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) August 25, 2011

(August 25, 2011)

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))

Page 1

Item 2.02   Results of Operations and Financial Condition

On August 25, 2011, Brown Shoe Company, Inc. (the "Company") issued a press release (the "Press Release") announcing, among other things, its resultsof operations for the quarter ended July 30, 2011. A copy of the Press Release is being furnished as exhibit 99.1 hereto, and the statements contained therein are incorporated by reference herein.

In accordance with General Instruction B.2. of Form 8-K, the information contained in Item 2.02 and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, 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
	99.1	Press Release issued August 25, 2011

Page 2

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:  August 25, 2011	/s/ Michael I. Oberlander
	Michael I. Oberlander
	Senior Vice President, General Counsel and Corporate Secretary

Page 3

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release dated August 25, 2011

Page 4

EX-99.1

Exhibit 99.1

News

 Contacts:

 Investors

 Peggy Reilly Tharp, Brown Shoe

 (314) 854-4134, ptharp@brownshoe.com

 Media

 Erin Conroy, Brown Shoe

(718) 913-0960, econroy@brownshoe.com

Brown Shoe Reports Second Quarter 2011 Results

Net sales of $628.1 million increased 7.2% year-over-year

GAAP net loss per diluted share of ($0.11)

Adjusted net loss per diluted share of ($0.06)

Declared 355th consecutive quarterly dividend of $0.07

ST. LOUIS, August 25, 2011 – Brown Shoe Company, Inc. (NYSE: BWS, brownshoe.com) today reported its second quarter 2011 financial results, with net sales of $628.1 million, an increase of 7.2% compared to second quarter 2010 net sales of $585.8 million.

The company reported a net loss of ($4.6) million, or ($0.11) per diluted share, compared to net earnings of $5.3 million, or $0.12 per diluted share, in the second quarter of 2010.  On an adjusted* basis, the net loss was ($2.7) million, or ($0.06) per diluted share, compared to net earnings of $6.5 million, or $0.15 per diluted share in the second quarter of 2010.  Gross profit margin in the second quarter of 2011 was 37.7% versus 40.7% in the second quarter of 2010.

“In the second quarter, not only were we up against record Famous Footwear comps, we also saw the overall toning category negatively impact sales at both Retail and Wholesale Operations,” said Diane Sullivan, president and chief executive officer of Brown Shoe.  “Although we experienced year-over-year growth in net sales in the second quarter, we also saw a more rapid than expected decline in toning.  During the quarter, we continued to review our investment in this category and reduced the carrying value of our entire toning inventory, which resulted in a write-down of $0.06 per diluted share.”

“In addition, while we are making progress in our SAP stabilization, it has cost us more in terms of dollars and effort than we had anticipated,” continued Sullivan.  “In the second quarter, results were negatively impacted by $0.07 per diluted share due to increases in allowances and chargebacks, margin related to lost sales, and incremental stabilization costs.”

“Importantly, as part of the strategic review of our portfolio, today we announced an agreement to sell AND 1 for $55 million in cash, which will be used to pay down debt.  We will continue completing this comprehensive review of our brands, in conjunction with evaluating our SG&A spend and reducing our costs during the second half,” concluded Sullivan.

