Earnings Releases

Brown Shoe Announces 3rd Quarter Earnings of $0.68; Announces Broad Financial and Operational Restructuring and Related Charge;
Expects Initiatives and Operational Gains to Increase Earnings by 65% to $2.75 in FY2003

ST. LOUIS, November 26, 2001 -- Brown Shoe Company, Inc. (NYSE:BWS) today reported net earnings of $11,851,000 or $0.68 per diluted share for the third fiscal quarter ended November 3, 2001, versus $0.88 per diluted share for the year-ago quarter, but in line with previously announced expectations. Consolidated net sales for the quarter were $462,361,000 versus $463,312,000 for the year ago quarter.

Brown Shoe also announced a sweeping series of initiatives, including profitability-enhancing measures in its Naturalizer division and the development of a shared services administrative platform, designed to dramatically improve the company's competitiveness over the next few years. The broad scope of these initiatives, combined with the comprehensive inventory and logistics work already underway, are expected to boost after-tax earnings by approximately $13 million by 2003; rising to more than $20 million by 2005. As a result of this bold restructuring and in order to enhance its base of profitability, Brown Shoe intends to take an after-tax charge in its fourth quarter of $29-$32 million, or $1.67-$1.84 per share.

"Earlier this year, we embarked on a campaign, that we've called Project IMPACT, to reshape the way we do business today and into the future," said Brown Shoe Chairman and CEO Ron Fromm. "We are now implementing programs to build enterprise-wide systems to support our businesses, eliminate redundant infrastructure and significantly improve the earnings power of this company."

The company's expected fourth quarter charge relates to the following areas: 1) a restructuring of the Naturalizer division, 2) severance costs, 3) inventory markdown, 4) management transition at Famous Footwear, and 5) debt restructuring. The company's Naturalizer division will be restructured to increase profitability, especially in terms of a more productive retail store base. The company will incur severance charges in connection with the elimination of a targeted 650 positions over the next 15 months. These positions are related to staff reductions for both Famous Footwear and Naturalizer retail as well as administrative staff reductions due to the creation of the company's new shared services platform. An incremental markdown charge will be taken in order to accelerate a reduction in inventory levels associated with the implementation of Project IMPACT. Finally, a portion of the charge will be associated with the restructuring of the company's finance arrangements, which will enable the company to take advantage of lower interest rates. The company has commitments for a new $350 million secured financing arrangement led by Bank of America. As a result, the company expects to call its currently outstanding $100 million 9.5% notes due in 2006.

Full realization of these benefits will build over the next several years as the company transitions its operating base. For 2002, the company expects these initiatives, in conjunction with the achievement of operational goals, will result in a 25 percent increase in earnings per share to a range of $2.00-$2.10; in fiscal 2003 the company expects to realize an additional 35 percent gain in its earnings per share to approximately $2.75. Implicit in this projection is a $75 million reduction in the company's inventory base by the end of fiscal 2004.

"In total, these actions will greatly strengthen our balance sheet and should vastly improve our profitability," noted Brown Shoe CFO Andy Rosen. "Combining the financial flexibility of this new financing with our reduced inventory and carrying costs from Project IMPACT gives us the financial base to accomplish this competitive transformation of our business."

Third Quarter Retail Results
As previously reported, sales at Famous Footwear, the company's 924-store family footwear chain, decreased 4.1 percent to $280,942,000 for the quarter versus $292,813,000 for the year ago period. Operating earnings for Famous Footwear declined 36.2 percent to $14,189,000, due primarily to lower-than-planned volume and lower margins. Same-store sales were down 9.4 percent.

Sales for the company's 477 Naturalizer stores in the U.S. and Canada rose 4.3 percent in the quarter to $52,159,000. Same-store sales were up 5.4 percent in the U.S and 8.8 percent in Canada. During the quarter, the division's operating loss improved by 23.7 percent to $1,354,000, compared with a loss of $1,775,000 for the year-ago quarter. The division continues to invest in updating its store designs to reflect the new Naturalizer image, expanding its customer catalog mailings, and intensifying its in-store merchandising presentations.

"As one of the largest shoe retailers in the U.S., Famous Footwear was hurt during September and October, as the economy and consumer confidence continued to deteriorate," said Fromm. "Fortunately, our IMPACT initiatives already had reduced inventory levels at Famous Footwear by $15 million, and while it's still early in the fourth quarter, our increased promotions are driving modest store-for-store gains."

Naturalizer retail performed above the market as women were drawn to the brand's collection of fashion boots and casual and dress flat shoes.

Third Quarter Wholesale Results
Sales for the wholesale businesses, which include branded, private label and licensed footwear for women, men and children sold in the U.S., Canada and several international markets, were up 7.0 percent to $128,915,000 from $120,473,000 for the year-ago quarter. Operating income increased 25.6 percent to $12,308,000 due to exceptionally strong sales in the private label and branded women's businesses.

