Earnings Releases

Brown Shoe Reports Fiscal 2001 and 4th Quarter Results

ST. LOUIS, MISSOURI, February 27, 2002 -- Brown Shoe Company, Inc. (NYSE: BWS) today announced sales, earnings, and earnings per share for its 52-week fiscal year and 13-week fourth quarter, ended February 2, 2002.

Sales for the 52 weeks rose to $1,755,848,000, an increase of 4.2 percent from the $1,684,859,000 reported for 53 weeks in fiscal 2000. Income for fiscal 2001, before an extraordinary loss from the early retirement of debt, and before the effect of nonrecurring charges, was $28,257,000, or $1.61 per diluted share, compared with $36,365,000, or $2.04 per diluted share, in fiscal 2000. Including nonrecurring charges, income before extraordinary loss was $949,000, or $.05 per diluted share, in fiscal 2001. After the extraordinary loss, the fiscal 2001 net loss was $3,962,000, or $.23 per diluted share.

Sales for the 13-week fourth quarter of fiscal 2001 were $415,270,000, a 1.9% increase over sales of $407,643,000 for the 14-week fourth quarter of fiscal 2000. Income for the fourth quarter, before the extraordinary loss from the early retirement of debt, and before the effect of nonrecurring charges, was $4,200,000, or $0.24 per diluted share, compared with $5,004,000, or $0.29 per diluted share, in fiscal 2000. Including nonrecurring charges, the loss before extraordinary loss was $23,108,000, or $1.34 per diluted share, in the fourth quarter of fiscal 2001. After the extraordinary loss, the fourth quarter 2001 net loss was $28,019,000, or $1.63 per diluted share.

During the fourth quarter of fiscal 2001, the company recorded after-tax non-recurring charges of $27.3 million. These charges include, on an after-tax basis: $10.9 million in costs associated with lease terminations, asset write-offs and severance for the closing of 97 under-performing Naturalizer stores in the United States; $10.4 million in costs for inventory markdowns associated with initiatives to accelerate merchandise flow at Famous Footwear; $2.5 million of management transition costs at Famous Footwear; $2.3 million in severance costs associated with implementation of a shared services administrative platform and the elimination of redundant infrastructure, and $1.2 million to write-off goodwill associated with the company's e-commerce business. In addition, the company incurred an extraordinary loss in the fourth quarter of $4.9 million, net of taxes, related to the early redemption of debt.

Fiscal 2001 was a year where we focused on improving the fundamental earnings power of our core business -- a year where we restructured the company to be highly competitive in 2002 and beyond," said Brown Shoe Chairman and CEO Ron Fromm. "We implemented key Project IMPACT initiatives, starting with new supply chain processes at Famous Footwear. We cleared aged goods and significantly lowered our inventories at Famous Footwear too. We sharpened our consumer-focused product design processes, achieving market share gains in our wholesale businesses. We launched a shared services initiative to maximize efficiency in our administrative areas. And we built a new management team at Famous Footwear, led by top-notch seasoned footwear executives."

Project IMPACT is the company's enterprise-wide program to achieve Improved Performance And Competitive Transformation.

"Fiscal 2001 was also a year where our Naturalizer brand achieved major market share 'wins,' outperforming the market with a 29 percent increase in wholesale sales," Fromm continued. "These impressive gains in a difficult market testify to the division's focus on product design, best-of-class sourcing, strong retail partnerships, and the dedication and talent of our associates."

Full-Year Results for Famous Footwear
Operating earnings for Famous Footwear were $25.5 million before charges in 2001, versus $58.0 million in fiscal 2000. The chain's performance was adversely affected by an over-inventoried situation and a retail climate that deteriorated as the year progressed, leading to same-store sales declines and sharply lower margins necessary to clear goods. Sales increased 1.0 percent to $1.044 billion in 2001, with same-store sales for the 52-week period down 5.7 percent. Famous Footwear opened 66 stores and closed 71 stores, to end the year with 920 stores.

"Famous Footwear emerges from 2001 in a strengthened operating position and should begin a sustainable rebound in the current year. Inventories for Famous at year-end were $30 million below last year's level. We expect to increase merchandise freshness and velocity by implementing our IMPACT strategy as a means to improve gross margins and to drive positive comparable-store sales. I'm confident that our new management team, under the leadership of Joe Wood, will execute these initiatives to revitalize this business in 2002," Fromm said.

Full-Year Results for Wholesale Division
Wholesale sales were $503.3 million, up 12.5 percent versus $447.6 million in the year-ago period. Operating earnings before nonrecurring charges were $52.0 million, up 68 percent versus $31.0 million in 2000. These increases were driven by gains at Naturalizer and in our women's licensed and private label footwear groups.

The Naturalizer brand continued to gain additional wholesale distribution with total sales up 29 percent, and sales to major department stores up 40 percent versus last year. The brand's department store market share position rose from 6th to 4th place. As a point of comparison, in 1999, the brand held an 8th place market share.

