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) February 5, 1998
BROWN GROUP, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
1-2191 43-0197190
(Commission File Number) (IRS Employer Identification Number)
8300 Maryland Avenue
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
(314) 854-4000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Page 1 of 6 Pages
Item 5. Other Events
--------------------
On February 5, 1998, Brown Group, Inc. announced
divisional retail sales results for the four-week
period, fourth quarter, and fiscal year ended
January 31, 1998. Brown Group, Inc. also announced
additional losses at its Pagoda International division.
Other activity disclosed was the sale of Famous
Footwear's fixture manufacturing facilities and the
contract completion for sale of its Brazilian
subsidiary's inventory.
Attached as an exhibit to this report is a copy of a
press release issued on February 5, 1998, which press
release is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Information and Exhibits
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Exhibit No. Description of Exhibit
----------- ----------------------
99.1 Press release dated February 5, 1998
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
BROWN GROUP, INC.
(Registrant)
By /s/ H. E. Rich
-----------------------------
Executive Vice President and
Chief Financial Officer
Date: February 5, 1998
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
BROWN GROUP REPORTS JANUARY SAME-STORE SALES
FOR FAMOUS FOOTWEAR UP 6.7%; NATURALIZER DOWN 1.3%; ALSO REPORTS
COMPLETED TRANSACTIONS AND ADDITIONAL PROVISIONS
FOR INTERNATIONAL RESTRUCTURING
ST. LOUIS, MISSOURI, February 5, 1998 . . . Brown Group, Inc.
(NYSE: BG) today announced divisional retail sales results for
the four-week period, fourth quarter and fiscal year ended
January 31, 1998 compared to the same periods ended February 1,
1997. Brown Group's retail operations include Famous Footwear,
an 815-store chain selling brand-name family footwear for less,
and Naturalizer, a 341-store chain selling the Naturalizer brand
of women's footwear.
Retail sales for Famous Footwear in January were $47,100,000
compared to $42,100,000 last January, an increase of 11.9
percent. Same-store sales increased 6.7 percent. Fourth quarter
sales for the thirteen-week period ended January 31, 1998
increased 10.5 percent to $188,700,000 compared to $170,700,000
in the same period last year and were up 3.7 percent on a same-
store basis. Sales for Famous Footwear for the fifty-two week
fiscal year ended January 31, 1998 increased 8.1 percent to
$828,700,000 from $766,300,000 for the same period last year and
were up 1.9 percent on a same-store basis.
The Naturalizer retail division's sales of $7,100,000 in January
were down 1.4 percent compared to $7,200,000 last January. Same-
store sales were down 1.3 percent. Fourth quarter sales for the
thirteen-week period ended January 31, 1998 were $31,200,000
compared to $30,100,000 in the same period last year, an
increase of 3.7 percent. Same-store sales for the quarter were
up 1.3 percent. Sales for the fifty-two week fiscal year ended
January 31, 1998 increased .3 percent to $130,100,000 from
$129,700,000 last year and were down .9 percent on a same-store
basis.
These results were announced by Harry E. Rich, Executive Vice
President and Chief Financial Officer, who said:
"Famous Footwear's 6.7 percent January same-store sales gain
is very encouraging, as it follows a similar same-store
increase in January last year, and margins were held at
about planned levels. It reflects solid improvements in
merchandising and operations, successful seasonal clearance,
and continuing strengthening in the sale of women's branded
footwear, which more than offset a decline in sales of
athletic product.
"We also are pleased to announce the sale earlier this week
of Famous Footwear's fixture manufacturing facilities to L.
A. Darling Company. The fixture operation had annual sales
in 1997 of about $20 million and had incurred losses in the
$1 to $2.5 million range over the past several years, which
depressed Famous Footwear's earnings, particularly during
the 1995 to 1997 period. The sale will result in positive
cash flow to Brown Group of about $4 million, and a non-
recurring charge of about $1.5 million, which will be
accounted against 1997 results.
"Year-end shipments at Brown Group's Core wholesale
businesses -- Brown Shoe Company and Pagoda USA -- were
slightly better than planned levels, and the Canadian
Operations continued to perform well. We are maintaining
the estimate of Core business earnings in 1997, which we
made in October and confirmed in December, of about
$24 million or $1.35 per share for the fiscal year ended
January 31, 1998. This earnings estimate excludes all
restructuring charges, and projected losses at Pagoda
International for the year.
"In that connection, earlier this week we completed the
contract for sale of Pagoda International's Brazilian
inventory with Calcados Dilly Ltda. In early December, a
Letter of Intent describing approximate terms of this
contract was announced. With the terms of the contract now
established, and the additional impact of the Brazilian
government's financial austerity program (which was
announced in November) more clearly determined, we now
estimate the 1997 loss at Pagoda International to be in the
$38 to $40 million range, or $2.16 to $2.27 per share. This
loss includes previously announced restructuring charges of
$13 million, a tax provision related to the repatriation of
the foreign cash of $8 million, and previously announced
estimated operating losses of over $10 million.' The
increase of $7 to $9 million in estimated 1997 losses
reflects the weaker retail footwear market in Brazil after
the austerity program, related higher markdown provisions
and operating losses, and the provision for the cost of
converting Pagoda International's European operations
completely to a first cost' basis, eliminating all in-stock
inventories of that business and providing for related
downsizing of that operation.
"As a result, Brown Group, Inc. expects to report a net loss
for the year of $15 to $17 million or $.85 to $.97 per share
on a basic and diluted basis. Despite the severe losses in
Pagoda International, with the completion of the marketing
contract in Brazil and the conversion of Pagoda
International's European operations to a first cost' basis,
Brown Group is well-positioned to support and benefit from
the emerging strength of our Core businesses."
Safe Harbor Statement Under the Private Securities Litigation Act of 1995:
This press release contains certain forward-looking statements that are
subject to various risks and uncertainties that could cause actual results to
differ materially. These include general economic conditions, competition,
consumer apparel and footwear buying trends, and political and economic
conditions in Brazil and China, which are significant footwear sourcing
countries. The Company's reports to the Securities and Exchange Commission
from time to time contain detailed information relating to such factors.
Brown Group, Inc. is a $1.5 billion footwear company with worldwide
operations. The Company operates the
Famous Footwear, Naturalizer and F. X. LaSalle chains of footwear retail
stores and markets leading brands including Naturalizer, Life Stride,
NaturalSPORT, the Larry Stuart Collection, le coq sportif athletic footwear,
Buster Brown, and licensed brands including Dr. Scholl's, Disney and Star Wars
character footwear.
Brown Group, Inc. press releases are available by fax through PR Newswire's
Company News On-Call fax service at 800-758-5804, extension 109435. Brown
Group, Inc. information also is available on the Company's web site at
http://www.browngroup.com.
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