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Brown Shoe Announces Restructuring Details; Confirms Earnings Targets

    ST. LOUIS, MISSOURI, February 7, 2002 -- Brown Shoe Company, Inc. (NYSE:BWS) today announced details of its "IMPACT" financial and operational restructuring plan that will dramatically improve the company's competitiveness, reduce operating expenses, and improve after-tax profitability by $22 million annually by 2005.

    To accomplish these objectives, as previously announced the company is taking a one-time charge, in the fourth quarter of fiscal 2001, of $32 million after-tax, or $1.84 per diluted share, of which more than half is non-cash.

    The charge includes, on an after-tax basis: 1) $10 million in costs for inventory markdown associated with initiatives to accelerate the company's merchandise flow at Famous Footwear; 2) $6 million in severance costs and management transition costs as the company eliminates redundant infrastructure, builds a shared services administrative platform, and transitions to new management at Famous Footwear; 3) $11 million in costs associated with severance, lease terminations, and asset write-offs for the closing of 97 under-performing Naturalizer stores, a move which will substantially improve the division's operating performance by 2003, and 4) $5 million to cover the call premium and other costs associated with retiring the company's long-term 9.5% notes and restructuring its credit facility.

    Brown Shoe expects the annualized after-tax benefits from these actions to build over the next several years from $13 million in 2003 to $22 million by 2005, as the company optimizes its supply chain processes, closes unprofitable stores and transitions its operating base. As a result of benefits from these sweeping initiatives and operational goals, the company expects to increase earnings per share to a range of $2.00-$2.10 in fiscal 2002, and to approximately $2.75 per share by 2003. The implementation of supply chain initiatives should allow the company to achieve a $75 million reduction in its inventory base by the end of 2004.

    Excluding these charges, Brown Shoe expects diluted earnings per share for fiscal 2001 to be approximately $l.60, in line with its previous estimates. Including special and extraordinary charges, Brown Shoe expects to incur a loss of $0.24 per diluted share for fiscal 2001. Estimated sales for the 52-week fiscal year ended February 2, 2002 are $1.750 billion, an increase of 4 percent. Brown Shoe will report its audited full-year earnings on February 27th after market close.

    The company expects to open 70 new stores during fiscal 2002, including 50 new Famous Footwear stores and 20 new Naturalizer stores. This includes a new flagship Naturalizer store on Lexington Avenue in New York City that opens March 1.

    Fourth Quarter Earnings and Conference Call
    Brown Shoe is scheduled to release its fourth quarter and full year earnings at 4:05 p.m. EST on Wednesday, February 27th. A conference call to discuss fourth quarter and full year results will be held at 4:30 p.m. EST that same afternoon. While the question-and-answer session of the call will be limited to institutional analysts and investors, retail brokers and individual investors are invited to attend via a live web-cast to be hosted http://www.streetevents.com. At the website, click on the Individual Investor Center to locate the broadcast.

    Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain forward-looking statements that are subject to various risks and uncertainties that could cause actual results to differ materially. These include general economic conditions, competition, consumer apparel and footwear buying trends, and political and economic conditions in Brazil and China, which are significant footwear sourcing countries. The Company's reports to the Securities and Exchange Commission contain detailed information relating to such factors.

    Brown Shoe is a $1.7 billion footwear company with worldwide operations. The company operates the 920-store Famous Footwear and 456-store Naturalizer chains of footwear retail stores. It markets leading brands including Naturalizer, LifeStride, Connie, Buster Brown, and licensed brands including Dr. Scholl's and Carlos by Carlos Santana for adults, and Barbie, Star Wars, Spider-Man and Bob-the-Builder character footwear for children.

    Brown Shoe press releases are available on the Company's web site at http://www.brownshoe.com.