If retail was the NFL, the honors for Coach of the Year would have to go to Famous Footwear president Joe Wood. A strong performance in the fourth quarter ended January 29 was due to two years of investment in the family footwear chain of Brown Shoe Company, Inc. and a strategic realignment of merchandising and store formats. Famous now has more than 60% of their stores remodeled in the new format that is helping drive both store traffic, average ticket, and average selling prices for the quarter and the year. All stores are expected to be converted by Back-to-School 2006.

Famous Footwear operating earnings, restated to reflect SEC-mandated lease accounting adjustments, were $11.2 million for the fourth quarter, a 115% increase compared to $5.2 million for fiscal 2003. Operating margins nearly doubled as a percent of sales, rising to 4.3% of sales from 2.2% of sales in Q4 last year. Net sales increased 8.7% to $263.1 million in 2004 versus $242.0 million in the fourth quarter 2003. The chain increased same-store sales for the quarter 4.1% for the quarter, momentum that reportedly carried over into February. The division was the lone bright spot for Brown Shoe Company for the quarter.

Famous reported comp sales increases in all genders of the business. Athletics, which comprised “slightly less than half” of the total business for the chain, was again a star performer. Children’s was also called out as a key performer. Comp gains in the men’s and women’s non-athletic business were said to be “modest”, but also as “healthy”. The boot business on the athletic side was said to have performed “fairly well”, but the non-athletic or dress boot performance will cause them to cut back on the category for this year.

Mr. Wood said the casual business is coming back after a long struggle through Back-to-School 2004. He said they are getting a teen casual customer that is getting into more of the Euro sportstyle looks that are coming from non-athletic vendors. He said the missy casual business has “come back very nicely” as well. He called out Skechers and Clarks as an opportunity on the casual side. Wood saw little change in athletic, saying he saw it “as strong or stronger” in 2005 than it was in 2004. About 14% of the athletic business was described as exclusive product, while 18% to 20% of the non-athletic business was exclusive. Both areas will get a larger slice of exclusives as the year progresses. Wood said athletic, which was already booked for Q3, would be “closer to 20% to 22%” in units for Back-to-School.

Famous opened 70 stores for the year and 44 stores were closed, for a total of 919 stores at year-end. The new stores averaged about 7,300 square feet each, while the closed stores averaged about 6,200 square feet, netting a slight square footage increase to 6.4 million feet at the end of fiscal 2004.

For 2005, plans are to open about 80 stores and close about 35 stores. Management is looking for further improved store traffic levels and expects to see same-store sales gains between 1% and 2% for the year.