Peggy Reilly Tharp – Vice President of Investor Relations Diane M. Sullivan – CEO, President and Chairman Russ Hammer – SVP and CFO Rick M. Ausick – Division President, Famous Footwear

Danielle McCoy - Brean Capital, LLC Jeff Stein - Northcoast Research Steve Marotta - CL King & Associates Jill Nelson - Johnson Rice & Company L.L.C. Christopher Svezia - Susquehanna Financial Group Scott Krasik - BB&T Capital Markets

Good morning. My name is Molly and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I will now turn the call over to Peggy Reilly Tharp. You may begin your conference.

Thank you, Molly. Good morning and thank you for participating in the Brown Shoe Company fourth quarter 2013 earnings call, which is being made available to the public via webcast. I'm Peggy Reilly Tharp, Vice President of Investor Relations for Brown Shoe Company. Earlier today, we distributed a press release that details financial tables which is available on our website at brownshoe.com. In addition, slides are available on our website for you to reference during today's call. Please be aware today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors, including, but not limited to the factors disclosed in the company's Form 10-K, and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors that could impact forward-looking statements. Copies of these reports are available offline. The company undertakes no obligation to update any information discussed in this call at any time. Joining us on the call today are Diane Sullivan, CEO, President, and Chairman; Russ Hammer, Chief Financial Officer; and Rick Ausick, President, Famous Footwear. Today, we'll begin with a strategy review from Dianne, followed by a financial summary from Russ, before turning the call back over for Q&A. Now, I'd like to turn the call over to Dianne. Diane M. Sullivan: Thanks, Peggy and good morning. And thank you everyone for joining us today as we wrap up a strong 2013 for Brown Shoe Company. At $2.513 billion, sales were up 1.4% over 2012 with contribution from all three of our key platforms; family, healthy living, and contemporary fashion. Adjusted EPS was $1.41 for the year, up 25% over last year as we benefited from all the portfolio realignment work that we've done over the last two years. These efforts also helped drive the improvement in our annual operating margin which came in at 4.2% on an adjusted basis. As we've discussed in the past, we’ve had hoped to be half way to our long-term operating margin goal of 8% by the end of 2014, and I'm happy to report that we're a year ahead of plan. None of these results would have been possible without the effort from the brands and the businesses, so let's turn to them, starting with Famous. As everybody here knows, Mother Nature did her best to dodge fourth quarter performance with same-store sales declining 1.8%, but the team delivered a good overall 2013. Let's review some of the year's results. Same-store sales were up 2.9% for the year. Operating earnings hit a record $107 million while operating margins improved to 7%. Revenue per square foot hit $207, up 4%. And we had record sales for the second and third quarter, including a 5.6% increase for back-to-school. Unfortunately, a fabulous 2013 ended with one of the snowiest and coldest winters in recent memory, and in total we lost nearly 4% of our potential selling days in the fourth quarter due to weather. Accordingly, we saw an increase as you would imagine in boot sales, which were up 7.5%, but athletic sales were down 5.1%. Now, while we only have a few weeks of the first quarter behind us, we're still seeing store closures related to weather. We lost approximately 6% of our potential selling days in February of 2014. And so far in March, we've lost roughly the same amount. However, in the sales regions we've designated as warm and hot, sales have been 10% to 15% higher than in our cold and moderate markets so far in the first quarter of 2014. The product success we've seen in those markets have us feeling very confident about spring styles once spring finally gets here; and that's the point, it always does at some point in time. So, with that in mind, we could see first quarter sales shifting into the second quarter since spring is already delayed and consumers remain in a buy-now, wear-now frame of mind. Now, before moving to our wholesale operations, I'd like to call out Famous' gross margin for the fourth quarter. At 45.5%, it was up 150 basis points, as we benefited from our proactive effort to reduce our BOGO promotions during the holiday shopping season. Now, let's talk a little bit about wholesale where 2013 sales of $763.7 million were up 5.3% and both our healthy living and contemporary fashion platforms contributed. We also saw an improvement in wholesale operating margins for the year, coming in at 6.4%, up 100 basis points on an adjusted basis. For the fourth quarter, wholesale sales of $196.3 million were up 13.5% and both platforms contributed to the growth. For Healthy Living, wholesale sales were up 2.4% in 2013, and 4.3% in the quarter with the quarterly increase led by a double-digit improvement in Naturalizer. You might recall when we began 2013, we shared with you that we expected Naturalizer to be on the right path by the end of the year and I believe that we have turned the corner with this brand. For Dr. Scholl's, domestic sales improved for both the full year and fourth quarter, up mid and low-single-digits respectively. We continued to see success throughout 2013 with our tiered product approach to this brand and we'll continue to drive sales at the mid-tier in 2014. At LifeStride, we once again saw improvement from this consistently profitable performer. Sales were up low-double-digits for the full year and mid-single-digits for the fourth quarter as retailer sentiment for this brand remains strong. For Ryka, we're preparing to rollout new styles this fall and new colors will be in store this spring, but we're really most excited about the product line updates coming later in this year. So, let's talk a little bit about contemporary fashion wholesale platform, where 2013 sales were up 12.7% and fourth quarter sales were up 28.2%. The strong quarter was led by our Sam Edelman and Franco Sarto brands. Sam Edelman had a remarkable 2013 with sales up nearly 40% for the year and over 50% for the quarter. As I'm sure many of you noticed we -- that Kate Upton is the face of the Sam Edelman brand for spring, and while we're excited about the campaign, we're even more excited about Sam's apparel line which will launch this fall. I've seen the product and aside from looking great, it's just perfectly aligned with Sam's brand identity. Franco Sarto had a good year in terms of sales, up high-single-digits. For the fourth quarter, sales were up low-double-digits and we saw strength in riding boots, wedge boots, and desert booties. For spring the brand is seeing good interest in casual oxfords, booties, and sandals, as well as casual flats, and these styles are already resonating well with retailers. At Via Spiga, while sales were still down in the fourth quarter and for the full year, we're excited about what we're seeing from our new designer Paul Andrew, and so are our retail partners. For spring, Via Spiga's sell-throughs are up double-digits year-over-year at our key retail partners. We still have a little more work to do, but I'm pleased with the quick action that the team took to get this brand back on track. And finally, for our celebrity brands, Carlos and Fergie, we saw mixed results with Carlos delivering a very strong fourth quarter, up over 40% and a good 2013, with sales up mid-single-digits. The Carlos brand always does well in fall and winter and they did again this year with boots and booties driving both sales and reorders. For Fergie, while sales were down for both the year and the quarter, boots helped drive an improvement in fourth quarter trends. And finally turning to Vince, the brand more than doubled in the fourth quarter and although this is off a small base, the attention the brand received in 2013 was really well deserved. We've seen good interest in our women's shoes and we began delivery of Vince men's footwear to about 60 doors beginning in the second quarter of 2014. So, while the weather did put a damper on the end of 2013, I'm very pleased with the success that we've demonstrated and the progress that we've made during the year. For 2014, we're going to continuously move forward and work towards building for growth in 2015 and beyond. We’re going to share more specifics around the next phase of our strategic development during our Investor Day in early June. But before that, I'd actually like to call out that we acquired the Franco Sarto brand for $65 million earlier this year. As you know, we have been interested in strategically shifting away from license brands and adding more owned brands to our portfolio. The addition of Franco to our own portfolio will enable us to fuel the long-term growth in our contemporary fashion platform. And in 2014, we're going to be investing heavily in our Sam Edelman brand, including the expansion of talent, marketing, e-commerce, and branded retail stores. This is a really exciting step forward for the company and the brand, and we're confident this investment in 2014 will benefit the company over the long-term. Lots more to follow when we see everybody in early June for that Investor Day. Now, with that, I'd like to turn the call over to Russ for a review of our financials and more details around our guidance.

