BUSINESS SEGMENT INFORMATION

12 Months Ended

Feb. 01, 2025

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 846 stores at the end of 2024, 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, independent retailers and mass merchandisers as well as Company-owned Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds stores and e-commerce businesses.  The Brand Portfolio segment included 60 branded retail stores in the United States and 54 branded retail stores in East Asia at the end of 2024.

The accounting policies of the reportable segments are the same as those described in Note 1 to the consolidated financial statements. 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 chief operating decision maker (CODM), the Company’s President and Chief Executive Officer, evaluates financial performance and allocates resources. The CODM uses segment operating earnings (loss), which represents gross profit, less selling and administrative expenses and restructuring and other special charges, net, to allocate resources. 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:

	2024
		Famous		Brand		Eliminations
($ thousands)		Footwear		Portfolio		and Other		Total
Net sales (1)		$	1,556,456	$	1,225,963	$	(59,736)	$	2,722,683
Cost of goods sold			869,829		689,668		(58,856)		1,500,641
Gross profit			686,627		536,295		(880)		1,222,042
Less expenses:
Retail stores (2)			366,144		31,108		—		397,252
Information technology			30,843		27,631		7,881		66,355
Warehousing and distribution			50,905		70,368		3,580		124,853
Advertising and marketing			50,370		78,275		3,459		132,104
Restructuring and other special charges, net			639		6,343		185		7,167
Other expenses (3)			100,650		200,448		43,357		344,455
Operating earnings (loss)		$	87,076	$	122,122	$	(59,342)	$	149,856
Segment assets		$	817,469	$	893,460	$	183,825	$	1,894,754
Purchases of property and equipment		$	36,694	$	10,335	$	2,118	$	49,147
Capitalized software		$	618	$	44	$	1,877	$	2,539

	2023
		Famous		Brand		Eliminations
($ thousands)		Footwear		Portfolio		and Other		Total
Net sales (1)		$	1,609,396	$	1,270,853	$	(62,955)	$	2,817,294
Cost of goods sold			889,847		724,848		(60,358)		1,554,337
Gross profit			719,549		546,005		(2,597)		1,262,957
Less expenses:
Retail stores (2)			360,102		28,793		—		388,895
Information technology			31,286		28,180		1,459		60,925
Warehousing and distribution			52,874		59,045		4,439		116,358
Advertising and marketing			52,771		70,761		3,102		126,634
Restructuring and other special charges, net			1,366		2,608		2,129		6,103
Other expenses (3)			97,312		211,159		61,116		369,587
Operating earnings (loss)		$	123,838	$	145,459	$	(74,842)	$	194,455
Segment assets		$	770,848	$	862,404	$	171,494	$	1,804,746
Purchases of property and equipment		$	31,743	$	10,515	$	2,326	$	44,584
Capitalized software		$	743	$	—	$	4,291	$	5,034

	2022
		Famous		Brand		Eliminations
($ thousands)		Footwear		Portfolio		and Other		Total
Net sales (1)		$	1,705,093	$	1,322,772	$	(59,727)	$	2,968,138
Cost of goods sold			916,089		825,507		(58,331)		1,683,265
Gross Profit			789,004		497,265		(1,396)		1,284,873
Less expenses:
Retail stores (2)			352,088		27,699		—		379,787
Information technology			28,100		26,331		1,781		56,212
Warehousing and distribution			54,056		57,337		5,192		116,585
Advertising and marketing			56,762		65,339		3,463		125,564
Restructuring and other special charges, net			—		—		2,910		2,910
Other expenses (3)			102,161		208,214		79,113		389,488
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

(1) Net sales includes intersegment sales from Brand Portfolio to Famous Footwear of $59.7 million, $63.0 million and $59.7 million in 2024, 2023 and 2022, respectively.

(2) Includes compensation and facilities costs associated with the Company’s North America retail stores.

(3) Primarily includes compensation costs associated with non-retail store operations, depreciation and amortization, and other overhead expenses.

Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 24% of consolidated net sales for 2024, 2023, and 2022.  

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

($ thousands)	2024		2023		2022
Operating earnings	$	149,856	$	194,455	$	214,327
Interest expense, net		(13,957)		(19,343)		(14,264)
Other income, net		(741)		6,210		12,971
Earnings before income taxes	$	135,158	$	181,322	$	213,034

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 East Asia, Canada and Europe.  The East 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)	2024		2023		2022
Net Sales
United States	$	2,532,717	$	2,624,474	$	2,763,896
East Asia		111,670		130,423		146,700
Canada		58,140		48,220		44,484
Other		20,156		14,177		13,058
Total net sales	$	2,722,683	$	2,817,294	$	2,968,138
Long-Lived Assets
United States	$	8,855,001	$	676,937	$	656,840
East Asia		140,929		11,805		11,614
Canada		113,060		6,601		10,441
Other		2,401		269		184
Total long-lived assets	$	9,111,391	$	695,612	$	679,079