BUSINESS SEGMENT INFORMATION

12 Months Ended

Jan. 29, 2022

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

7.   BUSINESS SEGMENT INFORMATION

The Company’s reportable segments are Famous Footwear and Brand Portfolio.  The Famous Footwear segment is comprised of Famous Footwear, famousfootwear.com and famousfootwear.ca.  Famous Footwear operated 894 stores at the end of 2021, selling primarily branded footwear for the entire family.

The Brand Portfolio segment is comprised of wholesale operations selling the Company’s branded footwear, and the retail stores and e-commerce sites associated with those brands.  This segment sources, manufactures and markets licensed, branded and private-label footwear primarily to online retailers, national chains, department stores, mass merchandisers and independent retailers as well as Company-owned Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds stores and e-commerce businesses.  The Brand Portfolio segment included 70 branded retail stores in the United States and 16 branded retail stores in China at the end of 2021.

The Company’s Famous Footwear and Brand Portfolio reportable segments are operating units that are managed separately.  These reportable segments reflect the level at which the Company’s chief operating decision maker evaluates financial performance and allocates resources.  Operating earnings (loss) for the reportable segments represents gross profit, less selling and administrative expenses, impairment of goodwill and intangible assets and restructuring and other special charges, net.  The accounting policies of the reportable segments are the same as those described in Note 1 to the consolidated financial statements.  Intersegment sales are generally recorded at a profit, and intersegment earnings related to inventory on hand at the purchasing segment are eliminated against the earnings.  

Corporate assets, administrative expenses and other costs and recoveries that are not allocated to the operating units, as well as the elimination of intersegment sales and profit, are reported in the Eliminations and Other category.

Following is a summary of certain key financial measures for the respective periods:

	Famous		Brand		Eliminations
($ thousands)	Footwear		Portfolio		and Other		Total
Fiscal 2021
Net sales	$	1,748,291	$	1,081,003	$	(51,690)	$	2,777,604
Intersegment sales		—		51,690		—		51,690
Depreciation and amortization		20,333		23,762		8,235		52,330
Operating earnings (loss)		276,415		35,928		(106,536)		205,807
Segment assets		705,063		944,241		194,622		1,843,926
Purchases of property and equipment		12,480		3,977		1,936		18,393
Capitalized software		121		8		5,623		5,752
Fiscal 2020
Net sales	$	1,263,551	$	902,481	$	(48,962)	$	2,117,070
Intersegment sales		—		48,962		—		48,962
Depreciation and amortization		23,090		28,889		8,560		60,539
Operating loss		(23,821)		(408,444)		(53,393)		(485,658)
Segment assets		765,754		851,027		250,269		1,867,050
Purchases of property and equipment		7,693		6,486		2,607		16,786
Capitalized software		870		153		4,251		5,274
Fiscal 2019
Net sales	$	1,588,057	$	1,406,460	$	(72,955)	$	2,921,562
Intersegment sales		—		72,955		—		72,955
Depreciation and amortization		26,706		29,875		8,981		65,562
Operating earnings (loss)		76,896		58,153		(31,236)		103,813
Segment assets		891,042		1,383,500		157,165		2,431,707
Purchases of property and equipment		16,129		21,973		6,431		44,533
Capitalized software		16		1,544		4,059		5,619

Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 26%, 25% and 22% of consolidated net sales for 2021, 2020 and 2019, respectively.  

Following is a reconciliation of operating earnings (loss) to earnings (loss) before income taxes:

($ thousands)	2021		2020		2019
Operating earnings (loss)	$	205,807	$	(485,658)	$	103,813
Interest expense, net		(30,930)		(48,287)		(33,123)
Loss on early extinguishment of debt		(1,011)		—		—
Other income, net		15,378		16,834		7,903
Earnings (loss) before income taxes	$	189,244	$	(517,111)	$	78,593

For geographic purposes, the domestic operations include the Company’s domestic retail operations, the wholesale distribution of licensed, branded and private-label footwear to a variety of retail customers, including the Famous Footwear and Brand Portfolio stores, as well as the Company’s e-commerce businesses.

The Company’s international operations consist of wholesale and retail operations primarily in Eastern Asia, Canada and Europe.  The Eastern Asia operations primarily include first-cost transactions, where footwear is sold at international ports to customers who then import the footwear into the United States and other countries.

A summary of the Company’s net sales and long-lived assets, including lease right-of-use assets and property and equipment, by geographic area were as follows:

($ thousands)	2021		2020		2019
Net Sales
United States	$	2,600,848	$	1,984,713	$	2,734,912
Eastern Asia		119,857		77,793		98,045
Canada		43,789		46,781		80,247
Other		13,110		7,783		8,358
Total net sales	$	2,777,604	$	2,117,070	$	2,921,562
Long-Lived Assets (1)
United States	$	630,519	$	703,642	$	881,338
Canada		14,687		20,246		35,317
Eastern Asia		8,357		2,660		3,527
Other		105		192		258
Total long-lived assets	$	653,668	$	726,740	$	920,440

(1) Long-lived assets include $503,430, $554,303 and $695,594 of lease right-of-use assets in 2021, 2020 and 2019, respectively.