Note 8 - Business Segment Information

12 Months Ended

Feb. 01, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

8.    BUSINESS SEGMENT INFORMATION

The Company's reportable segments are Famous Footwear and Brand Portfolio.  The Famous Footwear segment is comprised of Famous Footwear, Famous.com and Famous.ca.  Famous Footwear operated 949 stores at the end of 2019, primarily selling 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 and markets licensed, branded and private-label footwear primarily to national chains, online retailers, department stores, mass merchandisers, independent retailers and catalogs as well as Company-owned Famous Footwear, Allen Edmonds, Naturalizer and Sam Edelman stores, and e-commerce businesses.  The Brand Portfolio segment included 141 branded retail stores in the United States, 79 branded retail stores in Canada, six branded retail stores in China, one branded retail store in Guam, and one branded retail store in Italy at the end of 2019.  During the first quarter of 2019, the Company changed its segment presentation to disclose net sales of the Brand Portfolio segment inclusive of both external and intersegment sales, with the elimination of intersegment sales and profit from Brand Portfolio to Famous Footwear reflected within the Eliminations and Other category.  This presentation reflects the independent business models of both Brand Portfolio and Famous Footwear, as well as growth in intersegment activity driven by recent acquisitions.  Prior period information has been recast to conform to the current presentation.

The Company’s Famous Footwear and Brand Portfolio reportable segments are operating units that are managed separately.  An operating segment’s performance is evaluated and resources are allocated based primarily on operating earnings (loss).  Operating earnings (loss) 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:

($ thousands)	Famous Footwear		Brand Portfolio			Eliminations and Other			Total
Fiscal 2019
External 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
Fiscal 2018
External sales	$	1,606,808	$	1,313,551		$	(85,513	)	$	2,834,846
Intersegment sales		—		(85,513	)		—			85,513
Depreciation and amortization		28,816		20,768			13,113			62,697
Operating earnings (loss)		85,268		(40,799	)		(44,068	)		401
Segment assets		502,507		1,211,008			125,053			1,838,568
Purchases of property and equipment		17,552		41,993			2,938			62,483
Capitalized software		351		814			3,251			4,416
Fiscal 2017
External sales	$	1,637,627	$	1,233,081		$	(85,124	)	$	2,785,584
Intersegment sales		—		(85,124	)		—			85,124
Depreciation and amortization		29,990		16,873			17,207			64,070
Operating earnings (loss)		92,230		80,160			(44,707	)		127,683
Segment assets		500,862		814,508			174,045			1,489,415
Purchases of property and equipment		22,920		15,865			5,935			44,720
Capitalized software		483		232			5,743			6,458

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

($ thousands)	2019			2018			2017
Operating earnings	$	103,813		$	401		$	127,683
Interest expense, net		(33,123	)		(18,277	)		(17,325	)
Loss on early extinguishment of debt		—			(186	)		—
Other income, net		7,903			12,308			12,348
Earnings (loss) before income taxes	$	78,593		$	(5,754	)	$	122,706

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 foreign operations consist of wholesale and retail operations primarily in the Far East, Canada and Italy.  The Far East operations primarily include first-cost transactions, where footwear is sold at foreign 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)	2019		2018		2017
Net Sales
United States	$	2,734,912	$	2,656,928	$	2,603,725
Far East		98,045		93,883		98,287
Canada		80,247		63,354		75,764
Latin America and other		8,358		20,681		7,808
Total net sales	$	2,921,562	$	2,834,846	$	2,785,584
Long-Lived Assets (1)
United States	$	881,338	$	219,975	$	200,686
Canada		35,317		9,381		10,559
Far East		3,527		1,348		1,456
Other		258		80		98
Total long-lived assets	$	920,440	$	230,784	$	212,799

(1) Long-lived assets includes $695,594 of lease right-of-use assets in 2019, with no corresponding amounts in 2018 or 2017, as those periods precede the adoption of ASC 842.