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Brown Shoe Company Reports Third Quarter 2013 Results and Raises EPS Guidance Range

11/26/2013

Famous Footwear delivers record sales of $439.6 million

Sales at wholesale operations improve 4.5% to $205.3 million

ST. LOUIS--(BUSINESS WIRE)--Brown Shoe Company (NYSE: BWS)(brownshoe.com) today reported third quarter 2013 financial results, with net sales of $702.8 million up 1.0% versus third quarter 2012 net sales of $696.0 million, excluding sales from discontinued operations for both quarters. Results for the third quarter of 2013 and 2012 included sales of $0.2 million and $1.4 million, respectively, from brands and businesses the company has exited.

The company reported third quarter 2013 net earnings of $27.3 million, or $0.63 per diluted share, up 12.4% compared to $24.3 million, or $0.56 per diluted share, in the prior year. Third quarter 2012 included $2.6 million of costs related to the company’s portfolio realignment efforts ($1.6 million on an after-tax basis, or $0.04 per diluted share). Gross profit margin for the third quarter of 2013 declined 50 basis points to 39.6% from 40.1% in 2012.

“Famous Footwear reported record sales in the third quarter, with strength across all geographies, climate zones and genders. We also reported a 4.9% increase in same-store-sales(1) for the quarter,” said Diane Sullivan, president and chief executive officer of Brown Shoe Company. “For our wholesale business, we saw continued improvement. Sales were up 4.5% in the quarter, as our trend-right styles continued to resonate with consumers.”

US$M, except per share (unaudited)

  13 Weeks   3Q
3Q’13   3Q’12 Change
Consolidated net sales   $702.8   $696.0   1.0%
Famous Footwear   439.6   436.8   0.6%
Wholesale Operations   205.3   196.4   4.5%
Specialty Retail   57.9   62.8   (7.8%)
Gross profit   278.2   279.3   (0.4%)
Margin   39.6%   40.1%   (50 bps)
SG&A   233.5   236.2   (1.1%)
% of net sales   33.2%   33.9%   (70 bps)
Restructuring and other special charges, net   --   2.1   n/m
Operating earnings   44.7   41.0   9.0%
% of net sales   6.4%   5.9%   50 bps
Net interest expense   5.1   5.3   (3.8%)
Earnings from continuing operations before income taxes   39.5   35.7   10.9%
Tax rate   31.6%   32.0%   (40 bps)
Net earnings (loss) from discontinued operations   0.2   --   n/m
Net earnings (loss)   $27.3   $24.3   12.4%
Per diluted share   $0.63   $0.56   12.5%
Adjusted net earnings   $27.3   $25.9   5.5%
Per diluted share   $0.63   $0.60   5.0%

Third Quarter Highlights

Famous Footwear third quarter 2013 record sales of $439.6 million were up 0.6% year-over-year, with same-store-sales up 4.9%. For the back-to-school selling season, weeks 24 through 33, same-store-sales were up 5.6%. The strong performance in the quarter was led by good sales growth in sport slides, canvas shoe styles, sandals and lightweight running. During the quarter, the company closed or relocated 22 stores and added 11 new stores, as average revenue per square foot continued to improve.

Wholesale sales of $205.3 million were up 4.5% in the third quarter, excluding sales from discontinued brands. For the Healthy Living platform, wholesale sales of $106.6 million were down 5.6% (excluding sales from discontinued brands) reflecting the shift of approximately $7 million of sales into the second quarter from the third quarter, primarily for Naturalizer. On a year-to-date basis, Healthy Living sales improved 1.2% over 2012. The company’s Contemporary Fashion wholesale sales of $98.4 million were up 19.3% in the third quarter, excluding sales from discontinued brands, with strong double-digit growth from both Sam Edelman and Franco Sarto.

Consolidated gross profit of $278.2 million was down 0.4% in the third quarter, and gross margin of 39.6% declined by approximately 50 basis points versus the prior year. SG&A for the third quarter was $233.5 million, or 33.2% of net sales, which was down approximately 70 basis points from 33.9% of net sales in the prior year. For the quarter, operating margins improved 50 basis points to 6.4%.

