Brown Shoe Reports First Quarter Financial Results

ST. LOUIS, May 27 /PRNewswire-FirstCall/ -- Brown Shoe Company, Inc. (NYSE:
BWS) reported results for the first quarter of fiscal 2009 ended May 2, 2009.

First Quarter 2009 Results
-- Net sales were $538.7 million, a decrease of 2.8 percent compared to
$554.5 million in the year ago quarter;
-- Net loss attributable to Brown Shoe Company, Inc. (hereafter "net
loss") was $7.6 million, or $0.18 per diluted share, inclusive of
information technology initiatives costs of $0.04 per diluted share.
This compares to net earnings attributable to Brown Shoe Company, Inc.
(hereafter "net earnings") in the first quarter of 2008 of
$7.2 million, or $0.17 per diluted share, which included a net gain of
$0.12 per diluted share from insurance recoveries, net of associated
fees and costs, related to environmental remediation, partially offset
by costs from the Company's headquarters consolidation initiatives;
-- Cash and cash equivalents totaled $46.1 million at quarter-end;
-- Debt, net of cash and cash equivalents, was reduced by $32.7 million
from the end of fiscal 2008; and

-- Average inventory per store at quarter-end was down 5.1 percent at
Famous Footwear versus the prior year period and down 5.6 percent, on
a
constant dollar basis, at the Company's North American Specialty
Retail stores.

Ron Fromm, Brown Shoe's Chairman and CEO, stated, "As anticipated, the
consumer spending environment remained challenging in the first quarter, which
negatively impacted our sales and profitability. During the quarter, we were
successful in advancing our key priorities that focused on managing expenses,
inventory, working capital and debt, while maximizing opportunities within our
largest businesses of Famous Footwear, Naturalizer, and Dr. Scholl's. As a
result, our sales and operating performance were slightly better than our
expectations, we generated positive cash flow, and we lowered our net
borrowings by more than $30 million from the end of last year."

Fromm concluded, "While sentiment in the industry may have improved some since
last quarter, visibility remains difficult, so we will continue to manage our
business with discipline, focusing on expense, capital, and balance sheet
management. In keeping with this objective, we have decreased our Famous
Footwear store opening plan for 2009 and we now expect net openings to be flat
to down 15 in 2009 (open 55 and close 55 to 70). Additionally, we are
planning net store closings of approximately 30 stores per year in 2010 and
2011. We expect sequential improvement of operating results in the second
quarter, resulting in a narrower loss than in the first quarter, and that our
efforts to manage expenses will enable us to generate positive net earnings
for the full-year."

Consolidated Results for First Quarter 2009:
-- Net sales were $538.7 million, a decrease of 2.8 percent compared to
$554.5 million in the first quarter of 2008. Famous Footwear net
sales
were $317.6 million, a decline of 0.4 percent from the first quarter
of
last year, as same-store sales declined 4.9 percent in the quarter,
partially offset by operating 66 more stores. Net sales at the
Company's wholesale division decreased by 5.0 percent in the
quarter versus the same period last year, with net sales of
Naturalizer
increasing by 0.6 percent versus the same period last year and Dr.
Scholl's decreasing by 5.1 percent;
-- Gross margin rate in the first quarter decreased 40 basis points to
38.6
percent of net sales from 39.0 percent of net sales in the first
quarter
of 2008, driven by the continued promotional environment at retail as
well as a greater mix of mid-tier channel sales versus department
stores
sales;
-- Selling and administrative expenses in the first quarter increased by
$1.6 million to $212.8 million, or 39.4 percent of net sales, versus
$211.2 million, or 38.1 percent of net sales, in the same period last
year. The year-over-year change was primarily related to the impact of
operating 69 more North American stores as well as the consolidation
of
Edelman Shoe, Inc., offset partially by expense reductions across the
Company;
-- Net restructuring and other special charges (recoveries) increased the
Company's operating loss by $2.6 million in the first quarter of
2009 and increased operating earnings in the year-earlier period by
$8.4
million. Charges in 2009 include costs related to implementing a new
information technology platform, while the net benefit in 2008
reflects
net insurance recoveries related to environmental remediation,
partially
offset by costs related to the Company's headquarters consolidation
initiatives;
-- As a result, the Company generated an operating loss in the quarter of
$7.2 million versus operating earnings of $13.6 million in the first
quarter of 2008;
-- Net interest expense in the quarter increased $1.3 million to $5.1
million versus $3.8 million in the first quarter of 2008 due to
increased borrowings on the Company's revolving credit facility;
-- The Company recognized a $5.2 million income tax benefit in the
quarter
due to its loss in the quarter;
-- Net loss was $7.6 million, or $0.18 per diluted share, versus net
earnings of $7.2 million, or $0.17 per diluted share, in the year-ago
quarter. First quarter 2009 net loss included costs, net of a tax
benefit, of $1.7 million, or $0.04 per diluted share, related to the
Company's information technology initiatives. First quarter 2008
net earnings included costs, net of tax, of $1.1 million, or $0.03 per
diluted share related to its headquarters consolidation, offset by net
recoveries of $6.2 million, net of tax, or $0.15 per diluted share,
for
insurance recoveries, net of associated fees and costs, related to
environmental remediation;
-- Inventory at quarter-end was $408.5 million, as compared to $403.6
million at the end of the first quarter of 2008. The year-over-year
inventory increase was due primarily to operating 69 more North
American
stores and the consolidation of Edelman Shoe, Inc. Average inventory
on
a per store basis at Famous Footwear was down 5.1 percent in the
quarter
and average inventory per store at the Company's North American
Specialty Retail stores was down 5.6 percent, on a constant dollar
basis, as compared to first quarter-end last year;

