Famous Footwear 2014 Annual Report Download - page 9

Download and view the complete annual report

Please find page 9 of the 2014 Famous Footwear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 94

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94

8 2014 BROWN SHOE COMPANY, INC. FORM 10-K
PART I
ITEM 1 BUSINESS
Brown Shoe Company, Inc., founded in 1878 and incorporated in 1913, is a global footwear retailer and wholesaler with
annual net sales of $2.6 billion. Current activities include the operation of retail shoe stores and e-commerce websites as
well as the design, sourcing and marketing of footwear for women and men. Our business is seasonal in nature due to
consumer spending patterns, with higher back-to-school and Christmas season sales. Traditionally, the third fiscal quarter
accounts for a substantial portion of our earnings for the year.
Our accounting period is based upon a traditional retail calendar, which ends on the Saturday nearest January 31.
Periodically, this results in a fiscal year that includes 53 weeks. Both our 2014 and 2013 fiscal years had 52 weeks, while
our 2012 fiscal year included 53 weeks. The dierence in the number of weeks included in our fiscal years can aect
annual comparisons.
During 2014, categories of our consolidated net sales were approximately 64% women’s footwear, 22% men’s footwear,
9% children’s footwear and 5% accessories. This composition has remained relatively constant over the past few years.
Approximately 67% of footwear sales in 2014 represented retail sales, including sales through our e-commerce websites,
compared to 70% in 2013 and 71% in 2012, while the remaining 33%, 30% and 29% in the respective years represented
wholesale sales.
Employees
We had approximately 11,000 full-time and part-time employees as of January 31, 2015. In the United States, there are
no employees subject to union contracts. In Canada, we employ approximately 20 warehouse employees under a union
contract, which expires in October 2017.
Competition
With many companies operating retail shoe stores and shoe departments, we compete in a highly fragmented market.
Competitors include local, regional and national shoe store chains, department stores, discount stores, mass merchandisers,
numerous independent retail operators of various sizes and e-commerce businesses. Quality of products and services, store
location, trend-right merchandise selection and availability of brands, pricing, advertising and consumer service are all
factors that impact retail competition.
In addition, the vast majority of our wholesale customers also sell shoes purchased from competing footwear suppliers.
Those competing footwear suppliers own and license brands, many of which are well-known and marketed aggressively.
Many retailers, who are our wholesale customers, source directly from factories or through agents. The wholesale footwear
business has low barriers to entry, which further intensifies competition. Some competitors have also successfully branded
their trademarks as lifestyle brands, resulting in a greater competitive advantage to those companies.
Segments
During the fourth quarter of 2014, we reorganized our operations into two reportable segments, Famous Footwear and
Brand Portfolio. The Company’s reportable segments are described in more detail below. Historical financial results have
been restated to reflect the segment reorganization. Refer to Note 7 to the consolidated financial statements for additional
information regarding our business segments and financial information by geographic area.
FAMOUS FOOTWEAR
Our Famous Footwear segment includes our Famous Footwear stores, as well as Famous.com and Shoes.com. Our Shoes.
com subsidiary was sold in December 2014 as further discussed in Note 2 to the consolidated financial statements. Famous
Footwear is one of America’s leading family branded footwear retailers with 1,038 stores at the end of 2014 and net sales
for the segment of $1.6 billion in 2014. Our target consumers are women who buy brand-name fashionable shoes at a value
for themselves and their families.
Famous Footwear stores feature a wide selection of brand-name athletic, casual and dress shoes for the entire family.
Brands carried include, among others, Nike, Skechers, Bearpaw, Converse, Vans, New Balance, adidas, Asics, Sperry and
Sof Sole, as well as company-owned and licensed brands including, among others, LifeStride, Dr. Scholl’s, Fergalicious,
Naturalizer and Carlos. Our company-owned and licensed products are sold to our Famous Footwear segment by our
Brand Portfolio segment at a profit and represent approximately 12% of the Famous Footwear segment’s net sales.
We work closely with our vendors to provide our consumers with fresh product and, in some cases, product exclusively
designed for and available only in our stores. Famous Footwear’s average retail price is approximately $40 for footwear
with retail price points typically ranging from $25 for shoes up to $335 for boots.