Inventory at the end of the third quarter was $544.6 million, up from $512.2 million in the prior year. Wholesale inventory was up 8.5%, while Famous Footwear inventory was up 4.8%.

At quarter-end, Brown Shoe Company had no borrowings against its revolving credit facility and $42.4 million in cash and cash equivalents. The company’s debt-to-capital ratio improved to 30.6% from 41.7% in the third quarter of 2012.

Financial Review and 2013 Outlook

“To account for our strong performance year-to-date, we are raising our adjusted diluted EPS guidance to a range of $1.36 to $1.40,” said Russ Hammer, chief financial officer of Brown Shoe Company. “For the fourth quarter, we expect to operate under the same level of caution as many of our peers, as uncertainty around traffic, promotional activity and consumer sentiment appears to be permeating the overall industry this holiday season.”

Metric   FY’13
Consolidated net sales   $2.53 to $2.54 billion
Famous Footwear same-store sales   Up low-single digits
Wholesale Operations net sales   Up mid-single digits for continuing operations
Gross profit margin   Up approximately 10 basis points for continuing operations
SG&A   $910 to $915 million
Non-recurring costs   $31 million
Net interest expense   $21 to $22 million
Effective tax rate, on adjusted basis   31% to 32%
Earnings per diluted share   $0.82 to $0.86
Adjusted earnings per diluted share   $1.36 to $1.40
Depreciation and amortization   $54 to $56 million
Capital expenditures   $54 to $56 million

Investor Conference Call

Brown Shoe Company will webcast an investor conference call at 9:00 a.m. ET today, Nov. 26, 2013. The webcast and slides will be available at investor.brownshoe.com/news/events. A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 11145746.

A replay will be available for a limited period at investor.brownshoe.com/news/events/archive. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 11145746 through Tuesday, Dec. 3, 2013.

(1) Same-Store-Sales: For comparability purposes, same-store-sales for the third quarter of 2013 are calculated based on retail sales for weeks 27 through 39 in 2013 as compared to weeks 28 through 40 in 2012. This adjustment is due to the impact of the 53rd week of sales in the fourth quarter of fiscal 2012. The calculation for the third quarter of 2013 appropriately reflects the change in same-store-sales on a true retail calendar basis.

Non-GAAP Financial Measures: In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic and estimated future gross profit, operating earnings, net earnings and earnings per diluted share adjusted to exclude certain gains, charges and recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. Reconciliations to the applicable GAAP financial measures have been included in the attached schedules.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to Brown Shoe Company, Inc. and diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions; (ii) intense competition within the footwear industry; (iii) rapidly changing fashion trends and purchasing patterns; (iv) customer concentration and increased consolidation in the retail industry; (v) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China, where Brown Shoe Company relies heavily on manufacturing facilities for a significant amount of their inventory; (vi) the ability to recruit and retain senior management and other key associates; (vii) the ability to attract, retain and maintain good relationships with licensors and protect intellectual property rights; (viii) the ability to secure/exit leases on favorable terms; (ix) the ability to maintain relationships with current suppliers; (x) compliance with applicable laws and standards with respect to lead content in paint and other product safety issues; (xi) the ability to source product at a pace consistent with increased demand for footwear; and (xii) the impact of rising prices in a potentially inflationary global environment. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended Feb. 2, 2013, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

About Brown Shoe Company

Brown Shoe Company is a $2.6 billion, global, footwear company whose shoes are worn by people of all ages, from all walks of life. Our products are available virtually everywhere — in the over 1,200 Famous Footwear and Naturalizer retail stores we operate, in hundreds of major department and specialty stores, on 14 branded ecommerce sites, and on many additional third-party retail websites. Through our broad range of products, we serve three key market segments. Our Family brands — Famous Footwear, Famous.com, and shoes.com — are one-stop-shopping destinations for high quality, affordable styles for a family’s every occasion. Active people who want comfort, style and performance can look to our Healthy Living brands — Naturalizer, Dr. Scholl's, LifeStride and Ryka. Our Contemporary Fashion brands — Via Spiga, Vince, Sam Edelman, Franco Sarto, Carlos Santana and Fergie Footwear — keep fashionistas in step with the latest trends. At Brown Shoe Company, we inspire people to feel good and live better... feet first!

