8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) June 5, 2007

(June 5, 2007)

BROWN SHOE COMPANY, INC. (Exact name of registrant as specified in its charter)
New York (State or other jurisdiction of incorporation or organization)
1-2191 (Commission File Number)	43-0197190 (IRS Employer Identification Number)
8300 Maryland Avenue St. Louis, Missouri (Address of principal executive offices)	63105 (Zip Code)
(314) 854-4000 (Registrant's telephone number, including area code)

o                 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

      

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Item 7.01                       Regulation FD Disclosure.

Members of the executive management team of Brown Shoe Company, Inc. will present a business overview at the Piper Jaffray 2007 Consumer Conference held in New York City on Thursday, June 7, 2007, at 10:00 a.m. (Eastern Time), and periodically over the next few weeks. The slide presentation for use in conjunction with these presentations is furnished as Exhibit 99.1 hereto and is also available on the Company’s website via the following link: www.brownshoe.com/investor, although the Company reserves the right to discontinue its availability at any time.

The information in this Current Report on Form 8-K and the exhibit attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information or exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01   Financial Statements and Exhibits

(c) Exhibit
Exhibit Number	Description of Exhibits
99.1	Brown Shoe Company Investor Presentation

      

        Page       

    

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BROWN SHOE COMPANY, INC.
	(Registrant)
Date:  June 5, 2007	/s/ Michael I. Oberlander
	Michael I. Oberlander
	Senior Vice President, General Counsel and      Corporate Secretary

      

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INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Brown Shoe Company Investor Presentation

      

        Page       

    

EX-99.1

1

Investor Update

June 2007

2

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 preliminary nature of estimates of the costs and benefits of

the strategic earnings enhancement plan, which are subject to change as the Company

refines these estimates over time; (ii) intense competition within the footwear industry; (iii)

rapidly changing consumer demands and fashion trends and purchasing patterns, which may

be influenced by consumers' disposable income, which in turn can be influenced by general

economic conditions; (iv) customer concentration and increased consolidation in the retail

industry; (v) the Company’s ability to successfully implement its strategic earnings

enhancement plan; (vi) 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; (vii) the

Company's ability to attract and retain licensors and protect its intellectual property; (viii) the

Company's ability to secure leases on favorable terms; (ix) the Company's ability to maintain

relationships with current suppliers; and (x) the uncertainties of pending litigation. 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 for the year ended February 3, 2007 and

as updated in the Company’s 10-Q for the Quarter ended May 5, 2007, which information is

incorporated by reference herein. The Company does not undertake any obligation or plan to

update these forward-looking statements, even though its situation may change.

- June 4, 2007

NOTE:

On April 2, 2007, The Company effected a 3-for-2 stock split. All per share

data detailed in this packet is on a post-split basis. Guidance was issued on

May 24, 2007 and has not been updated.

3

Brown Shoe At A Glance

BROWN SHOE TODAY -

$2.5 Billion in Sales for 2006

Department &

Specialty Stores

$650 million

Mass Merchandisers

$300 million

Specialty Retail

$250million

Famous Footwear

1,000+ retail stores in the U.S.

$1.3 billion

38% Wholesale

■91 million pairs sourced

■2,000 retail customers

62% Retail

■Appx. 1,300 stores

■40 million pairs

■130 million consumers visit our stores/year

■9 e-commerce sites

■30+ million evisitors/year

Integrated wholesale-retail platform

Consumer-driven enterprise that builds brands and

retail concepts while gaining market share

4

Brown Shoe At A Glance

Our Rank Among Top Footwear Retailers

Dollar Sales and Store Count by Retailer*

* Source: Public filings, last 4 quarters. Includes international.

•Source: NPD Women’s dollar sales for 12 months ending 4/30/07 all POS

channels (Department Stores, National Chains, Shoe Chains). This NPD data

is confidential and proprietary and cannot be reproduced or disseminated by

third parties without prior written consent.

