation. Sales change from new and
closed stores, net, reflects the change in net sales due to stores that have been opened or closed during the period and are
thereby excluded from the same-store sales calculation. E-commerce sales for those e-commerce websites that function as
an extension of a retail chain are included in the same-store sales calculation.
Famous Footwear relies on merchandise allocation systems and processes that use allocation criteria, consumer
segmentation, and inventory data in an eort to ensure stores are adequately stocked with product and to dierentiate the
needs of each store based on location, consumer segmentation, and other factors. Famous Footwear’s distribution systems
allow for merchandise to be delivered to each store weekly, or on a more frequent basis, as needed. Famous Footwear also
utilizes regional third-party pooled distribution sites across the country. Famous Footwear’s in-store point-of-sale systems
provide detailed sales transaction data to our corporate oce for daily update and analysis in the perpetual inventory
and merchandise allocation systems. Certain of these systems also are used for training employees and communication
between the stores and corporate oce.
Famous Footwear’s marketing programs include national television, print, digital marketing and social networking,
in-store advertisements, cinema, billboards, and radio, all of which are designed to further develop and reinforce the
Famous Footwear concept and strengthen our connection with consumers. We believe the success of our campaigns
is attributable to highlighting key categories and tailoring the timing of such messaging to adapt to seasonal shopping
patterns. In 2013, we spent approximately $57.6 million to advertise and market Famous Footwear to our target consumers,
a portion of which was recovered from suppliers. Famous Footwear has a robust loyalty program (“Rewards”), which
informs and rewards frequent consumers with product previews, earned incentives based upon purchase continuity, and
other periodic promotional oers. In 2013, approximately 70% of our Famous Footwear net sales were generated by our
Rewards members. During the year, we expanded our eorts to connect with and engage our consumers to build a strong
brand preference for Famous Footwear through our loyalty program. In 2013, we introduced our mobile application across
multiple platforms and had more than 250,000 members enrolled by the end of the year. In 2014, we will continue to seek
new and expand existing channels for consumers to connect with Famous Footwear to drive our fans from the digital world
into profitable and loyal consumers in our omni-channel selling environments.
Specialty Retail
Our Specialty Retail segment, composed of 179 stores as of February 1, 2014, includes the following retail concepts, Shoes.com,
and our other e-commerce businesses, with the exception of Famous.com, which is included in the Famous Footwear segment.
Naturalizer
Naturalizer retail stores are a showcase for our Naturalizer brand of women’s shoes. These stores are designed and
merchandised to appeal to the Naturalizer consumer, who is style and comfort conscious and seeks quality and value in her
footwear selections. The Naturalizer stores oer a selection of women’s footwear styles, including casual, dress, sandals,
and boots, primarily under the Naturalizer brand. Retail price points typically range from $69 for shoes to $199 for boots.
The majority of products sold in our retail stores are purchased from our Wholesale Operations segment at a customary
gross profit rate.
At the end of 2013, we operated 87 Naturalizer stores in the United States (including a store in Guam) and 87 Naturalizer
stores in Canada. Of the total 174 stores, approximately 50% are located in regional malls, with a few stores having street
locations, and average approximately 1,200 square feet in size. The other 50% of stores are located in outlet malls and