SCHEDULE 1
       
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
 
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
(Thousands, except per share data) November 2, 2013 October 27, 2012 November 2, 2013 October 27, 2012
 
Net sales $ 702,788 $ 695,985 $ 1,913,150 $ 1,859,061
Cost of goods sold   424,548     416,650     1,140,268     1,117,818  
 
Gross profit   278,240     279,335     772,882     741,243  
 
Selling and administrative expenses 233,572 236,196 678,522 659,377
Restructuring and other special charges, net - 2,146 1,262 19,660
Impairment of assets held for sale   -     -     4,660     -  
 
Operating earnings   44,668     40,993     88,438     62,206  
 
Interest expense (5,254 ) (5,398 ) (16,167 ) (17,079 )
Interest income   132     76     282     236  
 
Earnings before income taxes from continuing operations   39,546     35,671     72,553     45,363  
 
Income tax provision   (12,495 )   (11,418 )   (24,522 )   (15,275 )
 
Net earnings from continuing operations   27,051     24,253     48,031     30,088  
 
Discontinued operations:
Earnings (loss) from discontinued operations, net of tax (expense) benefit of ($114), $19, $6,057 and $4,565, respectively 233 34 (4,784 ) (6,887 )
Impairment of net assets/disposition of discontinued operations   -     -     (11,512 )   -  
 
Net earnings (loss) from discontinued operations   233     34     (16,296 )   (6,887 )
 
Net earnings   27,284     24,287     31,735     23,201  
 
Net loss attributable to noncontrolling interests   (30 )   (5 )   (174 )   (251 )
 
Net earnings attributable to Brown Shoe Company, Inc. $ 27,314   $ 24,292   $ 31,909   $ 23,452  
 
Basic earnings (loss) per common share:
From continuing operations $ 0.63 $ 0.57 $ 1.13 $ 0.72
From discontinued operations   -     -     (0.39 )   (0.17 )

Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders

$ 0.63   $ 0.57   $ 0.74   $ 0.55  
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.62 $ 0.56 $ 1.12 $ 0.72
From discontinued operations   0.01     -     (0.39 )   (0.17 )

Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders

$ 0.63   $ 0.56   $ 0.73   $ 0.55  
 
Basic number of shares 41,447 40,745 41,288 40,618
Diluted number of shares   41,766     40,935     41,571     40,721  
SCHEDULE 2      
 
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited)  
(Thousands) November 2, 2013 October 27, 2012 February 2, 2013
ASSETS
 
Cash and cash equivalents $ 42,406 $ 40,884 $ 68,223
Receivables, net 112,491 113,519 111,392
Inventories, net 544,589 512,206 503,688
Prepaid expenses and other current assets 52,234 30,511 42,016
Current assets - discontinued operations   181   56,365   47,109
Total current assets   751,901   753,485   772,428
 
Property and equipment, net 148,182 139,982 144,856
Goodwill and intangible assets, net 75,181 81,219 79,703
Other assets 111,647 134,664 119,695
Non current assets - discontinued operations   -   54,754   54,577
Total assets $ 1,086,911 $ 1,164,104 $ 1,171,259
 
LIABILITIES AND EQUITY
 
Borrowings under revolving credit agreement $ - $ 110,000 $ 105,000
Trade accounts payable 200,706 173,856 213,660
Other accrued expenses 151,142 145,687 137,190
Current liabilities - discontinued operations   2,110   13,935   13,259
Total current liabilities   353,958   443,478   469,109
 
Long-term debt 198,963 198,773 198,823
Deferred rent 37,548 30,714 33,711
Other liabilities 44,483 51,999 36,719
Non current liabilities - discontinued operations   -   7,203   6,996
Total other liabilities   280,994   288,689   276,249
 