# Stores $’s in mm $’s in mm

Our Rank among Wholesalers

Women’s Fashion Footwear Sales in all NPD POS

Channels*

Ranked by Parent Company

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Foot Locker

Payless

BWS

Finish Line

DSW

Shoe Carnival

Bakers

Shoe Pavillion

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

$0

$100

$200

$300

$400

$500

$600

$700

$800

Nine West

GroupBWS

Skechers

Steve Madden

Iconix

VCS

Nike

Clarks

Stride Rite

AerogroupKCP

Adidas

5

Brown Shoe Company Portfolio

Salon

Bridge

Impulse

Better

Moderate

Junior

Comfort

Mass

Fashion = $33.3 B Athletic = $11.5 B

No. 12 in Bridge Zone at Dept. Store

No. 8 in Impulse Zone at Dept. Store

No. 2 in Better Zone at Dept. Store

No. 11 in Better Zone at Dept. Store

No. 1 in Moderate Zone at Dept. Store

No. 3 in Moderate Zone at Dept. Store

No. 10 in Junior Zone at Dept. Store

Dr. Scholl’s Inside

No. 1 Branded Family Footwear

No. 3 Pureplay

Ecommerce Footwear

Private Label / Brand

*Dept Store Zone rank according to NPD 12 months ending April 30

6

Review of BWS Financials

(all $’s in millions except EPS)

*See Appendix for reconciliation

May 5, 2007 April 29, 2006 % Chg.

Sales $566.3 $575.5 -1.6%

Net Earnings

GAAP $9.6 $10.0 -3.9%

Adjusted* $13.0 $10.0 29.2%

EPS

GAAP $0.22 $0.23 -4.3%

Adjusted* $0.29 $0.23 26.1%

Gross Margin 40.6% 38.7%

Debt/Cap* 22.7% 30.6%

Cash Flow from

Operating Activites ($1.9) $20.3 -109.6%

7

Review of BWS Financials

13 Weeks Ended 13 Weeks Ended

May 5, 2007 April 29, 2006 % Chg.

Famous Footwear

Sales $325.3 $302.3 7.6%

Operating Profit $21.0 $15.9 31.8%

Same-Store Sales 3.4% 1.9%

Specialty Retail

Sales $60.3 $56.4 6.9%

Operating Profit* -$2.9 -$2.9 0.0%

Same-Store Sales 3.4% 0.6%

Wholesale

Sales $180.7 $216.8 -16.6%

Operating Profit** $13.0 $14.1 -7.8%

**Includes $2.1 million in costs associated with the Earnings Enhancement Plan in 2007

*Includes Earnings Enhancement costs of $0.2 million in 2007

8

Second Quarter 2007 & Full Year Guidance

As of May 24, 2007 and has not been updated

Second Quarter 2007 EPS:

GAAP $0.22 to $0.24

Adjusted* $0.30 to $0.32

Full Year 2007 EPS:

GAAP $1.55 to $1.59

Adjusted* $1.86 to $1.90

*See Appendix for reconciliation

Other Annual Estimates:

Consolidated Sales: $2.48 - $2.52 Billion

Consolidated Tax Rate: Increasing approximately 200 bps

Increase in Marketing Spend: + $4 million, a double-digit increase

Famous Footwear

Same-Store Sales: + 2.5% - 3.5%

Net Store Openings: + 65 - 70 stores

Wholesale: Wholesale sales will be below 2006, with growth of its branded

business offset by the exit of the Bass license and a sales decline

in its private label business.

9

Shaping our Platform for Growth

Sales and Operating

Earnings Improvement

for BWS (millions $)

Operating

Earnings

■Net sales grew 34% since 2002

■Operating earnings grew 52% since 2002

Operating Margin

Improvement at Famous

Footwear

■Operating margin steadily

improving at Famous Footwear

Department Store Market

Share Improvement at

Wholesale*

■Second largest supplier to

department stores; 400+

bp gain in last 5 years

Sales

*Reflects NPD Group Reported POS Dollar Volume. 12

months ending December 2006.

6.4%

7.6% 7.9%

12.2%

10.8%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

2002 2003 2004 2005 2006

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006

0

20

40

60

80

100

120

4.2%

4.8%

5.4% 5.6%

7.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2002 2003 2004 2005 2006

10

Brown Shoe Vision:

Brown Shoe Company is a leading

fashion footwear marketer, winning loyal

customers with compelling global

brands

11

Brown Shoe Pillars

Vision:

