Famous Footwear 2013 Annual Report Download - page 27

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2013 BROWN SHOE COMPANY, INC. FORM 10-K 25
• Organizational change – During 2012, we incurred costs of $2.3 million ($1.4 million after-tax, or $0.03 per diluted share)
related to an organizational change made at our corporate headquarters, with no corresponding costs in 2013 or 2011.
See Note 4 to the consolidated financial statements for additional information related to this change
Our debt-to-capital ratio, as defined in the Liquidity and Capital Resources – Working Capital and Cash Flow section, decreased to
30.1% as of February 1, 2014, compared to 41.6% at February 2, 2013, primarily due to our $98.0 million decrease in borrowings
under our revolving credit agreement. Our current ratio, as defined in the Liquidity and Capital Resources – Working Capital and
Cash Flow section, was 2.05 to 1 at February 1, 2014, compared to 1.64 to 1 at February 2, 2013. Inventories at February 1, 2014
increased to $547.5 million, from $503.7 million at February 2, 2013, primarily as a result of early purchases of inventory for
our spring selling season as well as lower than anticipated sales during the fourth quarter of 2013 for Famous Footwear.
Outlook for 2014
The Company executed on our strategy in 2013 and improved our operating performance, delivering steady improvement
towards our long-term financial goals to drive sustainable profitability. For 2014, we expect to continue to deliver towards
our long-term goals, while balancing our realistic outlook in terms of the economy, the consumer, and the weather. We
expect same-store sales at Famous Footwear will grow in the low single-digit percentage range in 2014 and that our
Wholesale Operations and net sales will increase in the low to mid-single-digit percentage range in 2014 while Specialty
Retail net sales will decrease in the low single-digit percentage range.
 
Following are the consolidated results and the results by segment for 2013, 2012, and 2011:
 
CONSOLIDATED RESULTS
2013 2012 2011
% of % of % of
($ millions) Net Sales Net Sales Net Sales
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,513.1 100.0% $ 2,477.8 100.0% $ 2,434.8 100.0%
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,498.8 59.6% 1,489.2 60.1% 1,470.3 60.4%
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,014.3 40.4% 988.6 39.9% 964.5 39.6%
Selling and administrative expenses . . . . . . . . . . . . . . . . . . 909.7 36.2% 891.7 36.0% 910.3 37.4%
Restructuring and other special charges, net . . . . . . . . . . . . . 1.3 0.1% 22.4 0.9% 23.7 1.0%
Impairment of assets held for sale . . . . . . . . . . . . . . . . . . . 4.7 0.2% – – – –
Operating earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.6 3.9% 74.5 3.0% 30.5 1.2%
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21.3) (0.8)% (23.0) (0.9)% (25.4) (1.0)%
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.0% 0.3 0.0% 0.6 0.0%
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . – – – – (1.0) (0.0)%
Earnings before income taxes from continuing operations. . . . . . 77.7 3.1% 51.8 2.1% 4.7 0.2%
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . (23.7) (0.9)% (16.6) (0.7)% 1.4 0.0%
Net earnings from continuing operations . . . . . . . . . . . . . . . 54.0 2.2% 35.2 1.4% 6.1 0.2%
Discontinued operations:
(Loss) earnings from discontinued operations, net of tax . . . . . . (4.6) (0.2)% (4.5) (0.2)% 4.3 0.2%
Disposition/impairment of discontinued operations, net of tax . . . (11.5) (0.5)% (3.5) (0.1)% 14.0 0.6%
Net (loss) earnings from discontinued operations . . . . . . . . . . (16.1) (0.7)% (8.0) (0.3)% 18.3 0.8%
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.9 1.5% 27.2 1.1% 24.4 1.0%
Net loss attributable to noncontrolling interests . . . . . . . . . . . (0.2) (0.0)% (0.3) (0.0)% (0.2) (0.0)%
Net earnings attributable to Brown Shoe Company, Inc. . . . . . . . $ 38.1 1.5% $ 27.5 1.1% $ 24.6 1.0%
Net Sales
Net sales increased $35.3 million, or 1.4%, to $2,513.1 million in 2013, compared to $2,477.8 million last year. Wholesale
Operations and Famous Footwear experienced increases in net sales during 2013 compared to last year, partially oset by
a decrease in Specialty Retail net sales during 2013. Our Wholesale Operations segment reported a $38.8 million, or 5.3%,
increase in net sales, reflecting strong performance from many of our brands. Our Famous Footwear segment reported a
$13.2 million increase in net sales, reflecting a 2.9% same-store sales increase. The net sales of our Specialty Retail segment
decreased $16.6 million, or 7.0%, primarily due to lower net sales at Shoes.com, a lower store count, and the impact of the
53rd week in 2012, partially oset by the impact of foreign currency exchange rates and a same-store sales increase of 1.6%.
Net sales increased $43.0 million, or 1.8%, to $2,477.8 million in 2012, compared to $2,434.8 million in 2011. Famous
Footwear and Wholesale Operations experienced increases in net sales during 2012 compared to 2011, partially oset by a
decrease in Specialty Retail net sales during 2012. Our Famous Footwear segment reported a $58.0 million increase in net
sales, reflecting a 4.5% same-store sales increase. Our Wholesale Operations segment reported a $2.1 million increase in net
sales. The net sales of our Specialty Retail segment decreased $17.1 million, primarily due to a lower store count and lower
net sales at Shoes.com, partially oset by the impact of the 53rd week in 2012 and a same-store sales increase of 0.6%.
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 websites that function as an
extension of a retail chain are included in the same-store sales calculation.