Total Brown Shoe Company, Inc. shareholders’ equity 451,301 431,138 425,129
Noncontrolling interests   658   799   772
Total equity   451,959   431,937   425,901
Total liabilities and equity $ 1,086,911 $ 1,164,104 $ 1,171,259

SCHEDULE 3

   
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
39 Weeks Ended
(Thousands) November 2, 2013 October 27, 2012
OPERATING ACTIVITIES:
Net earnings $ 31,735 $ 23,201
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 41,114 40,457
Amortization of debt issuance costs and debt discount 1,885 1,885
Share-based compensation expense 4,066 4,776
Tax benefit related to share-based plans (2,581 ) (889 )
Loss on disposal of facilities and equipment 960 2,177
Impairment charges for facilities and equipment 1,072 2,481
Impairment of assets held for sale 4,660 -
Impairment of intangible assets - 5,777
Impairment of net assets/disposition of discontinued operations 11,512 -
Net loss on sale of subsidiaries 576 -
Deferred rent 3,837 (1,647 )
Provision for doubtful accounts 388 398
Changes in operating assets and liabilities, net of dispositions:
Receivables (385 ) 15,063
Inventories (41,180 ) 22,523
Prepaid expenses and other current and noncurrent assets (6,748 ) 17,852
Trade accounts payable (12,933 ) (7,213 )
Accrued expenses and other liabilities 23,848 18,113
Other, net   159     (1,431 )
Net cash provided by operating activities   61,985     143,523  
 
INVESTING ACTIVITIES:
Capital expenditures (41,603 ) (44,517 )
Proceeds from sale of subsidiaries, net of cash balance of $4,370 69,347 -
Acquisition cost   -     (5,000 )
Net cash provided by (used for) investing activities   27,744     (49,517 )
 
FINANCING ACTIVITIES:
Borrowings under revolving credit agreement 966,000 582,000
Repayments under revolving credit agreement (1,071,000 ) (673,000 )
Dividends paid (9,073 ) (9,007 )
Issuance of common stock under share-based plans, net (2,406 ) (1,860 )
Tax benefit related to share-based plans   2,581     889  
Net cash used for financing activities   (113,898 )   (100,978 )
Effect of exchange rate changes on cash and cash equivalents   (1,648 )   174  
Decrease in cash and cash equivalents (25,817 ) (6,798 )
Cash and cash equivalents at beginning of period   68,223     47,682  
 
Cash and cash equivalents at end of period $ 42,406   $ 40,884  
SCHEDULE 4
           
BROWN SHOE COMPANY, INC.
RECONCILIATION OF NET EARNINGS AND DILUTED EARNINGS PER SHARE (GAAP BASIS) TO ADJUSTED NET EARNINGS AND ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP BASIS)  
 
(Unaudited) (Unaudited)
13 Weeks Ended November 2, 2013 13 Weeks Ended October 27, 2012
(Thousands, except per share data)

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

 

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings
Per Share

 
GAAP earnings $ 27,314 $ 0.63 $ 24,292 $ 0.56
 

Charges/Other Items - Continuing Operations:

Portfolio realignment
Business exits and cost reductions $ - - - $ 2,282 1,425 0.04
 

Charges/Other Items - Discontinued Operations:

Portfolio realignment
Business exits and cost reductions - - - 274 180 -
           
Total charges/other items $ - $ - $ - $ 2,556 $ 1,605   0.04
 
Adjusted earnings $ 27,314 $ 0.63 $ 25,897 $ 0.60
 
 
39 Weeks Ended November 2, 2013 39 Weeks Ended October 27, 2012
(Thousands, except per share data)

Pre-Tax Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings Per
Share

 

Pre-Tax
Impact of
Charges/
Other Items

Net Earnings
Attributable to
Brown Shoe
Company, Inc.