The Brown Shoe Wholesale division continued to build upon its strategic business partnerships with major mass merchandisers in the United States. Strong performance in product development, sourcing and execution produced sales gains in the company's Dr. Scholl's licensed footwear business as well as its women's private label business. In February 2001, the company launched the Carlos by Carlos Santana footwear line: by year end, the line was in 130 department store locations.
The children's business posted increases for the year, with strong sales of top licensed names, including Barbie, Spider-Man, Bob-the-Builder and Mary-Kate and Ashley.

Full-Year Results for Naturalizer Retail
Naturalizer Retail stores, located throughout the U.S. and Canada, posted sales of $207.0 million in 2001, versus $203.5 million last year. Same-store sales for the 52 weeks ended February 2, 2002 for Naturalizer Retail's U.S. stores increased 3.8 percent and were up 6.3 percent in Canada. The operating loss narrowed to $1.9 million in 2001, before charges, versus $3.8 million in 2000, attributable primarily to same-store sales increases in both the U.S. and Canada and the closing of under-performing stores. The division opened 26 stores and closed 51 stores in 2001. There were 456 Naturalizer stores in operation at fiscal year end, including 296 in the U.S. and 160 in Canada.

"Store-for-store sales performance at Naturalizer was outstanding, given the retail environment. Our Naturalizer retail chain has proven itself to be an important brand-building platform," Fromm said. "Our decision to close 97 under-performing stores, which were in unproductive locations, represents necessary action in order to make the chain profitable as well."
In fiscal 2001, the company entered into a new $350 million secured financing arrangement, and redeemed its $100 million 9.5% debentures, ending the year with total debt of $216.3 million, $12.2 million lower than last year.

Net cash provided by operations was $21.0 million, up from $6.4 million last year, primarily due to reduced inventories. In addition, capital expenditures were $26.3 million in 2001, related primarily to the opening of 92 new stores and store remodels, down from $30.5 million in 2000.
"Looking ahead, our real estate repositioning, merchandising and store productivity programs aim to achieve a rebound at Famous Footwear. Same-store sales growth is projected in the low-single digits for the full fiscal year 2002, and gross margins are expected to improve as well," Fromm continued.

"Our early spring wholesale products are performing very well at retail with strong sell-throughs. Order position at Naturalizer continues to run positive. The overall wholesale position, however, is down compared with last year, as many retailers are tightening inventories and requesting shipment later in the season," Fromm noted. "Based on early results, we anticipate strong reorders and continued strong sell-throughs. Marketing expenditures have been planned to continue to build on the momentum of our Naturalizer and Famous Footwear branded businesses."

The company remains comfortable with its previous earnings per share estimates of $2.00 to $2.10 for fiscal year 2002. Earnings for the first quarter are planned slightly up compared to 2001 -- within the range of $0.35 to $0.40 per share versus $0.36 in 2001. The company estimates second quarter results will be approximately $0.35 to $0.40 versus $0.33 in 2001. Looking ahead to 2003, the company remains comfortable with its previous earnings per share estimate of $2.75, based on the increasing benefits from its Project IMPACT.


Fourth Quarter Earnings and Conference Call
A conference call to discuss fourth quarter results will be held at 4:30 p.m. EST this afternoon. 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 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 920-store Famous Footwear and 456-store Naturalizer chains of footwear retail stores. It owns leading brands including Naturalizer, LifeStride, Connie, Buster Brown, and 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.

Brown Shoe press releases are available on the company's web site at www.brownshoe.com.

(Thousands)			February 2,		February 3,
			2002		2001
ASSETS
Cash and Cash Investments			$ 22,172		$ 50,491
Receivables, Net			68,305		64,403
Inventories, Net			396,227		427,830
Other Current Assets			39,666		20,008
Total Current Assets			526,910		562,732
Property, Plant and Equipment – Net			85,746		90,605
Other Assets			88,242		86,732
			$ 700,898		$ 740,069
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable			$ 64,250		$ 66,500
Trade Accounts Payable			122,360		127,887
Accrued Expenses			85,743		89,954
Income Taxes			550		1,850
Current Maturities of Long-Term Debt			28,550		10,000
Total Current Liabilities			301,453		296,191
Long-Term Debt and Capitalized Leases			123,491		152,037
Other Liabilities			19,298		21,869
Shareholders' Equity			256,656		269,972
			$ 700,898		$ 740,069