US$ in millions, except per share data (unaudited)	13 Weeks Ended			26 Weeks Ended			52 Weeks Ended
	7/30/2011	7/31/2010	Change	7/30/2011	7/31/2010	Change	7/30/2011	7/31/2010	Change
Famous Footwear	344.9	347.3	(0.7%)	687.7	709.5	(3.1%)	1,464.7	1,441.4	1.6%
Wholesale Operations	222.7	178.6	24.6%	444.8	353.4	25.9%	845.8	674.3	25.4%
Specialty Retail	60.5	59.8	1.2%	120.3	120.6	(0.3%)	262.9	259.4	1.3%
Consolidated net sales	$628.1	$585.8	7.2%	$1,252.7	$1,183.5	5.9%	$2,573.4	$2,375.1	8.3%
Gross profit	236.5	238.5	(0.8%)	486.3	486.0	0.1%	1,003.9	977.4	2.7%
Margin	37.7%	40.7%	-300 bps	38.8%	41.1%	-230 bps	39.0%	41.2%	-220 bps
SG&A expenses	235.6	224.5	5.0%	471.2	448.9	4.9%	945.2	889.4	6.3%
% of net sales	37.6%	38.3%	-70 bps	37.6%	38.0%	-40 bps	36.7%	37.4%	-70 bps
Net restructuring, other special charges	0.7	1.9	(63.6%)	2.4	3.6	(32.6%)	6.7	10.9	(38.3%)
Operating earnings	0.2	12.1	(98.7%)	12.7	33.5	(61.9%)	52.0	77.1	(32.6%)
% of net sales	0.0%	2.1%	-210 bps	1.0%	2.8%	-180 bps	2.0%	3.2%	-120 bps
Net interest expense	7.5	4.7	56.6%	14.0	9.3	52.0%	24.3	19.2	26.3%
Loss (earnings) before income taxes	(7.3)	7.4	(199.0%)	(1.3)	24.2	(105.5%)	27.7	57.9	(52.2%)
Tax rate	34.7%	35.0%	-30 bps	14.8%	36.7%	n/m	25.6%	36.0%	n/m
Net (loss) earnings	($4.6)	$5.3	(187.6%)	($0.9)	$15.3	(106.0%)	$21.0	$36.7	(42.7%)
Per share	($0.11)	$0.12	(191.7%)	($0.02)	$0.35	(105.7%)	$0.47	$0.84	(44.0%)
Adjusted per share	($0.06)	$0.15	(140.0%)	$0.09	$0.41	(78.0%)	$0.65	$1.00	(35.0%)

Highlights

The 7.2% improvement in second quarter net sales was due to the company’s February 17 acquisition of American Sporting Goods (ASG), which accounted for 7.4% of consolidated second quarter net sales.  ASG was also the primary contributor to the 24.6% improvement in Wholesale Operations net sales over the second quarter of 2010.

Famous Footwear reported a year-over-year decline in second quarter net sales of (0.7%).  The decrease was primarily due to the significant deterioration in year-over-year toning sales, which was only partially offset by stronger running and sandal sales.  Excluding toning, Famous Footwear net sales improved 3.2% over the second quarter of 2010.

In the second quarter, same store sales at Famous Footwear increased 0.2%.  Excluding toning, the increase over the second quarter of 2010 was 3.9%.  During the quarter, the company closed eight underperforming stores and added 12 new stores.  When compared to the second quarter of 2010, the total number of stores declined to 1,116 from 1,128.

Consolidated gross profit decreased (0.8%) in the second quarter, while gross profit margin declined 300 basis points.  The reduction in gross margin, when compared to the second quarter of 2010, was primarily due to the lower value of toning product at Famous Footwear, however, it was also negatively impacted by a shift in mix.  For the second quarter, Retail and Wholesale Operations net sales were 65% and 35%, respectively, compared to 70% and 30% in the second quarter of 2010.  Gross profit margins in the company’s Retail businesses are traditionally higher than in Wholesale Operations.

The second quarter 2011 GAAP loss per diluted share of ($0.11) included ($0.05) of costs for the ASG integration and related inventory purchase accounting adjustments and the early retirement of the company’s 2012 senior notes.  Excluding these items, the adjusted loss was ($0.06) per diluted share.  For the second quarter of 2010, GAAP earnings per diluted share of $0.12 included ($0.03) of costs related to the company’s information technology initiatives.  Excluding these costs, adjusted earnings were $0.15 per diluted share.

Inventory at the end of the second quarter was $627.9 million, up 8.6% compared to $578.1 million in the second quarter of 2010, with the majority of the year-over-year increase due to the acquisition of ASG.  Famous Footwear inventory was down 3.2%, while Wholesale Operations inventory was up 56.6%.  ASG accounted for 78.5% of the inventory increase at Wholesale.

During the quarter, the company completed the issuance of its $200 million 7.125% senior notes due 2019 and the tender for its $150 million 8.75% senior notes due 2012.  At quarter-end, Brown Shoe had $270.7 million in availability under its revolving credit facility and $62.6 million in cash and cash equivalents.

The company utilized its existing authorization to repurchase 2.2 million shares for $22.4 million, or $10.20 per share, during the second quarter.  Early in the third quarter, the company completed its prior repurchase program.  Additionally, the board of directors authorized a new stock repurchase program** of up to 2.5 million shares, displaying the confidence the company has in its business and long-term prospects, as well as honoring its commitment to return value to shareholders.  The board also declared a quarterly dividend of $0.07 per share, payable Oct. 3, 2011, to shareholders of record on Sept. 16, 2011.  This dividend will be the 355th consecutive quarterly dividend paid by the company.