Diluted
Earnings
Per Share

 
GAAP earnings $ 31,909 $ 0.73 $ 23,452 $ 0.55
 

Charges/Other Items - Continuing Operations:

Portfolio realignment
Business exits and cost reductions $ 1,262 803 0.02 $ 18,872 12,440 0.29
Non-cash impairments/dispositions 4,660 4,660 0.11 - - -
Organizational change   -   -   -   2,283   1,395   0.03
Total Continuing Operations 5,922 5,463 0.13 21,155 13,835 0.32
 

Charges/Other Items - Discontinued Operations:

Portfolio realignment
Business exits and cost reductions 13,233 6,414 0.13 8,130 4,999 0.12
Non-cash impairments/dispositions 11,512 11,512 0.28 - - -
ASG integration-related costs   -   -   -   675   441   0.01
Total Discontinued Operations 24,745 17,926 0.41 8,805 5,440 0.13
           
Total charges/other items $ 30,667   23,389   0.54 $ 29,960   19,275   0.45
 
Adjusted earnings $ 55,298 $ 1.27 $ 42,727 $ 1.00
SCHEDULE 5
                   
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT
(Unaudited)
 
 

SUMMARY FINANCIAL RESULTS

 
Famous Footwear Wholesale Operations   Specialty Retail Other Consolidated
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27, November 2,

October 27,

(Thousands)   2013     2012     2013     2012     2013     2012     2013     2012     2013     2012  
 
Net Sales $ 439,605 $ 436,812 $ 205,269 $ 196,371 $ 57,914 $ 62,802 $ - $ - $ 702,788 $ 695,985
 
Gross Profit $ 187,286 $ 186,659 $ 65,177 $ 64,725 $ 25,777 $ 27,951 $ - $ - $ 278,240 $ 279,335
Adjusted Gross Profit $ 187,286 $ 186,659 $ 65,177 $ 64,761 $ 25,777 $ 28,051 $ - $ - $ 278,240 $ 279,471
 
Gross Profit Rate 42.6 % 42.7 % 31.8 % 33.0 % 44.5 % 44.5 % - - 39.6 % 40.1 %
Adjusted Gross Profit Rate 42.6 % 42.7 % 31.8 % 33.0 % 44.5 % 44.7 % - - 39.6 % 40.2 %
 
Operating Earnings (Loss) $ 37,047 $ 35,525 $ 16,782 $ 15,169 $ 221 $ 1,771 $ (9,382 ) $ (11,472 ) $ 44,668 $ 40,993
Adjusted Operating Earnings (Loss) $ 37,047 $ 35,881 $ 16,782 $ 16,641 $ 221 $ 2,138 $ (9,382 ) $ (11,385 ) $ 44,668 $ 43,275
 
Operating Earnings (Loss) % 8.4 % 8.1 % 8.2 % 7.7 % 0.4 % 2.8 % - - 6.4 % 5.9 %
Adjusted Operating Earnings (Loss) % 8.4 % 8.2 % 8.2 % 8.5 % 0.4 % 3.4 % - - 6.4 % 6.2 %
 
Same-store Sales % (on a 13-week basis) 4.9 % 6.8 % - - 0.6 % 8.4 % - - - -
 
Number of Stores 1,048 1,061 - - 185 223 - - 1,233 1,284
                                       
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations   Specialty Retail Other Consolidated
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27,
(Thousands)   2013     2012     2013     2012     2013     2012     2013     2012     2013     2012  
 
Gross Profit $ 187,286 $ 186,659 $ 65,177 $ 64,725 $ 25,777 $ 27,951 $ - $ - $ 278,240 $ 279,335
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - - 36 - 100 - - - 136
                   
Total charges/other items   -     -     -     36     -     100     -     -     -     136  
 
Adjusted Gross Profit $ 187,286   $ 186,659   $ 65,177   $ 64,761   $ 25,777   $ 28,051   $ -   $ -   $ 278,240   $ 279,471  
 
 
Operating Earnings (Loss) $ 37,047 $ 35,525 $ 16,782 $ 15,169 $ 221 $ 1,771 $ (9,382 ) $ (11,472 ) $ 44,668 $ 40,993
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - 356 - 1,472 - 367 - 87 - 2,282
                   
Total charges/other items   -     356     -     1,472     -     367     -     87     -     2,282  
 
Adjusted Operating Earnings (Loss) $ 37,047   $ 35,881   $ 16,782   $ 16,641   $ 221   $ 2,138   $ (9,382 ) $ (11,385 ) $ 44,668   $ 43,275  
SCHEDULE 5 - CONTINUED
                   
