Famous Footwear 2013 Annual Report Download - page 31

2013 BROWN SHOE COMPANY, INC. FORM 10-K 29
Net Sales
Net sales increased $13.2 million, or 0.9%, to $1,527.5 million in 2013 compared to $1,514.3 million last year. During 2013,
same-store sales increased 2.9%, or $41.1 million, reflecting an improved conversion rate and higher average retail prices,
partially oset by a decrease in customer trac. In addition, we saw strong growth from canvas shoes and boots.
As a result of the same-store sales increase, sales per square foot, excluding e-commerce, increased 4.1% to $207,
compared to $199 last year. The inclusion of the 53rd week in 2012 impacted net sales negatively by $18.1 million in 2013
as compared to 2012. Net closed stores reduced net sales by $9.8 million, which reflects the relocation of certain stores
and the closure of underperforming stores. In 2013, we expanded our eorts to connect with and engage our customers
to build a strong brand preference for Famous Footwear through our loyalty program, Rewards. As a result, in 2013
approximately 70% of our net sales were to Rewards members, compared to 66% in 2012 and 62% in 2011.
Net sales increased $58.0 million, or 4.0%, to $1,514.3 million in 2012 compared to $1,456.3 million in 2011. During
2012, same-store sales increased 4.5%, or $62.2 million, reflecting improved average retail prices, conversion rate, and
customer trac, partially oset by lower pairs per transaction. The impact of the 53rd week in 2012 increased sales
by $18.1 million. In addition, we saw strong growth from boat shoes, athletic shoes, and boots. As a result of the same-
store sales increase, sales per square foot, excluding e-commerce, increased 7.3% to $199, compared to $186 in 2011.
Net closed stores resulted in a $22.3 million decrease in net sales due to the relocation of certain stores and the closure
of underperforming stores.
Gross Profit
Gross profit increased $15.0 million, or 2.3%, to $681.1 million in 2013 compared to $666.1 million last year due to higher net
sales and a higher gross profit rate. As a percentage of net sales, our gross profit rate increased to 44.6% in 2013 compared
to 44.0% last year. The increase in our gross profit rate was driven by higher initial margins in boots and athletics.
Gross profit increased $30.9 million, or 4.9%, to $666.1 million in 2012 compared to $635.2 million in 2011 due to higher
net sales and gross profit rate. As a percentage of net sales, our gross profit rate increased to 44.0% in 2012 compared
to 43.6% in 2011. The increase in our gross profit rate was driven by lower inventory markdown requirements resulting
from a better aged inventory position.
Selling and Administrative Expenses
Selling and administrative expenses increased $9.8 million, or 1.7%, to $574.0 million during 2013 compared to
$564.2 million last year. The increase was primarily attributable to higher store depreciation expense and other
facilities costs, higher marketing expenses, and higher variable store employee and benefit costs, as well as an
increase in expected payouts under both our cash and stock-based incentive plans, partially oset by the impact of
the incremental week of expenses associated with the 53rd week in 2012. As a percentage of net sales, selling and
administrative expenses increased to 37.6% in 2013 from 37.3% last year.
Selling and administrative expenses decreased $5.7 million, or 1.0%, to $564.2 million during 2012 compared
to $569.9 million in 2011. The decrease was primarily attributable to lower net facilities costs, as our portfolio
realignment actions more than oset new store costs, and lower marketing expenses, partially oset by an
incremental week of expenses associated with the 53rd week and higher expected payouts under both our cash
and stock-based incentive plans. As a percentage of net sales, selling and administrative expenses decreased
to 37.3% in 2012 from 39.1% in 2011, reflecting higher net sales and the closure of underperforming stores.
Restructuring and Other Special Charges, Net
We incurred no restructuring and other special charges, net during 2013 compared to $7.8 million last year as a
result of our portfolio realignment initiatives in 2012, which included closing or relocating underperforming or poorly
aligned stores and closing our Sun Prairie, Wisconsin distribution center.
During 2011, we incurred restructuring and other special charges, net of $2.8 million related to the closure of our
Sun Prairie, Wisconsin distribution center.
Operating Earnings
Operating earnings increased $13.0 million, or 13.8%, to $107.1 million for 2013, compared to $94.1 million last year.
The increase is the result of higher net sales, an increase in gross profit rate, and a decrease in restructuring and other
special charges, net, partially oset by higher selling and administrative expenses, as described above. As a percentage
of net sales, operating earnings increased to 7.0% in 2013 compared to 6.2% last year.
Operating earnings increased $31.6 million, or 50.5%, to $94.1 million for 2012, compared to $62.5 million in 2011.
The increase is the result of higher net sales, an increase in gross profit rate, and a decrease selling and administrative
expenses, partially oset by higher restructuring and other special charges, net, as described above. As a percentage
of net sales, operating earnings increased to 6.2% in 2012 compared to 4.3% in 2011.