Full Year 2011 Guidance

“We’ve taken a hard look at our potential earnings for both the back half and full year of 2011, and as a result, we now expect 2011 adjusted EPS of between $0.85 and $0.97,” said Mark Hood, chief financial officer of Brown Shoe.  “Our guidance reflects our continued concern about any potential impact from the overall global economic uncertainty, consumer acceptance of pending price increases, and expected cost pressures.”

	2H’11	FY’11
Consolidated net sales	$1.42 to $1.45 billion	$2.68 to $2.71 billion
Famous Footwear same-store sales	Up low single-digits	Flat
Wholesale Operations net sales	Flat, excluding ASG	Flat, excluding ASG
Gross profit margin	Up 30 to 60 basis points	Down 60 to 90 basis points
Net interest expense	$12 to $13 million	$25 to $26 million
Effective tax rate	32.5 to 33.0%	32.5 to 33.0%
Earnings per diluted share	$1.03 to $1.15	$1.01 to $1.13
Adjusted earnings per diluted share	$0.76 to $0.88	$0.85 to $0.97
Depreciation and amortization	$30 to $32 million	$59 to $61 million
Capital expenditures	$30 to $32 million	$52 to $54 million

Investor Conference Call

Brown Shoe will webcast an investor conference call at 9:00 a.m. ET today, Aug. 25, 2011.  The webcast will be available at brownshoe.com/investor.  A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 91563708.  A replay will be available on the website for a limited period.  Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 91563708 through Sept. 8, 2011.

* Non-GAAP Financial Measures

In this press release, 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 and earnings per diluted share adjusted to exclude 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 identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

** A portion of the repurchased shares may be used for the company's employee benefit plans, and the balance will be available for other general corporate purposes. The stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as levels of cash generation from operations, cash requirements for investments, repayment of debt, current stock price, and other factors.  Brown Shoe may repurchase shares from time to time on the open market or in private transactions, including structured transactions. The stock repurchase program may be modified or discontinued at any time.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings (loss) attributable to Brown Shoe Company, Inc. and diluted earnings (loss) per common share attributable to Brown Shoe Company, Inc. shareholders, are presented as net earnings (loss) and earnings (loss) per diluted share, respectively.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release 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 risks include (i) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions; (ii) potential disruption to Brown Shoe’s business and operations as it integrates ASG into its business; (iii) potential disruption to Brown Shoe’s business and operations as it implements its information technology initiatives; (iv) Brown Shoe’s ability to utilize its new information technology system to successfully execute its strategies, including integrating ASG’s business; (v) intense competition within the footwear industry; (vi) rapidly changing fashion trends and purchasing patterns; (vii) customer concentration and increased consolidation in the retail industry; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China, where ASG has manufacturing facilities and both ASG and Brown Shoe rely heavily on third-party manufacturing facilities for a significant amount of their inventory; (ix) the ability to recruit and retain senior management and other key associates; (x) the ability to attract and retain licensors and protect intellectual property rights; (xi) the ability to secure/exit leases on favorable terms; (xii) the ability to maintain relationships with current suppliers; (xiii) compliance with applicable laws and standards with respect to lead content in paint and other product safety issues; (xiv) the ability to source product at a pace consistent with increased demand for footwear; (xv) the impact of rising prices in a potentially inflationary global environment; and (xvi) the ability of Galaxy International to obtain financing and to close on the purchase of AND 1. 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 on Form 10-K for the year ended January 29, 2011, which information is incorporated by reference herein and updated by the Company’s Quarterly Reports on Form 10-Q. The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

# # #

About Brown Shoe Company, Inc.

Brown Shoe is a $2.7 billion global footwear company. Brown Shoe's Retail division operates Famous Footwear(TM), a leading family branded footwear destination with over 1,100 stores nationwide and e-commerce site FamousFootwear.com, approximately 250 specialty retail stores in the U.S., Canada, and China primarily under the Naturalizer® brand name, and footwear e-tailer shoes.com. Through its wholesale divisions, Brown Shoe designs and markets leading fashion and athletic footwear brands including Naturalizer, Dr. Scholl's®, LifeStride®, Sam Edelman®, Franco Sarto(TM), Via Spiga®, Etienne Aigner(TM), Vera Wang Lavender(TM), Avia®, ryka® and Buster Brown(TM). Brown Shoe press releases are available on the Company's website at www.brownshoe.com.

