Slide 1: Brown Shoe Company, Inc. Investor Update
Brown Shoe Company, Inc. Investor Update March 2008 1
Slide 2: Forward-looking statements
This document contains certain forward-looking statements and expectations regarding the Company's future performance and the future performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include (i) the c
Slide 3: Brown Shoe At A Glance
Brown Shoe At A Glance BROWN SHOE TODAY - $2.4 Billion in Sales for 2007 Integrated wholesale-retail platform Consumer-driven enterprise that builds brands and Total BWS D2C retail concepts while gaining market share $110 million (Includes FamousFootwear.com, Naturalizer.com, Naturalizer Catalog, Sh
Slide 4: Brown Shoe Platform
Brown Shoe Platform RETAIL WHOLESALE ● 1,300+ total retail doors – appx. 1,100 ● World class global sourcing network. Famous Footwear, 250+ Naturalizer, Sourced 76 million pairs at wholesale Brown Shoe Closet, FX LaSalle, and and sold another 40 million at retail branded concepts. 130 million consum
Slide 5: Power of the Integrated Wholesale / Retail Model
Brown Shoe Platform Power of the Integrated Wholesale / Retail Model x Driving Growth, Profitability, and Value Creation • Fragmentation of the consumer has significantly expanded the Control the matrix of style preferences and retail options Customer • Integrated model allows a wide variety of bran
Slide 6: Brown Shoe Portfolio
Brown Shoe Portfolio Salon Bridge No. 3 Pureplay Ecommerce Footwear Impulse Better Moderate Junior No. 1 Branded Family Footwear Comfort Dr. Scholl’s Inside Mass Private Label / Brand 6
Slide 7: Review of BWS Financials
Review of BWS Financials (all $’s in millions except EPS) 52 Weeks Ended 53 Weeks Ended Feb. 2, 2008 Feb. 3, 2007 % Chg. Sales $2,359.9 $2,470.9 -4.5% Net Earnings GAAP $60.4 $65.7 -8.0% Adjusted* $72.8 $71.0 2.5% EPS GAAP $1.37 $1.51 -9.3% Adjusted* $1.65 $1.63 1.2% Gross Margin 40.0% 39.3% Debt/Ca
Slide 8: First Quarter 2008 & Full Year Guidance
First Quarter 2008 & Full Year Guidance As of March 5, 2008 and has not been updated Consolidated Sales: 2008 Est. 2007 Actual First Quarter $575 - $585 million $566 million Full Year $2.5 - $2.55 billion $2.36 billion EPS: First Quarter $0.07 to $0.11 $0.22 Full Year $1.52 to $1.62 $1.37 Other Annu
Slide 9: Brown Shoe Vision
Brown Shoe Vision: Brown Shoe is the leading fashion footwear marketer, winning loyal customers with compelling global brands. Doubling our rate of profitability while doubling our sales over the next five years. 9
Slide 10: Growth and Profit Drivers
Growth and Profit Drivers 1. Build powerful consumer brands • Grow brand equity of flagship brands • Test, incubate and grow new brands 2. Drive brands through owned retail • Leverage vertical & multi-channel businesses • Maximize owned-distribution and owned-branded assets 3. Expand our brands to g
Slide 11: Famous Footwear growth opportunity
Profitable Market More Shoes, Optimization More Ways (Real Estate) Merchant Localization (Tailoring Inventory Assortment Optimization by Region) Balance & Value ● Growth opportunity to a minimum of 1,500 doors ● Trend-right product ● Leveraging multi-channel platform ● Marketing strategy ● Technolog
Slide 12: Famous Footwear Rewards Program
Rewards Program Famous Footwear Rewards - Active Members (defined as shopped in past 12 months) 8 54% 60% Active Members 7 % Member Sales 45% 50% Members Sales (% of Sales) Active Members (millions) 6 39% 34% 40% 5 30% 4 30% 6.5 3 17% 5.4 20% 4.4 2 3.8 3.4 10% 1 1.9 0 0% 2002 2003 2004 2005 2006 200
Slide 13: Brand extension to new categories and touchpoints
$125-$300 $60-180 In te rn at io na Accessories/Other Categories l $30-$80 ● Extended brand essence to new categories and consumer touchpoints ● Tightly-targeted consumer communications ● Sell-through model; fresh trend-right product ● Improved product delivered when she wants to buy ● Model to be l
Slide 14: International markets 2008-2012
2007 2012 Est. US 133 Canada 120 *Central & S. America 25 *Pacific Rim 38 **China 26 Current Domestic Markets Total 342 700 - 750 Current International Markets *All Central and South American and Pacific Rim stores are franchised **21 of the 26 China stores are franchised by the B&H Footwear joint 2