BROWN SHOE COMPANY, INC.
SUMMARY FINANCIAL RESULTS BY SEGMENT
(Unaudited)
 
 
SUMMARY FINANCIAL RESULTS
 
Famous Footwear Wholesale Operations   Specialty Retail Other Consolidated
39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended
November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27,
(Thousands)   2013     2012     2013     2012     2013     2012     2013     2012     2013     2012  
 
Net Sales $ 1,180,143 $ 1,134,237 $ 567,334 $ 551,896 $ 165,673 $ 172,928 $ - $ - $ 1,913,150 $ 1,859,061
 
Gross Profit $ 523,022 $ 498,718 $ 178,859 $ 170,064 $ 71,001 $ 72,461 $ - $ - $ 772,882 $ 741,243
Adjusted Gross Profit $ 523,022 $ 498,718 $ 178,859 $ 171,263 $ 71,001 $ 72,757 $ - $ - $ 772,882 $ 742,738
 
Gross Profit Rate 44.3 % 44.0 % 31.5 % 30.8 % 42.9 % 41.9 % - - 40.4 % 39.9 %
Adjusted Gross Profit Rate 44.3 % 44.0 % 31.5 % 31.0 % 42.9 % 42.1 % - - 40.4 % 40.0 %
 
Operating Earnings (Loss) $ 95,057 $ 74,365 $ 28,085 $ 25,833 $ (2,934 ) $ (7,551 ) $ (31,770 ) $ (30,441 ) $ 88,438 $ 62,206
Adjusted Operating Earnings (Loss) $ 95,057 $ 82,052 $ 33,991 $ 32,321 $ (2,934 ) $ (3,647 ) $ (31,754 ) $ (27,365 ) $ 94,360 $ 83,361
 
Operating Earnings (Loss) % 8.1 % 6.6 % 5.0 % 4.7 % (1.8 %) (4.4 %) - - 4.6 % 3.3 %
Adjusted Operating Earnings (Loss) % 8.1 % 7.2 % 6.0 % 5.9 % (1.8 %) (2.1 %) - - 4.9 % 4.5 %
 
Same-store Sales % (on a 39-week basis) 4.3 % 4.6 % - - 1.7 % 3.2 % - - - -
 
Number of Stores 1,048 1,061 - - 185 223 - - 1,233 1,284
                                       
 
 
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
 
Famous Footwear Wholesale Operations   Specialty Retail Other Consolidated
39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended 39 Weeks Ended

November 2,

October 27, November 2, October 27, November 2, October 27, November 2, October 27, November 2, October 27,
(Thousands)   2013     2012     2013     2012     2013     2012     2013     2012     2013     2012  
 
Gross Profit $ 523,022 $ 498,718 $ 178,859 $ 170,064 $ 71,001 $ 72,461 $ - $ - $ 772,882 $ 741,243
 

Charges/Other Items:

Portfolio realignment
Business exits and cost reductions - - - 1,199 - 296 - - - 1,495
                   
Total charges/other items   -     -     -     1,199     -     296     -     -     -     1,495  
 
Adjusted Gross Profit $ 523,022   $ 498,718   $ 178,859   $ 171,263   $ 71,001   $ 72,757   $ -   $ -   $ 772,882   $ 742,738  
 
 
Operating Earnings (Loss) $ 95,057 $ 74,365 $ 28,085 $ 25,833 $ (2,934 ) $ (7,551 ) $ (31,770 ) $ (30,441 ) $ 88,438 $ 62,206
 

Charges/Other Items:

Portfolio realignment
Non-cash impairment charges - - 4,660 - - - - - 4,660 -
Business exits and cost reductions - 7,687 1,246 6,488 - 3,904 16 793 1,262 18,872
Organizational change - - - - - - - 2,283 - 2,283
                   
Total charges/other items   -     7,687     5,906     6,488     -     3,904     16     3,076     5,922     21,155  
 