-- At quarter-end, the Company's borrowings against its revolving
credit facility were $39.0 million versus no borrowings in the
year-earlier period and $112.5 million at the end of fiscal 2008. Cash
and cash equivalents at quarter-end were $46.1 million versus $63.2
million at first quarter-end last year and $86.9 million at the end of
fiscal 2008.

Dividend
The Company's Board of Directors has declared a quarterly dividend of $0.07
per diluted share, payable July 1, 2009 to shareholders of record on June 19,
2009. This dividend will be the 346th consecutive quarterly dividend paid by
the Company.

Outlook
Based on first quarter results and the current outlook, the Company expects
the following for fiscal 2009:
-- Net sales in the range of $2.2 billion to $2.3 billion;
-- Famous Footwear plans to open 55 new stores in 2009 while closing 55
to
70 stores. Famous Footwear same-store sales are expected to decline
mid-single digits for the year;
-- For its wholesale division, the Company expects a high-single digit
decline of its existing brands and private label business, partially
offset by growth in its new brands and channels of distribution;
-- Selling and administrative expenses in the range of 38.8 to 39.2
percent
for the full-year, which includes costs of $8 million to $9 million,
related to its information technology initiatives;
-- Depreciation and amortization of capitalized software and intangible
assets is expected to total $53 million to $55 million for the
full-year;
-- Net interest expense should approximate $21 million to $22 million,
driven by increased periodic year-over-year borrowings and higher
unused
fees on its recently renewed revolving credit facility;
-- The Company expects to generate a tax benefit in fiscal 2009. Its
consolidated effective tax rate is heavily dependent on geographic
earnings (mix of foreign and domestic earnings). The Company has
provided taxes in the first quarter based on its best estimate of the
annual effective tax rate;
-- Purchases of property and equipment and capitalized software are
targeted in the range of $55 million to $60 million;

-- The Company expects to generate a net loss in the second quarter,
though
narrower than in the first quarter on slightly lower net sales.
Additionally, it expects to generate both positive operating earnings
(earnings before interest and tax) and positive net earnings in 2009
(on
a GAAP and non-GAAP basis).

Participation in Investor Conference
The Company will be presenting at the Piper Jaffrey 29th Annual Consumer
Conference, held at the Westin New York at Times Square on Wednesday, June 10,
at 2:15 p.m. Eastern Time. Ron Fromm, Chairman and Chief Executive Officer,
and Mark Hood, Chief Financial Officer, will host the presentation. The
presentation, including the question and answer portion, will be webcast live
at www.brownshoe.com/investor.

Definitions
Consistent with SFAS 160, Noncontrolling Interests in Consolidated Financial
Statements, all references in this press release, outside of the condensed
consolidated financial statements that follow, unless otherwise noted, related
to net (loss) earnings attributable to Brown Shoe Company, Inc. and diluted
(loss) earnings per common share attributable to Brown Shoe Company, Inc.
shareholders, are presented as net (loss) earnings and (loss) earnings per
diluted share, respectively.

Non-GAAP Financial Measures
In this press release, the Company's financial results are provided both in
accordance with generally accepted accounting principles (GAAP) and using
certain non-GAAP financial measures. In particular, the Company provides
historic and estimated future net earnings (loss) and earnings (loss) per
diluted share adjusted to exclude certain charges and recoveries, which are
non-GAAP financial measures. These results are included as a complement to
results provided in accordance with GAAP because management believes these
non-GAAP financial measures help identify underlying trends in the Company's
business and provide useful information to both management and investors by
excluding certain items that may not be indicative of the Company's core
operating results. These measures should not be considered a substitute for or
superior to GAAP results.