Slide 15: Online footwear pure play opportunity
pure play ● $350 to $450 million opportunity in next 5 years ● Branded web sites and multi-channel opportunities ● Integrated platform $6.3 ● Growth by winning in new and emerging markets $5.5 * Source: Forrester $4.8 $4.2 $3.7 $2.8 $3.2 $ Billions Online Footwear: Projected to be $1.7 over $6B mark
Slide 16: Brown New York
Brown New York ● Provides fashion halo to portfolio ● Strong emotional connection with consumer ● Fashion/Style Credibility/Talent ● Brand extension and lifestyle potential ● Expect double-digit sales increase in 2008 16
Slide 17: Dr. Scholl's brand
● High brand recognition and strong equity ● 97% brand awareness driven by insole TV and print advertising ● Partnerships with Wal-Mart and Schering-Plough ● Extend asset into new categories and channels ● Growth through vertical model 17
Slide 18: Positioning for Growth
Positioning for Growth Sustainable Growth Increasing Prospects for • Growing portfolio Profitability •Organic Improving •Consolidation Core • Earnings • Focus on best brands Enhancement Plan Competencies and market • Brown NY integration opportunities • Accelerating Famous • Consumer-Driven growth R
Slide 19: Appendix
Appendix a i shy eats ¢ y lin ® Ly . 7i93 7 THE LEADER IN FOOTWEAR® BROWN SHOE 19
Slide 20: Sales and EPS – 2003 to Estimated 2008
Adjusted EPS GAAP EPS Sales and EPS – 2003 to Estimated 2008* Guidance range Sales in Billions Earnings Per Share $1.63 $1.65 $2.5 $2.55 – $1.62 – $2.50 $1.52* Billion* $1.48 $1.51 $1.50 $1.37 $2.0 $1.13 $1.10 $1.02 $0.96 $1.5 $1.00 $1.0 $0.50 $0.5 $0.0 $0.00 2003 2004 2005 2006 2007 2008 2003 2004
Slide 21: Earnings Enhancement Plan
Earnings Enhancement Plan During 2006, the Company introduced its Earnings Enhancement Plan designed to increase earnings through cost reductions, efficiency initiatives, and the reallocation of resources. Key elements of the plan include: i) restructuring administrative and support areas; ii) redes
Slide 22: Earnings Enhancement Plan Savings of $26 million to date
Earnings Enhancement Plan x Savings of $26 million to date Key Accomplishments in 2007: Reorganization of Brown Shoe Retail and associated consolidation of key functions: Blended all retail field operations and store support functions, across all retail formats Created enterprise-wide D2C organi
Slide 23: Capital Expenditure Schedule
Capital Expenditure Schedule (Millions of dollars) 2007 2008 New Stores $ 22.8 $ 22.0 to $ 24.0 Remodel 13.8 19.0 to 23.0 Logistics 0.1 22.0 to 22.0 Infrastructure (Incl. IT) 4.8 12.0 to 16.0 Total $ 41.5 $ 75.0 to $ 85.0 23
Slide 24: EBITDA Reconciliation
EBITDA Reconciliation (Millions of dollars) 2007 2006 Operating Profit $ 95.7 $ 108.1 Depreciation & Amortization * 52.3 50.8 EBITDA $ 146.5 $ 157.4 * Depreciation and amortization excludes amortization for debt issuance costs 24
Slide 25: Debt to Capital Ratio
Debt to Capital Ratio (Millions of dollars, except for Debt to Capital Ratio) Debt to Capital Ratio 2007 2006 2005 2004 2003 2002 Total Debt Obligations* $ 165 $ 151 $ 200 $ 142 $ 120 $ 152 Total Shareholders' Equity 559 524 434 391 350 292 Total Capital $ 724 $ 675 $ 634 $ 533 $ 470 $ 444 Debt to C
Slide 26: Review of BWS Financials
Review of BWS Financials 52 Weeks Ended 53 Weeks Ended Feb. 2, 2008 Feb. 3, 2007 % Chg. (#039;s in millions) Famous Footwear Sales $1,313.2 $1,282.2 2.4% Operating Profit $84.1 $89.8 -6.3% Same-Store Sales -0.6% 3.4% Specialty Retail Sales $263.2 $257.9 2.0% Operating Profit* -$8.2 -$3.8 115.8% Same-St
Slide 27: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings: 2007 v. 2006 2007 2006 (#039;s in thousands) Net Earnings EPS Net Earnings EPS GAAP Net earnings $60,427 $1.37 $65,708 $1.51 Charges/Other Items: Earnings Enhancement Plan 12,351 0.28 3,927 0.09 Bass Exit Costs - - 2,337 0.05 Insurance Recov
Slide 28: Wholesale Portfolio - 2007
Wholesale Portfolio - 2007 Private Label / Private Brand Children’s 28
Slide 29: Sales by category 2007
-- Sales by category 2007 Accessories 5% 15% 6% Athletic 8% Kid’s Athletic Women’s 16% 30% Men’s Athletic 20% 29