SCHEDULE 1
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
	13 Weeks Ended						26 Weeks Ended						52 Weeks Ended
(Thousands, except per share data)	July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010
Net sales	$	628,128		$	585,756		$	1,252,748		$	1,183,474		$	2,573,365		$	2,375,081
Cost of goods sold		391,583			347,286			766,403			697,444			1,569,496			1,397,716
Gross profit		236,545			238,470			486,345			486,030			1,003,869			977,365
Selling and administrative expenses		235,696			224,448			471,164			448,963			945,177			889,319
Restructuring and other special charges, net		689			1,891			2,433			3,608			6,739			10,919
Operating earnings		160			12,131			12,748			33,459			51,953			77,127
Interest expense		(6,520	)		(4,810	)		(13,218	)		(9,322	)		(23,543	)		(19,354	)
Loss on early extinguishment of debt		(1,003	)		-			(1,003	)		-			(1,003	)		-
Interest income		65			49			150			67			286			153
(Loss) earnings before income taxes		(7,298	)		7,370			(1,323	)		24,204			27,693			57,926
Income tax benefit (provision)		2,530			(2,582	)		196			(8,881	)		(7,083	)		(20,873	)
Net (loss) earnings	$	(4,768	)	$	4,788		$	(1,127	)	$	15,323		$	20,610		$	37,053
Less: net (loss) earnings attributable to noncontrolling interests		(159	)		(473	)		(206	)		16			(395	)		398
Net (loss) earnings attributable to Brown Shoe Company, Inc.	$	(4,609	)	$	5,261		$	(921	)	$	15,307		$	21,005		$	36,655
Basic (loss) earnings per common share attributable to Brown Shoe Company, Inc. shareholders	$	(0.11	)	$	0.12		$	(0.02	)	$	0.35		$	0.48		$	0.85
Diluted (loss) earnings per common share attributable to Brown Shoe Company, Inc. shareholders	$	(0.11	)	$	0.12		$	(0.02	)	$	0.35		$	0.47		$	0.84
Basic number of shares		41,852			42,147			42,164			41,951			42,262			41,773
Diluted number of shares		41,852			42,463			42,164			42,267			42,683			41,994

SCHEDULE 2
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands)	July 30, 2011		July 31, 2010		January 29, 2011
ASSETS
Cash and cash equivalents	$	62,553	$	30,724	$	126,548
Receivables		158,595		106,149		113,937
Inventories		627,929		578,085		524,250
Prepaid expenses and other current assets		49,360		33,206		43,546
Total current assets		898,437		748,164		808,281
Other assets		139,109		118,884		133,538
Goodwill and intangible assets, net		174,299		73,876		70,592
Property and equipment, net		139,078		136,207		135,632
Total assets	$	1,350,923	$	1,077,131	$	1,148,043
LIABILITIES AND EQUITY
Borrowings under revolving credit agreement	$	250,000	$	35,500	$	198,000
Trade accounts payable		295,826		294,845		167,190
Other accrued expenses		139,698		139,675		146,715
Total current liabilities		685,524		470,020		511,905
Long-term debt		198,540		150,000		150,000
Deferred rent		33,445		38,011		34,678
Other liabilities		42,692		27,555		35,551
Total other liabilities		274,677		215,566		220,229
Total Brown Shoe Company, Inc. shareholders’ equity		390,077		391,071		415,080
Noncontrolling interests		645		474		829
Total equity		390,722		391,545		415,909
Total liabilities and equity	$	1,350,923	$	1,077,131	$	1,148,043

