ST. LOUIS, Jan. 21 /PRNewswire-FirstCall/ -- Brown Shoe Company, Inc.
(NYSE: BWS) today announced that it has entered into an amended and restated
agreement that will extend its asset-based revolving credit facility. The
size of the Company's facility has been increased to $380 million from $350
million, reflecting the growth and improved valuation of the Company's
borrowing base of inventory and receivables. The maturity date has been
extended to January 21, 2014, providing the company with a strong liquidity
position. Additionally, the Company announced expense reduction initiatives
to proactively position itself for continued challenges in the retail
environment. Details of this plan include a voluntary and involuntary
workforce reduction program, changes in its incentive compensation structure,
a discontinuation of merit increases for the Company's executives in 2009, the
closure of 30 to 35 Famous Footwear stores in 2009, and the closing of certain
functions at its Fredericktown, MO distribution center. These and other cost
reduction initiatives are expected to result in annual savings of
approximately $22 million, beginning in fiscal 2009.
Ron Fromm, Brown Shoe's Chairman and CEO, stated, "The renewal and
extension of our credit agreement at a higher borrowing capacity reflect the
strong partnerships we have with our banks and their confidence in Brown
Shoe's business model and position in the marketplace, especially in light of
the current challenges in both the banking and retail sectors. The amendments
to the facility provide Brown Shoe not only with continued and improved
liquidity during these difficult times, but also provide us with the
flexibility to execute on the initiatives that we believe will position us for
long-term growth and greater share of market. We continue to invest wisely in
our brands and infrastructure to increase value for all Brown Shoe
stakeholders."
Fromm continued, "We continue to develop plans and manage to multiple
scenarios of outcome and, as part of our ongoing expense review process, we
have decided to take proactive and responsible steps to respond to the
economic challenges of the current environment. While we have already
implemented a number of expense and capital containment measures, we see no
near-term indications that the current slowdown in consumer spending will
reverse itself in 2009 and we believe it is prudent to manage our cost
structure to the reduced-sales environment. Following thoughtful planning, we
have made difficult decisions that will affect a significant number of Brown
Shoe employees. However, we are committed to handling this process in the
right way for our employees, as well as for our customers, shareholders, and
the communities in which we live and work. In doing so, we have offered a
voluntary separation program that will provide enhanced payments and benefits
above our standard severance package. Brown Shoe is a 130-year-old company
and it has seen both good and difficult economies and we continue to look for
ways to increase our profitability and liquidity, while laying the groundwork
for success for generations to come."
Renewal and Extension of Credit Facility
The Company's borrowing capacity under its asset-based revolving credit
agreement has been increased to $380 million from $350 million and the
maturity date has been extended to January 21, 2014. The agreement also
contains an accordion feature that will provide the Company the opportunity to
request an increase in the size of the facility to $530 million, given a
sufficient borrowing base. The credit facility will be primarily used for
working capital and as backing for trade letters of credit and may also be
used for investments in infrastructure, potential acquisitions, and general
corporate purposes. Banc of America Securities LLC and Wells Fargo Retail
Finance, LLC were Joint Lead Arrangers in the amendment process and Banc of
America Securities LLC, Wells Fargo Retail Finance, LLC and JPMorgan Chase
Bank, N.A. were Joint Lead Bookrunners.
Cost Reduction Initiatives
The Company has offered a voluntary separation package to its domestic
employees, excluding store and hourly distribution center associates, in order
to reduce payroll expenses. This program will provide payments and benefits
above the Company's base severance package to those employees who choose this
option. Following the outcome of the voluntary program, the Company noted
that it will also initiate involuntary reductions in workforce within the next
two weeks. Due to the nature of the separations, the Company will be unable
to quantify the costs of workforce reduction until it determines the number of
employees that accept the voluntary program. Additionally, it had informed
employees at its Fredericktown, MO distribution center last week that it would
discontinue wholesale shipment processing from that location and permanently
lay-off 59 associates. This move was made in conjunction with the Company's
overall logistics strategy that involves realigning its distribution network
to increase the speed to deliver shoes to its consumers through increased
utilization of its west coast distribution centers and, hence, reduce the need
for processing capacity in Fredericktown.
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
include, among other things, the preliminary nature of the estimates of the
benefits of the Company's cost reduction program. 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 February 2, 2008, 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 $2.3 billion footwear company with global operations.
Brown Shoe's Retail division operates Famous Footwear, the over 1,100-store
chain that sells brand name shoes for the family, over 300 specialty retail
stores in the U.S., Canada, and China under the Naturalizer, Brown Shoe
Closet, FX LaSalle, Franco Sarto and Via Spiga names, and Shoes.com, the
Company's e-commerce subsidiary. Brown Shoe, through its Wholesale divisions,
owns and markets leading footwear brands including Naturalizer, LifeStride,
Via Spiga, Sam Edelman, Nickels Soft, Connie and Buster Brown; it also markets
licensed brands including Franco Sarto, Dr. Scholl's, Etienne Aigner, Carlos
by Carlos Santana, Fergie branded footwear, and Vera Wang Lavender Label
Collection as well as Barbie, Fisher-Price and Nickelodeon character footwear
for children. Brown Shoe press releases are available on the Company's
website at http://www.brownshoe.com.
SOURCE Brown Shoe Company, Inc.