Earnings Releases

Brown Shoe Reports Strong First Quarter Results
Earnings Per Share Up 19% to $0.43
Company Raises FY02 EPS Guidance to $2.10-$2.15 from $2.00-$2.10

ST. LOUIS, MISSOURI, May 21, 2002 -- Brown Shoe Company, Inc. (NYSE: BWS) reported a 19 percent increase in net earnings to $7,633,000, or $0.43 per diluted share, for the first quarter of fiscal 2002 ended May 4, 2002. This compares to net earnings of $6,411,000, or $0.36 per diluted share, in the first quarter of 2001.

Consolidated net sales for the first quarter of 2002 were $446,738,000 compared to $436,138,000 in last year's first quarter, an increase of 2.4 percent.

Total company inventory levels at the end of the first quarter were $91.6 million below the same period last year and total debt was down $49.3 million, reflecting improvements achieved through the company's IMPACT initiatives. In 2001, Brown Shoe announced and began implementation of enterprise-wide IMPACT initiatives to reengineer inventory management processes, improve logistics systems and eliminate redundant infrastructure.

"Our IMPACT initiatives, which initially focused on Famous Footwear, our largest division, are allowing the chain to significantly improve the quality and freshness of its inventory and achieve higher sell-through rates with dramatically lower inventory levels," said Chief Financial Officer Andrew Rosen. "In addition to improving our in-store product mix, these initiatives have allowed us to reduce our interest costs by $1.9 million versus the year-ago period."

Retail Divisions
As previously reported, total sales at Famous Footwear, the company's 917-store family footwear chain, were up 4.6 percent to $267,606,000 for the quarter, from $255,728,000 for the same 13-week period last year. Same-store sales for the quarter increased 0.4 percent. Operating earnings were $10,791,000, a 9.5 percent increase over year-ago operating earnings of $9,854,000, primarily due to improved leveraging of the expense base and better margin rates on new spring footwear. The chain also improved its customer purchase conversion rate – as more customers entering the store made purchases.

Naturalizer Retail, the company's 440-store chain selling the Naturalizer brand of women's shoes in both the U.S. and Canada, posted sales of $49,272,000 compared to $50,985,000 for the same period last year, on a base of 35 fewer stores. Naturalizer Retail's 274 U.S.-based stores had a same-store sales increase of 3.1 percent for the quarter. To-date, the U.S. division has completed more than half of the 97 planned store-closings that were announced at the end of 2001. The 166 Canadian stores had a same-store decrease of 5.1 percent for the quarter.

Naturalizer Retail's operating loss increased to $1,322,000 versus a loss of $561,000 last year, primarily due to spring snowstorms and cold weather patterns in Canada, that caused store-for-store sales declines in March and April. Results also include operating losses of approximately $1,400,000 relating to U.S. stores scheduled to be closed under the announced plan.

Wholesale Divisions
Operating earnings for the wholesale businesses, which include the Naturalizer, LifeStride, Carlos, and Dr. Scholl's brands, private label footwear, the Buster Brown & Co. kids' business, as well as the company's Canadian wholesale operations, increased by 4.7 percent to $11,898,000 from $11,362,000 for the prior year quarter. Sales for the quarter were $128,822,000 versus $129,422,000 last year.

Naturalizer wholesale sales climbed 12.4 percent for the quarter, making this the 11th consecutive quarter of sales gains for the flagship brand. Sales to department stores, where the brand continues to gain market share, were up 23 percent. Unshipped orders for 2nd quarter shipments at Naturalizer were up 35 percent versus last year, with the current combined backlog for all wholesale business up 12 percent.

Sales and operating profits for Buster Brown & Co., the kids' division of Brown Shoe, were up double digits for the quarter, fueled by sales of licensed footwear – most notably Spider-Man shoes, which were an instant success with March deliveries.

Progress on other IMPACT Initiatives
As announced, the company launched its shared services center for human resources and payroll processing, established a U.S. consumer call center, and began consolidating IT operations during the first quarter. The company's logistics initiative is proceeding, and realizing efficiencies and savings through new process management. In August, a shared services platform for finance will launch.

"We are continuing to achieve efficiencies and economies of scale within our base businesses, " said Rosen. "While the work is far from complete, we're pleased with the progress on these programs."

Outlook for the Second Quarter and Full Year
With respect to forward-looking guidance, Brown Shoe continues to be comfortable with its current earnings per share expectations of $0.35 to $0.40 for the second quarter and is now comfortable with a full-year estimate in the range of $2.10 to $2.15, an upward revision from previous guidance of $2.00 to $2.10.

First Quarter Conference Call – NEW TIME
Brown Shoe will hold a conference call to discuss first quarter results at 10:00 a.m. Eastern Time tomorrow morning, Wednesday, May 22. 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 at www.companyboardroom.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 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. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors.

Brown Shoe is a $1.76 billion footwear company with worldwide operations. The company operates the 900-store Famous Footwear chain, which sells brand name shoes for less. It also operates 400 Naturalizer stores in the U.S. and Canada that sell the Naturalizer brand of shoes and accessories. Brown Shoe, through its wholesale divisions, owns and markets leading footwear brands including Naturalizer, LifeStride, Connie, Buster Brown; it also markets licensed brands including Dr. Scholl's and Carlos by Carlos Santana for adults, and Barbie, Star Wars, Spider-Man and Bob-the-Builder character footwear for children.