SCHEDULE 3
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	26 Weeks Ended
(Thousands)	July 30, 2011			July 31, 2010
OPERATING ACTIVITIES:
Net (loss) earnings	$	(1,127	)	$	15,323
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation		18,565			16,028
Amortization of capitalized software		6,657			5,010
Amortization of intangibles		4,206			3,350
Amortization of debt issuance costs		1,163			1,098
Debt extinguishment		1,003			-
Share-based compensation expense		3,007			2,781
Tax deficiency related to share-based plans		453			142
Loss on disposal of facilities and equipment		454			617
Impairment charges for facilities and equipment		746			1,684
Deferred rent		(1,233	)		(858	)
Provision for doubtful accounts		422			80
Foreign currency transaction losses (gains)		17			(11	)
Changes in operating assets and liabilities, net of acquired businesses:
Receivables		(23,921	)		(21,923	)
Inventories		(56,405	)		(121,298	)
Prepaid expenses and other current and noncurrent assets		9,247			8,923
Trade accounts payable		115,236			117,041
Accrued expenses and other liabilities		(33,999	)		(714	)
Other, net		(1,028	)		(284	)
Net cash provided by operating activities		43,463			26,989
INVESTING ACTIVITIES:
Purchases of property and equipment		(14,683	)		(12,844	)
Capitalized software		(7,098	)		(11,871	)
Acquisition cost (American Sporting Goods Corporation)		(156,636	)		-
Cash recognized on initial consolidation		3,121			-
Net cash used for investing activities		(175,296	)		(24,715	)
FINANCING ACTIVITIES:
Borrowings under revolving credit agreement		965,500			435,500
Repayments under revolving credit agreement		(913,500	)		(494,500	)
Proceeds from issuance of 2019 Senior Notes		198,540			-
Redemption of 2012 Senior Notes		(150,000	)		-
Dividends paid		(6,197	)		(6,114	)
Debt issuance costs		(5,456	)		-
Payment of tender premium		(372	)		-
Acquisition of treasury stock		(22,408	)		-
Proceeds from stock options exercised		693			561
Tax deficiency related to share-based plans		(453	)		(142	)
Acquisition of noncontrolling interests (Edelman Shoe, Inc.)		-			(32,692	)
Net cash provided by (used for) financing activities		66,347			(97,387	)
Effect of exchange rate changes on cash and cash equivalents		1,491			4
Decrease in cash and cash equivalents		(63,995	)		(95,109	)
Cash and cash equivalents at beginning of period		126,548			125,833
Cash and cash equivalents at end of period	$	62,553		$	30,724

SCHEDULE 4
BROWN SHOE COMPANY, INC.
Reconciliation of Operating Earnings, Net Earnings and Diluted Earnings Per Share (GAAP Basis) to Adjusted Operating Earnings, Net Earnings and Diluted Earnings Per Share (Non-GAAP Basis)
	13 Weeks Ended July 30, 2011								13 Weeks Ended July 31, 2010
(Thousands, except per share data)	Operating Earnings		Net (Loss) Earnings Attributable to Brown Shoe Company, Inc.			Diluted (Loss) Earnings Per Share			Operating Earnings			Net Earnings Attributable to Brown Shoe Company, Inc.			Diluted Earnings Per Share
GAAP earnings (loss)	$	160	$	(4,609	)	$	(0.11	)	$	12,131		$	5,261		$	0.12
Charges/Other Items:
ASG cost of goods sold adjustment(1)		1,479		873			0.02			-			-			-
Loss on early extinguishment of debt		1,003		638			0.02			-			-			-
Acquisition-related costs		689		438			0.01			-			-			-
IT initiatives		-		-			-			1,891			1,263			0.03
Total charges/other items		3,171		1,949			0.05			1,891			1,263			0.03
Adjusted earnings (loss)	$	3,331	$	(2,660	)	$	(0.06	)	$	14,022		$	6,524		$	0.15
	26 Weeks Ended July 30, 2011								26 Weeks Ended July 31, 2010
(Thousands, except per share data)	Operating Earnings		Net (Loss) Earnings Attributable to Brown Shoe Company, Inc.			Diluted (Loss) Earnings Per Share			Operating Earnings			Net Earnings Attributable to Brown Shoe Company, Inc.			Diluted Earnings Per Share
GAAP earnings (loss)	$	12,748	$	(921	)	$	(0.02	)	$	33,459		$	15,307		$	0.35
Charges/Other Items:
ASG cost of goods sold adjustment(1)		4,189		2,477			0.05			-			-			-
Acquisition-related costs(2)		2,433		2,105			0.04			-			-			-
Loss on early extinguishment of debt		1,003		638			0.02			-			-			-
IT initiatives		-		-			-			3,608			2,447			0.06
Total charges/other items		7,625		5,220			0.11			3,608			2,447			0.06
Adjusted earnings	$	20,373	$	4,299		$	0.09		$	37,067		$	17,754		$	0.41
	52 Weeks Ended July 30, 2011								52 Weeks Ended July 31, 2010
(Thousands, except per share data)	Operating Earnings		Net Earnings Attributable to Brown Shoe Company, Inc.			Diluted Earnings Per Share			Operating Earnings			Net Earnings Attributable to Brown Shoe Company, Inc.			Diluted Earnings Per Share
GAAP earnings	$	51,953	$	21,005		$	0.47		$	77,127		$	36,655		$	0.84
Charges/Other Items:
ASG cost of goods sold adjustment(1)		4,189		2,477			0.06			-			-			-
Acquisition-related costs(2)		3,552		2,829			0.06			-			-			-
IT initiatives		3,187		2,088			0.05			8,159			5,256			0.12
Loss on early extinguishment of debt		1,003		638			0.01			-			-			-
Organizational changes		-		-			-			4,624			2,825			0.07
Headquarters consolidation		-		-			-			(1,864	)		(1,139	)		(0.03	)
Total charges/other items		11,931		8,032			0.18			10,919			6,942			0.16
Adjusted earnings	$	63,884	$	29,037		$	0.65		$	88,046		$	43,597		$	1.00
(1) In accordance with GAAP, purchase accounting rules require the company to record inventory at fair value (i.e., expected selling price less costs to sell) on the acquisition date. This results in lower than typical gross margins when the acquired inventory is sold. This adjustment reflects the elimination of the unfavorable impact of lower gross margins for ASG product sold in the first and second quarters of 2011.
(2) A significant portion of the acquisition related expenses incurred in the first quarter of 2011 are not tax-deductible and therefore do not have a tax benefit allocated to those costs. In addition, certain acquisition costs recognized by the company in the fourth quarter of 2010 have, upon consummation of the ASG acquisition in the first quarter of 2011, become non-deductible. Therefore, the acquisition related costs line also reflects a $0.2 million increase in tax expense related to certain acquisition costs incurred during 2010.

