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Brown Shoe Company, Inc. at Bank of America Securities Consumer Conference - Final.

Article Excerpt
UNIDENTIFIED PARTICIPANT: -- Brown Shoe. Joining us today will be Chairman and CEO Ron Fromm, as well as CFO Mark Hood. So I will now turn it over to Ron.

RON FROMM, CHAIRMAN AND CEO, BROWN SHOE COMPANY, INC.: Good morning, everyone.

I think you can all -- well, you've seen these Safe Harbor statements before, [but the] forward-looking statements, think, were there.

I think that many of you, I know, do follow us. And thought I'd just start out with a couple of update notes.

Our presentation is very similar, as we presented at the ICR Conference, as we were taking a look ahead at that time as well. And so I just wanted to make sure you understand it's consistent with that. I think today we're going to talk to you about a couple of things, but I want to really sort of focus on four or five points that I think are very important as we think about the future.

First of all, you should expect from us certain things. I think the first thing you should expect is that we ought to see improvement in our sales as well as our margin, as we go through 2009. I think the second thing -- you ought to see very clear evidence of why Famous Footwear will continue to gain market share. I think particularly, as we think about our verticalization efforts and our specialization efforts, I think you'll see how they're going to be materialized in 2009.

I think third, you're going to continue to see the opportunity to grow our core business with Naturalizer, Famous Footwear, now Sam Edelman, as well as our Dr. Scholl's business as well, and continue to work on building what we call the esteem of those brands, which give us the opportunity to improve our margins.

I think fourth is the opportunity, through the new brand launches and new business opportunities which we've created in the pipeline. The most notable that you've heard of is Fergie and Fergalicious, the Libby Edelman line, as well as Hot Kiss and a number of other initiatives that are in the pipeline yet to come.

And then, also importantly, is the realization of the benefit stream from the infrastructure spend that we've started and are continuing on, first in our distribution and transportation opportunities from the West Coast distribution capability, as well as the first benefits from the implementation of our ERP platform, particularly when it comes to our sample cost benefits and our product line management benefits.

And then, of course, you should expect from us continued focus on cash flow and profitability as we continue to manage our inventories tightly, and we continue to manage our expense base very tightly as well.

Why do you think about Brown Shoe in a tough economy? I think it's real important that for a long time, there are two concepts that our company has stood for. That is what we are going to stand for as we endure these difficult and challenging times as well. For those of you who may not know us, we're 130 years old and have certainly existed and survived in difficult economic times and good economic times.

One of the reasons why we're in business today and will continue to be successful in the future is that we have long-lasting and very strong partnerships across our business -- from leading retailers around the globe, to some of the world's greatest footwear brands, to the factory partners in the Far East; and some of the best financial firms to support us. And we believe that we are clearly differentiated through our sourcing, design and distribution expertise.

Over the last several years, we have focused on maintaining a strong balance sheet and generating some solid cash flow. Inventory is our largest asset, and we have taken a diligent approach to its management. Here we have been perhaps even a little bit ahead of the industry, as we were one of the early adopters of JDA and ProfitLogic, both of which are important tools in managing that inventory today. And we continue to explore ways to increase the optimization of our inventory at both retail and wholesale. We also manage a portfolio of brands, and we'll talk more of those as we go through the slides.

We remain committed to maximizing shareholder value. We continue to take further steps to improve that shareholder value in this environment. We want to position ourselves to grow as we exit this demanding environment in these unprecedented times. While we don't control the consumer environment, we certainly can control the execution of our business and communicate our [differentiated] point to value. And certainly, value becomes more important in these times.

While we're focused on applying increased discipline, the allocation of our capital and our resources -- while we think we have a leadership position that's proven in inventory management, we're not sitting on that. We continue to tighten that inventory control.

You know we have a great credit risk team at Brown. We've certainly gone through these difficult times. And I think we've proven that we're able to sit on top of ourselves within limiting that exposure during these times. We have lowered our CapEx plans by over $100 million over the next three years.

We have also significantly reduced our near-term store-expansion plans, with the few stores that we're opening next year. The vast majority of them will open in the first quarter. We're now looking at a net of only 20 stores for 2009, and we're probably looking at pretty flat store-for-store growth in the foreseeable future.

And we indefinitely...