Brown Shoe is a leading fashion footwear marketer, winning

loyal customers with compelling global brands

ENABLING STRATEGIES GROWTH STRATEGIES

Partnership Initiatives

Platform Optimization

Market Intelligence

Consumer-Driven Model

CROSS-COMPANY SYNERGIES [VERTICAL AND HORIZONTAL}

SYSTEMS AND PROCESSES BEST PRACTICES

THOUGHTFUL PLANNING AND RIGOROUS EXECUTION

TALENT AND LEADERSHIP

12

Brown Shoe Vision

PARTNERSHIP MODEL

Continue path towards being a world-class partner holistically in the industry:

Vendor, Supplier, Customer, Consumer, Real Estate, Investor

OPERATIONAL EXCELLENCE

Disciplined approach to profitability enhancement, efficiency and effectiveness

PORTFOLIO OPTIMIZATION

Financial and market orientation

Maximize returns and market space opportunities

BRAND POWER

Leverage our unique branded assets

Delivering consumer-driven brands to the marketplace

13

Brown Shoe Platform

RETAIL WHOLESALE

ECOMMERCE

■1,300 total retail doors –1,000+

Famous Footwear, 250+ Naturalizer,

Brown Shoe Closet, FX LaSalle, and

branded concepts

■2,000 customers served at wholesale

across our branded and private

label/brand divisions

■Integrated ecommerce platform for all

BWS brands –

including 3rd largest

pureplay internet footwear retailer in

Shoes.com

■World class global sourcing network

■All BWS wholesale brands play across

one or more BWS retail/ecommerce

concepts

■14% of Famous Footwear sales

through BWS wholesale brands

■Front-end /Back-end perspective from

retail and wholesale provides greater

insights to consumer desires and

understanding of trends

■Cross-skilled talent base

14

Brand Power

Building differentiated, market-leading brands driven by consumer preference

1. Developed Brand-Building Model

2. Developing premier product and design capabilities

New York Design Studio State of the Art Design and Technology Center

3. Increasing investments in marketing, merchandising, research and talent

4. Refining Consumer-Driven Model:

SUPPLY CHAIN

Factory Base

Demand Planning Line Planning

Retail Performance

Speed to Market and Test & Learn

5. Embracing leading-edge analytics and tools

15

Brand Power

Marketing Initiatives –

investing in our flagship brands and

increasing spend against our consumers

FAMOUS FOOTWEAR

■Partnering with Ogilvy to refine brand positioning

■Broadcast media and CRM focus

■Using consumer database to drive Rewards program

VIA SPIGA

■Brand strategy and consumer research

■Partnering with Vogue Magazine. Arthur Elgort photos for national magazine ads and

out-of-home in Manhattan –

taxi tops, king buses, telephone kiosks

■Trade marketing for FFANY with cover wrap of Footwear News

NATURALIZER

■Partnership with Self Magazine –

premium position for key Spring months and

product opportunities that provide unique consumer touchpoints

■Ongoing partnership with “

Ladies Who Launch” –a

national organization for women

entrepreneurs –

a genuine brand for genuine women

■Partnering with Ogilvy to refine brand positioning

FRANCO SARTO

■Brand strategy, product segmentation, and positioning study

■Investing in retail relationships –

partnering with Nordstrom on second half ’

07 direct mail initiative

■Leveraging Franco himself -

consumers have a

strong connection to the individual -

by increasing the number of personal appearances in support of the brand

16

Brand Power

Product & Design Initiatives –

Investments into enhancing and broadening our product

development, design, and sourcing capabilities

■Test & Learn

■Via Spiga Design Team

■Broadening Designer Inputs

■New York Design Studio

■Style & Trend

■Design Internship Program

17

Brands targeting key consumer segments…

Sexy, eye-catching,

styles that she can

wear with

everything from

jeans to dresses

Segment Needs Style Profile Brown Shoe

Brands

16%

Buying Power

(% Total female

spend)

18%

14%

24%

BWS Consumer

Seeks expressive,

youthful brands.

Wants to experiment

with fashion at an

affordable price.

Likes trusted,

accessible brands.

Looks for quality and

a balance of comfort

and style.

Seeks fresh classics

and high quality.

Looks for good value.

Shops the most and

seeks attainable

luxury. Is willing to

pay for high quality

and high style.