SCHEDULE 5
BROWN SHOE COMPANY, INC.
OPERATING RESULTS BY MAJOR SEGMENT
	Famous Footwear				Wholesale Operations				Specialty Retail
($ millions)	13 Weeks Ended				13 Weeks Ended				13 Weeks Ended
	July 30,		July 31,		July 30,		July 31,		July 30,			July 31,
	2011		2010		2011		2010		2011			2010
Net Sales	$	344.9	$	347.3	$	222.7	$	178.6	$	60.5		$	59.8
Gross Profit	$	149.0	$	159.6	$	63.4	$	54.1	$	24.2		$	24.8
Gross Profit Rate		43.2%		46.0%		28.5%		30.3%		40.0%			41.4%
Operating Earnings (Loss)	$	7.5	$	15.8	$	4.1	$	9.0	$	(3.0	)	$	(2.7	)
Operating Earnings (Loss) %		2.2%		4.5%		1.8%		5.1%		-5.0%			-4.6%
Same-store Sales %		0.2%		11.8%		-		-		5.2%			6.8%
Number of Stores		1,116		1,128		-		-		245			264
	Famous Footwear				Wholesale Operations				Specialty Retail
($ millions)	26 Weeks Ended				26 Weeks Ended				26 Weeks Ended
	July 30,		July 31,		July 30,		July 31,		July 30,			July 31,
		2011		2010		2011		2010		2011			2010
Net Sales	$	687.7	$	709.5	$	444.8	$	353.4	$	120.3		$	120.6
Gross Profit	$	305.6	$	323.8	$	131.1	$	110.7	$	49.6		$	51.5
Gross Profit Rate		44.4%		45.6%		29.5%		31.3%		41.2%			42.7%
Operating Earnings (Loss)	$	26.3	$	43.9	$	10.6	$	17.7	$	(6.8	)	$	(5.7	)
Operating Earnings (Loss) %		3.8%		6.2%		2.4%		5.0%		-5.6%			-4.7%
Same-store Sales %		-1.9%		13.6%		-		-		2.1%			11.3%
	Famous Footwear				Wholesale Operations				Specialty Retail
	52 Weeks Ended				52 Weeks Ended				52 Weeks Ended
	July 30,		July 31,		July 30,		July 31,		July 30,			July 31,
($ millions)		2011		2010		2011		2010		2011			2010
Net Sales	$	1,464.7	$	1,441.4	$	845.8	$	674.3	$	262.9		$	259.4
Gross Profit	$	650.9	$	645.9	$	242.5	$	220.8	$	110.6		$	110.7
Gross Profit Rate		44.4%		44.8%		28.7%		32.7%		42.1%			42.7%
Operating Earnings (Loss)	$	72.8	$	86.4	$	25.1	$	45.0	$	(7.1	)	$	(9.4	)
Operating Earnings (Loss) %		5.0%		6.0%		3.0%		6.7%		-2.7%			-3.6%
Same-store Sales %		3.1%		10.0%		-		-		2.4%			8.5%