Brown Shoe Company consolidated net sales for the quarter increased 4.3% to $514.8 million versus $493.4 million for the year-ago quarter. Net earnings declined 11.3% to $18.8 million, or $1.01 per diluted share, from $21.2 million, or $1.13 million per diluted share, in the year-ago quarter.

“Earnings were essentially in-line with our earlier projections,” said Brown Shoe Chairman and CEO Ron Fromm. “An on-plan earnings performance in our Famous Footwear division helped offset the challenging environment faced by areas of our branded wholesale, Naturalizer Retail and children’s businesses. In addition, the quarter was favorably impacted by reduced
compensation costs related to stock-based and incentive plans of $5.3 million after-tax, compared to last year’s third quarter.

“As we look ahead,” Fromm added, “we continue to see near-term challenges for our wholesale segment due to the difficult retail environment, especially within the moderate zone. While we believe our strategies and brand-building investments will improve results in 2005, we believe it prudent to reduce our full-year earnings guidance to $2.35 to $2.50 per diluted share.”

Third Quarter Retail Results

As previously reported, sales at Famous Footwear, the Company’s 914-store family footwear chain, increased 3.3% to $311,685,000 for the quarter, versus $301,588,000 for the year-ago period. Operating earnings for Famous Footwear were up 5.9% to $24,802,000, versus $23,427,000 for the year-ago quarter. Same-store sales were down 0.4% for the quarter and margins were down slightly. The improvement in operating earnings was due to the leveraging of higher sales across the expense base.

“We are encouraged by Famous Footwear’s ability to deliver year-to-date operating earnings that are on-plan, despite this year’s challenging back-to-school period,” Fromm said. “We believe these results validate our investments in improving our assortments, merchandising and store shopping experience.”

Third quarter sales for the Company’s 381 Naturalizer stores in the United States and Canada were $49,911,000, versus $49,789,000 for the year-ago period. During the quarter, the division had an operating loss of $1,491,000, compared to an operating loss of $166,000 for the year-ago quarter, primarily due to lower than planned same-store sales. Same-store sales were down 5.7% for stores in the United States, and up 2.4% in Canada.

Last week, Brown Shoe announced it had formed a separate division devoted to its 381 specialty retail stores in the United States and Canada. “We have added management expertise to this area primarily with the goal of increasing the profitability of our Naturalizer stores,” Fromm continued. “This work is under way and we are looking for improved results next year.”

At the same time, Brown Shoe consolidated management of its Wholesale operations into one division: Brown Shoe Wholesale. As announced, that move is intended to further strengthen product design, brand building and service to major store customers.

Third Quarter Wholesale Results

Wholesale sales for the quarter were $148,696,000, up 6.2% versus $140,062,000 last year.

Operating earnings for the Wholesale businesses were $10,375,000 compared to $15,460,000 for the prior-year quarter, a 32.9% decrease, as a result of increased allowances and lower-than-anticipated sales in its
children’s, Bass, Original Dr. Scholl’s and Naturalizer businesses.

“While our LifeStride brand had a 19.4% increase in wholesale sales for the quarter and our Carlos business increased 65.9%, Naturalizer wholesale sales were down 9.8%,” Fromm said. “Year-to-date, however, these brands continued to gain market share in U.S. department stores versus last year according to NPD Group data.”

Unfilled orders for the Wholesale division are running 6% higher than last year.

Nine Months Results

For the first nine months of 2004, consolidated net earnings were down 15.7%, to $35,201,000 or $1.87 per diluted share, compared to $41,759,000 or $2.25 per diluted share, the year before. Earnings per share for the period were negatively affected by Bass transition costs, which have totaled $0.17 per share. Offsetting these charges are benefits from reduced compensation costs associated with stock-based and incentive compensation
plans; they were $6.0 million after-tax, or $0.32 per diluted share, lower than the comparable nine-month period last year.

Sales increased 4.8% during the nine-month period to $1,465,314,000, compared to $1,398,261,000 last year. For the nine month period, sales at Famous Footwear increased 2.6% to $853,620,000 from $831,634,000 for the year-ago period; increased 0.9
percent at Naturalizer Retail (United States and Canada) to $143,507,000 versus $142,296,000; and increased 9.1% at Wholesale to $457,125,000 versus $418,950,000 for the first nine months of last year.

Operating earnings for the nine months increased 6.2% to $49,818,000 at Famous Footwear versus $46,914,000 last year; decreased 21.8% for Wholesale to $32,144,000 versus $41,106,000; and declined to a loss of $6,262,000 for Naturalizer Retail, which posted a loss of $2,534,000 for the first nine months of 2003.

Forward-Looking Guidance

With respect to forward-looking guidance for fiscal 2004, due to the continued difficult wholesale environment, Brown Shoe is revising its earnings per share estimate to $2.35 to $2.50, which compares to fiscal 2003 earnings
per share of $2.52. The Company estimates diluted earnings per share for the fourth quarter will be $0.48 to $0.63, versus $0.27 for the year-ago quarter. Both the full-year and fourth quarter 2003 results included special charges of $0.14 per diluted share in connection with the closing of the Company’s last Canadian manufacturing facility and $0.11 per diluted share from an environmental litigation charge.

This guidance is predicated upon a slightly positive same-store sales retail performance at Famous Footwear for the fourth quarter of 2004. The Company also estimates its Wholesale sales and operating earnings will be down
versus last year for the fourth quarter.

                             BROWN SHOE COMPANY, INC.

    (Thousands, except per share data)

                            Thirteen Weeks Ended   Thirty-Nine Weeks Ended

                           October 30, November 1, October 30, November 1,
                                 2004        2003        2004        2003

    Net Sales                $514,825    $493,433  $1,465,314  $1,398,261
    Cost of Goods Sold        306,782     288,721     868,661     820,557

    Gross Profit              208,043     204,712     596,653     577,704
     - % of Sales                40.4%       41.5%       40.7%       41.3%

    Selling & Administrative
     Expenses                 179,762     172,278     540,177     511,317
     - % of Sales                34.9%       34.9%       36.9%       36.6%

    Operating Earnings         28,281      32,434      56,476      66,387

    Interest Expense, Net       1,759       2,138       6,083       7,361

    Earnings Before Income
     Taxes                     26,522      30,296      50,393      59,026

    Income Tax Provision        7,702       9,096      15,192      17,267

    NET EARNINGS              $18,820     $21,200     $35,201     $41,759

    Basic Net Earnings per
     Common Share               $1.05       $1.19       $1.97       $2.37

    Diluted Net Earnings per
     Common Share               $1.01       $1.13       $1.87       $2.25