The increase was led by 28 percent wholesale gains for Naturalizer, the company's flagship brand -- year-to-date, Naturalizer wholesale sales are up 34 percent over the year-ago period. Earlier this month, Naturalizer was named "Brand of the Year" by Footwear News.

"Since August 1999, when we launched the re-imaging campaign, the Naturalizer brand has increased its wholesale distribution by more than 50 percent, upped its market share by 84 percent in the department store channel, and added more than 600 new independent store customers. Plus, since the early 1990s, the brand has shaved 20 years off the average age of its customer," said Fromm. "This is a brand on the move, and we are grateful for the tremendous support we've received from our retail partners who also saw the potential and got behind us."

The wholesale division also reported excellent sales of its Dr. Scholl's footwear and women's fashion shoes and boots, sold primarily through top mass merchandisers.

Nine Months Results
During the first nine months of the fiscal year, diluted earnings per share were $1.37 versus $1.75 for the year ago period, and net earnings were $24,057,000 versus $31,361,000. Consolidated net sales for the nine months were $1,340,578,000 versus $1,277,216,000 for the year ago period.

For the nine month period, sales increased 2.5 percent at Famous Footwear to $803,102,000; 3.7 percent at Naturalizer Retail (U.S. and Canada) to $157,711,000, and increased 11.1 percent at wholesale to $379,226,000. Operating earnings for the nine months declined 49.1 percent to $23,781,000 at Famous Footwear; increased 59.8 percent for wholesale to $37,326,000, and improved 78.5 percent for Naturalizer Retail, which posted a loss of $385,000.

Forward-looking Guidance
With respect to forward-looking guidance, the company estimates earnings per share will be in the range of $0.23 to $0.28 before the taking of an after-tax charge in the fourth quarter; for a yearly estimate of $1.60 to $1.65 before charges.

Third Quarter Earnings and Conference Call
Brown Shoe will hold a conference call to discuss these results today at 4:30 p.m. EST. While 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 http://www.streetevents.com. At the website, click on the Individual Investor Center to locate the broadcast.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain forward-looking statements that are subject to various risks and uncertainties that could cause actual results to differ materially. These include general economic conditions, competition, consumer apparel and footwear buying trends, and political and economic conditions in Brazil and China, which are significant footwear sourcing countries. Brown Shoe Company, Inc. reports to the Securities and Exchange Commission including its Annual Report on Form 10-K contain detailed information relating to such factors. The Company disclaims any intent or obligation to update any forward-looking statements mentioned in this press release.

Brown Shoe is a $1.7 billion footwear company with worldwide operations. The company operates the Famous Footwear and Naturalizer chains of footwear retail stores and markets leading brands including Naturalizer, LifeStride, Buster Brown, and licensed brands including Dr. Scholl's, Carlos, Barbie, and other kids' character footwear. Brown Shoe press releases are available on the Company's web site at www.brownshoe.com

(Thousands, except per share)
	Thirteen Weeks Ended		Thirty-nine Weeks Ended
	November 3, 2001	October 28, 2000	November 3, 2001	October 28, 2000
Net Sales	$462,361	$463,312	$ 1,340,578	$ 1,277,216
Cost of Goods Sold	280,874	278,955	814,499	762,794
Gross Profit	181,487	184,357	526,079	514,422
Selling and Administrative Expenses	161,098	157,050	479,651	455,385
Interest Expense	4,827	4,747	15,591	13,326
Other (Income) Expense	312	(168)	(1,665)	(675)
Earnings Before Income Taxes	15,250	22,728	32,502	46,386
Income Tax Provision	3,399	7,113	8,445	15,025
Net Earnings	$ 11,851	$ 15,615	$ 24,057	$ 31,361
Basic Net Earnings per Common Share	$ .69	$ .88	$ 1.40	$ 1.76
Diluted Net Earnings per Common Share	$ .68	$ .88	$ 1.37	$ 1.75
Basic Number of Shares	17,208	17,648	17,179	17,810
Diluted Number of Shares	17,414	17,789	17,562	17,969

(Thousands)
		November 3, 2001	October 28, . 2000
ASSETS
Cash and Cash Equivalents		$ 25,152	$ 44,634
Receivables, Net		55,962	57,942
Inventories, Net		445,065	444,355
Other Current Assets		23,157	26,979
Total Current Assets		549,336	573,910
Property & Equipment - Net		88,881	91,091
Other Assets		87,587	80,125
		$ 725,804	$ 745,126
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable		$ 85,000	$ 59,000
Trade Accounts Payable		109,748	141,292
Accrued Expenses		70,527	85,562
Income Taxes		2,464	8,606
Current Maturities of Long-Term Debt		28,550	10,000
Total Current Liabilities		296,289	304,460
Long-Term Debt and Capitalized Leases		123,490	152,037
Other Liabilities		19,294	19,443
Shareholders' Equity		286,731	269,186
		$ 725,804	$ 745,126