BUSINESS SEGMENT INFORMATION

12 Months Ended

Jan. 28, 2023

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 873 stores at the end of 2022, 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 branded, licensed 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 63 branded retail stores in the United States and 29 branded retail stores in China at the end of 2022.

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 2022
Net sales	$	1,705,093	$	1,322,772	$	(59,727)	$	2,968,138
Intersegment sales		—		59,727		—		59,727
Depreciation and amortization		20,585		21,812		6,614		49,011
Operating earnings (loss)		195,837		112,345		(93,855)		214,327
Segment assets		767,575		921,110		147,787		1,836,472
Purchases of property and equipment		41,755		4,170		9,988		55,913
Capitalized software		—		42		8,082		8,124
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

Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 24%, 26% and 25% of consolidated net sales for 2022, 2021 and 2020, respectively.  

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

($ thousands)	2022		2021		2020
Operating earnings (loss)	$	214,327	$	205,807	$	(485,658)
Interest expense, net		(14,264)		(30,930)		(48,287)
Loss on early extinguishment of debt		—		(1,011)		—
Other income, net		12,971		15,378		16,834
Earnings (loss) before income taxes	$	213,034	$	189,244	$	(517,111)

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)	2022		2021		2020
Net Sales
United States	$	2,763,896	$	2,600,848	$	1,984,713
Eastern Asia		146,700		119,857		77,793
Canada		44,484		43,789		46,781
Other		13,058		13,110		7,783
Total net sales	$	2,968,138	$	2,777,604	$	2,117,070
Long-Lived Assets
United States	$	656,840	$	630,519	$	703,642
Eastern Asia		11,614		8,357		2,660
Canada		10,441		14,687		20,246
Other		184		105		192
Total long-lived assets	$	679,079	$	653,668	$	726,740