Adjusted Operating Earnings (Loss) $ 95,057   $ 82,052   $ 33,991   $ 32,321   $ (2,934 ) $ (3,647 ) $ (31,754 ) $ (27,365 ) $ 94,360   $ 83,361  
SCHEDULE 6
       
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE RECONCILIATION
 
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
November 2, October 27, November 2, October 27,
(Thousands, except per share data)   2013     2012     2013     2012  
 
Net earnings attributable to Brown Shoe Company, Inc.:
Net earnings from continuing operations $ 27,051 $ 24,253 $ 48,031 $ 30,088
Net loss attributable to noncontrolling interests 30 5 174 251
Net earnings allocated to participating securities   (1,097 )   (1,210 )   (1,386 )   (1,166 )
Net earnings from continuing operations   25,984     23,048     46,819     29,173  
 
Net earnings (loss) from discontinued operations 233 34 (16,296 ) (6,887 )
Net earnings allocated to participating securities   (9 )   (2 )   -     -  
Net earnings (loss) from discontinued operations   224     32     (16,296 )   (6,887 )
 
Net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 26,208   $ 23,080   $ 30,523   $ 22,286  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 41,447 40,745 41,288 40,618
Dilutive effect of share-based awards for continuing operations and discontinued operations   319     190     283     103  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   41,766     40,935     41,571     40,721  
 
Basic earnings (loss) per common share:
From continuing operations $ 0.63 $ 0.57 $ 1.13 $ 0.72
From discontinued operations   -     -     (0.39 )   (0.17 )
Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.63   $ 0.57   $ 0.74   $ 0.55  
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.62 $ 0.56 $ 1.12 $ 0.72
From discontinued operations   0.01     -     (0.39 )   (0.17 )
Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.63   $ 0.56   $ 0.73   $ 0.55  
SCHEDULE 7
       
BROWN SHOE COMPANY, INC.
BASIC AND DILUTED ADJUSTED EARNINGS (LOSS) PER SHARE RECONCILIATION
 
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
November 2, October 27, November 2, October 27,
(Thousands, except per share data)   2013     2012     2013     2012  
 
Adjusted net earnings attributable to Brown Shoe Company, Inc.:
Adjusted net earnings from continuing operations $ 27,051 $ 25,678 $ 53,493 $ 43,923
Net loss attributable to noncontrolling interests 30 5 174 251
Net earnings allocated to participating securities   (1,097 )   (1,281 )   (2,336 )   (2,114 )
Adjusted net earnings from continuing operations   25,984     24,402     51,331     42,060  
 
Adjusted net earnings (loss) from discontinued operations 233 214 1,630 (1,447 )
Net earnings allocated to participating securities   (9 )   (11 )   (71 )   -  
Net earnings (loss) from discontinued operations   224     203     1,559     (1,447 )
 
Adjusted net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities $ 26,208   $ 24,605   $ 52,890   $ 40,613  
 
 
Basic and diluted common shares attributable to Brown Shoe Company, Inc.:
Basic common shares for continuing operations and discontinued operations 41,447 40,745 41,288 40,618
Dilutive effect of share-based awards for continuing operations and discontinued operations   319     190     283     103  
Diluted common shares for continuing operations and discontinued operations attributable to Brown Shoe Company, Inc.   41,766     40,935     41,571     40,721  
 
Basic adjusted earnings (loss) per common share:
From continuing operations $ 0.63 $ 0.60 $ 1.24 $ 1.04
From discontinued operations   -     -     0.04     (0.04 )
Basic adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.63   $ 0.60   $ 1.28   $ 1.00  
 
Diluted adjusted earnings (loss) per common share:
From continuing operations $ 0.62 $ 0.60 $ 1.23 $ 1.04
From discontinued operations   0.01     -     0.04     (0.04 )
Diluted adjusted earnings per common share attributable to Brown Shoe Company, Inc. shareholders $ 0.63   $ 0.60   $ 1.27   $ 1.00  

Contact:

Brown Shoe Company
Investors
Peggy Reilly Tharp, 314-854-4134
ptharp@brownshoe.com
or
Media
Kelly Malone, 314-854-4093
kmalone@brownshoe.com

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