Sophisticated,

youthful, trendsetting

style that

stands out

Twist on basics

instead of trends,

quality brands

with understated

indulgence

“Trusted basics”

that prioritize

comfort and

quality

EXPLORER

SOPHISTICATE

LEADER

BALANCER

18

Brand Power

Building differentiated, market-leading brands driven by consumer preference

■Trend-right product - Differentiating mix

of athletic, men’s and women’s casual, and

young attitude brands

■Leveraging multi-channel platform

■Marketing Strategy

■Technology/redefining service

■Growth opportunity of minimum 1,500 doors

Merchant

Localization

(Tailoring

Assortment

by Region)

Balance &

Value

Inventory

Optimization

More Shoes,

More Ways

Profitable

Market

Optimization

(Real Estate)

19

Brand Power

Building differentiated, market-leading brands driven by consumer preference

$30-$80

$60-180

$125-$300

Accessories/Other Categories

International

■Sell-through model; Fresh trend-right product

■Extended brand essence to new categories and consumer

touchpoints

■Tightly-targeted consumer communications

■Improved product delivered when she wants to buy

■Model to be leveraged across all BWS wholesale

20

Brand Power

Building differentiated, market-leading brands driven by consumer preference

■Allows us to play in new zones reaching new consumers

■Strong emotional connection with consumer

■Fashion/Style Credibility/Talent

■Brand extension potential

■Brown New York Transition work:

■Consumer Research

■New Leadership

■Organization structure

■Real Estate Transition

■Talent issues

■Inefficient processes

■Supply Chain opportunities

■Merchandising and planning

■Marketing – reengage consumer

■New Design Talent, improved

Product Development process

■Next Generation Branding

■Elevate product execution,

impactful stories

■Take advantage of Global

Sourcing capabilities

Brown New York:

2006 2007 2008

Identifying the problems Competing in the Present Winning in the Future

DEVELOPING A

PERSPECTIVE

Investigating the issues

INSTALLING THE PLATFORM

Becoming More Profitable

CREATING TRANSFORMATION

Strategic Branding

21

Brand Power

Building differentiated, market-leading brands driven by consumer preference

■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

22

Brand Power

Building differentiated, market-leading brands driven by consumer preference

■Direct-to-Consumer

pure play

■Branded web sites and multi-channel opportunities

■Growth by winning in new and emerging markets

Online Footwear: Projected to be

over $

6B market by 2011* $1.0

$1.7

$2.8

$3.2

$3.7

$4.2

$4.8

$5.5

$6.3

2003 2004 2005 2006 2007 2008 2009 2010 2011

$Billions

*

Source: Forrester

23

Positioning for Growth

• Reorganization of

Executive Team

• Focus on core

activities

• Secured financing

and stabilized liquidity

• IMPACT

• Key management

changes

• 1st Naturalizer resizing

and

reorganization

• Growing portfolio

•Organic

•Consolidation

• Earnings

Enhancement Plan

• Brown NY integration

• Accelerating Famous

growth

• International

Opportunities

• Strategy

development

• Good to Great

disciplines

• Portfolio

Management

• Focus on best brands

and market

opportunities

• Consumer-Driven

Wholesale Model

• Integrated, efficient

business model

• Naturalizer

turnaround

• Bennett acquisition

Increasing

Prospects for

Profitability

Growth

Survival

Rebuild

Improving

Core

Competencies

Share Price

1997 2007

Total Return:

1 Year = 27.5%

3 Year = 66.6%

5 Year = 194.2%

10 Year = 350.7%

At 5/31/07

24

Appendix

25

Sales and EPS – 2001 to Estimated 2007*

$0.00

$0.50

$1.00

$1.50

2002 2003 2004 2005 2006 2007

Est

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

2002 2003 2004 2005 2006 2007

Est

Earnings Per Share

Sales in Billions

$1.63

$1.48

$1.13 $1.11 $1.09

$1.51

$2.48 - $2.52

Billion

GAAP EPS

Adjusted EPS

$0.96

$1.02

$1.86 –

$1.90

$1.55 –

$1.59

* Note: Guidance was issued on May 24, 2007 and has not been updated.

Charges and recoveries included in net earnings and EPS for 2005, 2006 and 2007 are listed in the

Reconciliation of Net Earnings to Adjusted Net Earnings in this Appendix.

26

Distinct Wholesale Portfolio - 2006

Private Label

Children’s

Other

27

Famous Footwear -- Sales by category 2006

14%

30%

20%

17%

6%

6%

7%

Women’s Women’s

Men’s Men’s

Kid’s Kid’s

Athletic

Athletic

Accessories

Athletic

28

Strategic Earnings Enhancement Plan

During the second quarter of 2006, the Company introduced a strategic earnings

enhancement plan designed to increase earnings and reallocate resources, through i)

restructuring administrative and support areas; ii) redesigning logistics and distribution

platforms; iii) reorganizing to eliminate operational redundancies; iv) realigning strategic

priorities; and v) refining the supply chain process and enhancing inventory utilization.

