Ronald A. Fromm
Chairman, President
and Chief Executive Officer

DEAR FELLOW INVESTORS:

Fiscal 2000 was an important year for Brown Shoe. It was a year marked by significant progress in pursuing our strategic directions. We expanded our industry-leading Famous Footwear chain. We aggressively built market share for our flagship Naturalizer brand in better-grade department stores. And, by designing the right product at the right price, our women’s private label business had a record year. Just as important, we withdrew from less successful product line initiatives and poor performing store locations.

It was also a year where we were modestly successful in growing both our top line sales and our bottom line profits. Brown Shoe’s earnings per share increased 4 percent to $2.04 from $1.96 in fiscal 1999, and net earnings reached $36.4 million compared to $35.5 million the year before. Sales were up 6 percent, to nearly $1.7 billion.

In 2000, we acquired the 26-store Milwaukee-based Mil-Mar chain, and have assimilated it into Famous Footwear, increasing our market penetration. We also acquired a controlling interest in Shoes. com, Inc., with plans to relaunch this e-tailing site in spring 2001.

TARGETING EARNINGS GROWTH.

As we enter fiscal 2001, we remain focused on achieving growth across all divisions and winning market share. Our plan is to reshape Brown Shoe so that we can deliver consistent double-digit growth in sales and earnings over the long-term. I’m proud of the progress made by our team to date, but we still have much work to do.