(Thousands, except per share)	13 Weeks Ended	14 Weeks Ended	52 Weeks Ended	53 Weeks Ended
	February 2,	February 3,	February 2,	February 3,
	2002	2001	2002	2001
Net Sales	$ 415,270	$ 407,643	$ 1,755,848	$ 1,684,859
Cost of Goods Sold	275,050	239,933	1,089,549	1,002,727
Gross Profit	140,220	167,710	666,299	682,132
- % of Sales	33.8%	41.1%	37.9%	40.5%
Selling and Administrative Expenses	170,595	155,403	650,246	610,788
- % of Sales	41.1%	38.1%	37.0%	36.3%
Interest Expense	4,649	5,497	20,240	18,823
Other Expense	3,153	839	1,488	164
Earnings (Loss) Before Income Taxes	(38,177)	5,971	(5,675)	52,357
Income Tax (Provision) Benefit	15,069	(967)	6,624	(15,992)
Earnings (Loss) Before Extraordinary Loss	(23,108)	5,004	949	36,365
Extraordinary (Loss) Net of Taxes	(4,911)	--	(4,911)	--
Net Earnings (Loss)	$ (28,109)	$ 5,004	$ (3,962)	$36,365
Earnings (Loss) per Common Share Before Extraordinary Loss
- Basic	$ (1.34)	$ .29	$ .06	$ 2.06
- Diluted	$ (1.34)	$ .29	$ .05	$ 2.04
Net Earnings (Loss) per Common Share
- Basic	$ (1.63)	$ .29	$ (.23)	$ 2.06
- Diluted	$ (1.63)	$ .29	$ (.23)	$ 2.04
Average Basic Number of Common Shares Oustanding	17,215	17,279	17,188	17,670
Average Diluted Number of Common Shares Outstanding	17,215	17,504	17,539	17,846

NOTES:

1. The company recorded nonrecurring charges in the fourth quarter of fiscal 2001 related to the closing of Naturalizer stores, inventory markdowns and management transition costs at Famous Footwear, severance costs for implementation of a Shared Services platform, and goodwill impairment in the company's e-commerce business. These charges totaled $41,363,000 on a pretax basis, of which $20,100,000 are reflected in Cost of Sales, $20,057,000 in Selling & Administrative Expenses, and $1,206,000 in Other Expense. A tax benefit of $14,055,000 associated with the nonrecurring charges was recorded in the fourth quarter of fiscal 2001.

2. The company's income tax provisions and benefits in the respective periods are influenced by the mix of domestic versus offshore operating income, and the nonrecurring charges recorded in fiscal 2001. Offshore earnings are taxed at lower rates.

3. In the fourth quarter of fiscal 2001, the company recorded an after-tax Extraordinary loss of $4,911,000 or $.29 per share, due to the call of $100 million of 9.5% debentures due in 2006, and to write-off deferred debt issuance costs associated with the $100 million debentures and the company's $165 million revolving credit which was replaced with a new $350 million Credit Agreement in December 2001.

(Thousands, except per share)	13 Weeks Ended	14 Weeks Ended	52 Weeks Ended	53 Weeks Ended
	February 2,	February 3,	February 2,	February 3,
	2002	2001	2002	2001
Net Sales	$ 415,270	$ 407,643	$ 1,755,848	$ 1,684,859
Cost of Goods Sold	254,950	239,933	1,069,449	1,002,727
Gross Profit	160,320	167,710	686,399	682,132
- % of Sales	38.6%	41.1%	39.1%	40.5%
Selling and Administrative Expenses	150,538	155,403	630,189	610,788
- % of Sales	36.3%	38.1%	35.9%	36.3%
Interest Expense	4,649	5,497	20,240	18,823
Other Expense	1,947	839	282	164
Earnings (Loss) Before Income Taxes	3,186	5,971	35,688	52,357
Income Tax (Provision) Benefit	1,014	(967)	(7,431)	(15,992)
Earnings (Loss) Before Charges and Extraordinary Loss	$ 4,200	$ 5,004	$ 28,257	$ 36,365
Earnings (Loss) per Common Share Before Nonrecurring Charges and Extraordinary Loss
- Basic	$.24	$ .29	$ 1.64	$ 2.06
- Diluted	$ .24	$ .29	$ 1.61	$ 2.04
Average Basic Number of Common Shares Oustanding	17,215	17,279	17,188	17,670
Average Diluted Number of Common Shares Outstanding	17,215	17,504	17,539	17,846

(Thousands)			52 Weeks		53 Weeks
			Ended		Ended
			February 2,		February 3,
			2002		2001
OPERATING ACTIVITIES
Net Earnings (loss)			$ (3,962)		$ 36,365
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization			26,707		23,593
Changes in operating assets and liabilities
Receivables			(3,902)		3,833
Inventories			31,603		(61,841)
Prepaid expenses and other current assets			(19,658)		(617)
Trade accounts payable and other accrued expenses			(9,738)		14,474
Income taxes			(1,300)		(2,552)
Other, net			1,313		(7,184)
Net cash used by operating activities			21,063		6,431
INVESTING ACTIVITIES
Capital expenditures			(26,319)		(30,528)
Other			2,587		1,007
Net cash used by investing activities			(23,732)		(29,521)
FINANCING ACTIVITIES
Increase (decrease) in short-term notes payable			(2,250)		66,500
Debt insurance costs			(5,214)		(1,203)
Repayments of long-term debt			(110,000)		(10,000)
Additions to long-term debt			100,000		--
Payments for purchase of treasury stock			(2,630)		(8,699)
Proceeds from issuance of common stock			1,972		27
Dividends paid			(6,988)		(7,202)
Net cash provided (used) by financing facilities			(25,110)		39,423
Increase (decrease) in cash and cash equivalents			(27,779)		16,333
Cash and cash equivalents at beginning of year			50,491		34,158
Cash and cash equivalents at end of year			$ 22,172		$ 50,491