Conference Call
A conference call to discuss first quarter 2009 results will be held this
morning at 9:00 a.m. ET. While participation in the question-and-answer
session of the call will be limited to institutional analysts and investors,
retail brokers and individual investors are invited to attend via a live
web-cast to be hosted at www.brownshoe.com/investor or www.earnings.com (at
the website, type in the BWS ticker symbol to locate the broadcast).

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995:
This press release 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 timing and uncertainty of activities and costs related to the
Company's information technology initiatives, including software
implementation and business transformation; (ii) potential disruption to the
Company's business and operations as it implements its information technology
initiatives; (iii) the Company's ability to utilize its new information
technology system to successfully execute its growth strategy; (iv) changing
consumer demands, which may be influenced by consumers' disposable income,
which in turn can be influenced by general economic conditions; (v) intense
competition within the footwear industry; (vi) rapidly changing fashion trends
and purchasing patterns; (vii) customer concentration and increased
consolidation in the retail industry; (viii) political and economic conditions
or other threats to continued and uninterrupted flow of inventory from China
and Brazil, where the Company relies heavily on third-party manufacturing
facilities for a significant amount of its inventory; (ix) the Company's
ability to attract and retain licensors and protect its intellectual property;
(x) the Company's ability to secure/exit leases on favorable terms; (xi) the
Company's ability to maintain relationships with current suppliers; and (xii)
the Company's ability to successfully execute its international growth
strategy. The Company's reports to the Securities and Exchange Commission
contain detailed information relating to such factors, including, without
limitation, the information under the caption "Risk Factors" in Item 1A of the
Company's Annual Report on Form 10-K for the year ended January 31, 2009,
which information is incorporated by reference herein and updated by the
Company's Quarterly Reports on Form 10-Q. The Company does not undertake any
obligation or plan to update these forward-looking statements, even though its
situation may change.

About Brown Shoe Company, Inc.
Brown Shoe is a $2.3 billion footwear company with global operations. Brown
Shoe's Retail division operates Famous Footwear, the more than 1,100-store
chain that sells brand name shoes for the family, approximately 300 specialty
retail stores in the U.S., Canada, and China primarily under the Naturalizer
brand name, and footwear e-tailer Shoes.com. Through its Wholesale divisions,
Brown Shoe markets leading footwear brands including Naturalizer, Dr.
Scholl's, Franco Sarto, LifeStride, Etienne Aigner, Via Spiga, and Sam
Edelman. Brown Shoe press releases are available on the Company's website at
http://www.brownshoe.com.

SCHEDULE 1

BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

Thirteen Weeks Ended
(Thousands, except per share data) May 2, 2009 May 3, 2008

Net sales $538,740 $554,491
Cost of goods sold 330,576 338,029

Gross profit 208,164 216,462
- % of Net Sales 38.6% 39.0%

Selling and administrative expenses 212,717 211,175
- % of Net Sales 39.4% 38.1%

Restructuring and other special
charges (recoveries), net 2,614 (8,387)

Equity in net loss of nonconsolidated
affiliate - 114

Operating (loss) earnings (7,167) 13,560

Interest expense, net (5,106) (3,758)

(Loss) earnings before income taxes (12,273) 9,802

Income tax benefit (provision) 5,202 (2,980)

Net (loss) earnings $(7,071) $6,822

Less: Net earnings (loss) attributable
to noncontrolling interests 532 (373)

Net (loss) earnings attributable
to Brown Shoe Company, Inc. $(7,603) $7,195

Basic (loss) earnings per common
share attributable to Brown Shoe
Company, Inc. shareholders $(0.18) $0.17

Diluted (loss) earnings per common
share attributable to Brown Shoe
Company, Inc. shareholders $(0.18) $0.17

Basic number of shares 41,566 41,463

Diluted number of shares 41,566 41,675

SCHEDULE 2

BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

May 2, May 3, January 31,
(Thousands) 2009 2008 2009

ASSETS

Cash and cash equivalents $46,121 $63,197 $86,900
Receivables 68,134 74,227 84,252
Inventories 408,459 403,606 466,002
Prepaid expenses and other
current assets 46,853 44,861 44,289
Total current assets 569,567 585,891 681,443

Other assets 106,038 96,762 103,137
Investment in nonconsolidated
affiliate - 6,526 -
Goodwill and intangible
assets, net 82,306 215,495 84,000
Property and equipment, net 155,864 145,178 157,451
Total assets $913,775 $1,049,852 $1,026,031

LIABILITIES AND EQUITY

Borrowings under revolving
credit agreement $39,000 $- $112,500
Trade accounts payable 133,000 134,592 152,339
Accrued expenses 126,521 117,806 137,307
Total current liabilities 298,521 252,398 402,146

Long-term debt 150,000 150,000 150,000
Deferred rent 41,864 41,337 41,714
Other liabilities 30,251 43,667 29,957

