Famous Footwear president Joe Wood said growth in the women’s business in the fourth quarter was offset by the challenges in the Athletic Footwear business. Wood pointed to price compression across the industry that impacted prices “to the tune of about 3 to 4 percent”. The impact on Brown Shoe Company’s family footwear chain were significant since Athletic Footwear represents about 40% of total sales for Famous in fourth quarter.

Wood said they are planning a 2% increase in average retail prices in 2004. He said the average inbound cost per pair is “up slightly from last year” which should lead to higher retail prices at retail.

Famous is also looking for upside in the first half of this year due to easier comparisons to the first five months of last year when FF averaged “about a 4% comp store sales decline”. The Athletic business actually fell over 7% on a comp store basis in the first six months of LY.

Wood also said the Athletic product is “much better” going forward, with the “infusion of fresh new footwear including exclusive athletic by some key vendors” he expects will help add excitement to the stores.

“We don't have one athletic vendor we deal with that we don't have exclusive products from for this spring so it's a continuing and growing process,” said Wood.

Brown Shoe CEO Ron Fromme said he believes FF can improve store traffic levels and estimates that same-store sales can grow “1% to 2% over 2003”. Total sales at Famous Footwear are expected to rise by 4.0%, due in part to a 2% to 3% increase of average square footage for the year. Famous plans to open “about 70 stores and close 50” for a net gain of 20 stores for 2004.

Famous will also increase marketing spend by nearly 15% for the year to advertise the “new Famous” to consumers.
As previously reported, sales at Famous Footwear in Q4 declined 2.3% to $242.0 million versus $242.3 million for the year-ago quarter. Same-store sales were down 2.3%. Operating earnings for Famous Footwear were $6.1 million, even with last year. Gross margins improved by 40 basis points in the quarter.

Full year sales at Famous Footwear inched up 0.1% to $1.074 billion versus $1.075 billion in fiscal 2002. Comp store sales decreased 2.4%, “due primarily to lower traffic counts throughout most of the year”. FF saw full-year operating earnings increase 14.4% to $53.0 million from $46.3 million last year. FF saw margins improve and the percentage of customers making purchases improve due to an “improved mix of trend-right, in-season product”.