BUSINESS SEGMENT INFORMATION

12 Months Ended

Feb. 03, 2024

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 860 stores at the end of 2023, 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 62 branded retail stores in the United States and 36 branded retail stores in East Asia at the end of 2023.

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, the Company’s President and Chief Executive Officer, evaluates financial performance and allocates resources.  Operating earnings (loss) for the reportable segments represents gross profit, less selling and administrative expenses 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 2023
Net sales	$	1,609,396	$	1,270,853	$	(62,955)	$	2,817,294
Intersegment sales		—		62,955		—		62,955
Depreciation and amortization		23,085		22,766		7,429		53,280
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
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

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 both 2023 and 2022, and 26% for 2021.  

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

($ thousands)	2023		2022		2021
Operating earnings	$	194,455	$	214,327	$	205,807
Interest expense, net		(19,343)		(14,264)		(30,930)
Loss on early extinguishment of debt		—		—		(1,011)
Other income, net		6,210		12,971		15,378
Earnings before income taxes	$	181,322	$	213,034	$	189,244

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)	2023		2022		2021
Net Sales
United States	$	2,624,474	$	2,763,896	$	2,600,848
East Asia		130,423		146,700		119,857
Canada		48,220		44,484		43,789
Other		14,177		13,058		13,110
Total net sales	$	2,817,294	$	2,968,138	$	2,777,604
Long-Lived Assets
United States	$	676,937	$	656,840	$	630,519
East Asia		11,805		11,614		8,357
Canada		6,601		10,441		14,687
Other		269		184		105
Total long-lived assets	$	695,612	$	679,079	$	653,668