Annual after-tax savings expected to be achieved upon completion of the initiatives are

estimated to be $17–$20 million.

During the first quarter of 2007, the Company closed its Italian sales office, its Dover, NH

distribution center, and its Needham, MA office, and incurred costs for severance and

other projects still under development. As a result of these actions, the Company

incurred after-tax costs of $3.3 million or $0.07 per diluted share in the quarter. The

Company continues to work on other initiatives related to this plan.

While much has been accomplished, certain of the initiatives are still in early stages of

development, and the Company expects to update cost and savings estimates as they

are further developed. Current estimates are as follows:

■In 2007, after-tax implementation costs are estimated to be approximately $14

million, while the Company expects to realize after-tax benefits of $10 to $12

million;

■In 2008, after-tax implementation costs are estimated to be approximately $5

million and annual after-tax benefits are still estimated to be $17 to $20 million.

Note: The above data, as provided in The Company’s May 24, 2007 Press Release for

first quarter ended May 5, 2007, reflects then current estimates for costs and benefits

related to the initiatives. We expect to refine this information in the upcoming quarters

and provide updated guidance as appropriate.

29

Debt to Capital Ratio May-07 2006 2005 2004 2003 2002

Total Debt Obligations* 160 $ 151 $ 200 $ 142 $ 120 $ 152 $

Total Shareholders' Equity 544 524 434 391 350 292

Total Capital 704 $ 675 $ 634 $ 533 $ 470 $ 444 $

Debt to Capital Ratio** 22.7% 22.4% 31.5% 26.6% 26.0% 34.0%

Debt to Capital Ratio

(Millions of dollars, except for Debt to Capital Ratio)

* Total Debt Obligations include long term debt, borrowings under revolving credit agreement

and capital lease obligations.

** Total Debt Obligations divided by Total Capital

30

Reconciliation of GAAP Net Earnings to Adjusted Net Earnings:

Q1 2007 v. Q1 2006

After-tax Net

Earnings EPS

After-tax Net

Earnings EPS

Net earnings $9,636 $0.22 $10,031 $0.23

Charges/Other Items:

Strategic initiatives costs 3,324 0.07 - -

Adjusted net earnings $12,960 $0.29 $10,031 $0.23

1st Quarter 2007 1st Quarter 2006

Non-GAAP Financial Measures

In this document, 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 per diluted share excluding 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 indicate underlying trends in the Company’s business and provide useful information to both

management and investors by excluding certain items that are not indicative of the Company’s core operating results. These measures should be considered in

addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

31

Reconciliation of GAAP Net Earnings to Adjusted Net Earnings:

2005 – 2007 Estimated**

2nd Quarter

Diluted EPS

Full Year

Diluted

EPS

Net

Earnings

Diluted

EPS

Net

Earnings

Diluted

EPS

GAAP Results $0.22 - 0.24 $1.55 - 1.59 65.7 $ 1.51 $ 41.0 $ 0.96 $

Special Charges and Recoveries:

Strategic Initiatives Costs 0.08 0.31 3.9 0.09 - -

Incremental Bass Exit Costs - - 2.3 0.05 - -

Insurance Recoveries - - (1.0) (0.02) - -

Naturalizer Restructuring - - - - 9.2 0.22

Tax Repatriation - - - - 12.0 0.28

Bridge Loan Fee - - - - 0.6 0.02

Adjusted Earnings $0.30 - 0.32 $1.86 - 1.90 71.0 $ 1.63 $ 62.9 $ 1.48 $

2007 Estimated Range

Low - High 2006* 2005

(in millions, except EPS data)

*Full-year fiscal 2006 and 2007 includes stock option expense with no related expense in 2005.

**Note: Estimated Earnings Guidance was issued on May 24, 2007 and has not been updated.

Non-GAAP Financial Measures

In this document, 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 per diluted share excluding 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 indicate underlying trends in the Company’s business and provide useful information to both

management and investors by excluding certain items that are not indicative of the Company’s core operating results. These measures should be considered

in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.