Famous Footwear Sees Nice September Gain led by Athletics

Brown Shoe Company, Inc. reported September retail sales at Famous Footwear increased 8.9% to $104,000,000 for the five-week period ended October 2, 2004, compared to $95,500,000 for the same period last year. Same-store sales for September were up 4.7%.

Famous Footwear sales for the first eight months of fiscal 2004 were $779,400,000, a 2.4 percent increase compared to $761,400,000 for the year-ago period. Same-store sales for the 35 weeks were down 0.4 percent.

“The back-to-school season started late for Famous Footwear,” said Brown Shoe Chairman and CEO Ron Fromm. “While our back-to-school business strengthened with a 4.7 percent same-store sales gain in September, combined same-store sales for August and September were down 1.3 percent — falling short of our expectations.”

The Company noted the following category performances at Famous Footwear over the August/September period: Athletics increased mid-single digits on a same-store basis, as did dress footwear. Its kids' business was flat. Total women's footwear was down for the two months, with the largest decline coming from the casual category.

Retail sales at Brown Shoe's Naturalizer retail division, a 382-store chain selling the Naturalizer brand of women's footwear in the U.S. and Canada, were $19,700,000 for the five-week month, compared to $21,000,000 for the year-ago period. September same-store sales declined 8.1 percent. Total sales for the chain for the first eight months were $124,900,000 compared to $125,500,000 for the same period last year; same-store sales were down 2.8 percent.

Forward Guidance

Based on quarter-to-date results, Brown Shoe currently estimates third quarter diluted earnings per share will be in the range of $0.90 to $1.00, versus $1.13 per share for the third quarter of 2003. Full-year results for fiscal 2004 are currently estimated in the range of $2.55 to $2.65, as compared to the Company's fiscal 2003 diluted earnings per share of $2.52.

“In addition to the lower-than-planned back-to-school business, our third quarter guidance reflects a continuation of the challenges we faced in the second quarter with respect to our Children's and Bass wholesale businesses and the Naturalizer business,” said Fromm. “Looking to the fourth quarter, we expect to report increases in sales and earnings. Our expectation is based on Famous Footwear continuing to achieve at or near planned earnings levels, predicated on flat to a modest increase in same-store sales. In addition, Carlos by Carlos Santana, LifeStride and our Men's and Athletic businesses are achieving solid results with expectations of this performance continuing in the fourth quarter. We also expect our Children's division to stabilize as we begin to ship new licensed product. This is somewhat tempered by continuing difficult conditions at retail, which could affect our wholesale shipping.

“Over the long term, we remain committed to delivering compelling product to our wholesale customers and creating an equally compelling shopping experience for our retail customers. This will enable us to increase our market share and create value for our shareholders,” Fromm said.