Total Brown Shoe Company,
Inc. shareholders' equity 384,497 560,736 394,104
Noncontrolling interests 8,642 1,714 8,110
Total equity 393,139 562,450 402,214
Total liabilities and
equity $913,775 $1,049,852 $1,026,031

SCHEDULE 3

BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Thirteen Weeks Ended
(Thousands) May 2, 2009 May 3, 2008

OPERATING ACTIVITIES:
Net (loss) earnings $(7,071) $6,822
Adjustments to reconcile net (loss)
earnings to net cash provided by
operating activities:
Depreciation 8,623 9,206
Amortization of capitalized
software 1,845 2,059
Amortization of intangibles 1,694 1,711
Amortization of debt
issuance costs 549 370
Share-based compensation
expense (income) 1,373 (57)
Loss on disposal of
facilities and equipment 117 163
Impairment charges for
facilities and equipment 1,590 410
Deferred rent 150 (78)
Deferred income taxes - (147)
Provision for doubtful accounts 308 25
Foreign currency transaction
(gains) losses (12) 39
Undistributed loss of
nonconsolidated affiliate - 114
Changes in operating assets
and liabilities:
Receivables 15,809 42,610
Inventories 57,962 31,690
Prepaid expenses and other
current assets (2,300) (20,230)
Trade accounts payable (19,372) (38,310)
Accrued expenses (10,891) 2,425
Other, net (923) (2,531)
Net cash provided by operating
activities $49,451 $36,291

INVESTING ACTIVITIES:
Purchases of property and equipment (8,559) (13,213)
Capitalized software (4,783) (1,391)
Net cash used for investing activities (13,342) (14,604)

FINANCING ACTIVITIES:
Borrowings under revolving
credit agreement 168,400 135,500
Repayments under revolving
credit agreement (241,900) (150,500)
Proceeds from stock options
exercised - 178
Tax (expense) benefit related
to share-based plans (57) 87
Dividends paid (3,004) (2,963)
Net cash used for financing activities (76,561) (17,698)

Effect of exchange rate changes on cash (327) (593)

(Decrease) increase in cash and cash
equivalents (40,779) 3,396

Cash and cash equivalents at
beginning of period 86,900 59,801

Cash and cash equivalents at
end of period $46,121 $63,197

SCHEDULE 4

BROWN SHOE COMPANY, INC.
Reconciliation of Net (Loss) Earnings Attributable to Brown Shoe
Company, Inc. (GAAP Basis) to Adjusted Net (Loss) Earnings
Attributable to Brown Shoe Company, Inc. (Non-GAAP)

The following is a reconciliation of the Company's first quarter GAAP Net
(Loss) Earnings Attributable to Brown Shoe Company, Inc. to Adjusted Net
(Loss) Earnings Attributable to Brown Shoe Company, Inc.:

1st Quarter 2009 1st Quarter 2008
Net (Loss) Diluted Net (Loss) Diluted
Earnings (Loss) Earnings (Loss)
Earnings Earnings
(Thousands, except per share data) Per Share Per Share

GAAP Net (Loss) Earnings
Attributable to Brown Shoe
Company, Inc. $(7,603) $(0.18) $7,195 $0.17

Charges / Other Items:
Insurance recoveries, net - - (6,210) (0.15)
Headquarters consolidation - - 1,087 0.03
IT initiatives 1,683 0.04 - -
Total Charges / Other Items 1,683 0.04 (5,123) (0.12)

Adjusted Net (Loss) Earnings
Attributable to Brown Shoe
Company, Inc. $(5,920) $(0.14) $2,072 $0.05

SCHEDULE 5

BROWN SHOE COMPANY, INC.
OPERATING RESULTS BY SEGMENT

Famous Footwear Wholesale Specialty Retail
1st 1st 1st 1st 1st 1st
Quarter Quarter Quarter Quarter Quarter Quarter
($millions) 2009 2008 2009 2008 2009 2008

Net Sales $317.6 $318.8 $168.8 $177.7 $52.4 $58.0

Gross Profit $136.5 $137.0 $49.4 $54.1 $22.3 $25.3

Gross Profit Rate 43.0% 43.0% 29.3% 30.5% 42.5% 43.7%

Operating (Loss)
Earnings $3.0 $7.6 $5.9 $8.7 $(6.2) $(4.7)

Operating (Loss)
Earnings % 1.0% 2.4% 3.5% 4.9% (11.9)% (8.0)%

Same-store Sales % (4.9)% (7.3)% - - (6.1)% (5.8)%

Number of Stores 1,166 1,100 - - 299 291

SOURCE Brown Shoe Company, Inc.

investors, Ken Golden, +1-314-854-4134, kgolden@brownshoe.com, or media, Erin
Conroy, +1-212-324-4515, econroy@brownshoe.com, both of Brown Shoe Company,
Inc.