Thank you, Diane, and thank you everyone for joining us on both the call and the webcast this morning. We certainly appreciate it. Although Diane briefly reviewed our consolidated sales, I'd like to add a little more color. Starting with the fourth quarter, we reported net sales of $600 million versus $618.7 million in the prior year and both amounts excluded sales from discontinued operations. As a reminder, 2012 included a 53rd week, which increased net sales by approximately $21 million that had an immaterial impact on earnings. We reported GAAP net earnings of $6.2 million in the fourth quarter or $0.14 per diluted share, up 52.6% compared to $4 million in the prior year or $0.09 per diluted share. Fourth quarter 2012 included portfolio realignment costs of $2.9 million on a pretax basis or $0.05 per diluted share. Excluding this amount, fourth quarter earnings per share were flat year-over-year. For the full year, net earnings were -- net sales were $2.513 billion versus $2.478 billion in 2012 and these amounts exclude sales from exited businesses and brands. GAAP net earnings for the full year were $38.1 million or $0.88 per diluted share versus $27.5 million or $0.64 in 2012. On an adjusted basis, excluding all portfolio realignment organization change integration related costs in both years, net earnings for 2013 were $61.5 million or $1.41 per share, up 26.5% when compared to 2012 earnings of $48.6 million or $1.13 per share. At Famous Footwear, we improved our revenue per square foot to $207 as we closed or relocated 62 stores and opened 51 this year. In the fourth quarter, we closed or relocated 13 stores and opened nine. And for 2014, we expect to open 50 to 55 stores and close 50 stores. Let's turn to a review of our financial metrics now. Overall gross margin in the fourth quarter was 40.2%, which was up 20 basis points. SG&A as a share of revenue was 38.5%, up 90 basis points year-over-year as we had lower sales at Famous Footwear with only slightly lower SG&A expenses. For the full year, gross margin was 40.4%, up 40 basis points on an adjusted basis. SG&A as a share of revenue was 36.2%, up 20 basis points year-over-year. Inventory at year end was $547.5 million, up 8.7% from $503.7 million in 2012. At Famous Footwear, while total inventory was up 8.6%, our aging position improved by 100 basis points year-over-year. Wholesale inventory was up 8.7% at year end, driven by our higher growth contemporary fashion brands. Our corporate tax rate was 30.6% for the full year, resulting in a negative 14.8% for the fourth quarter. Cash and equivalents at year end were $82.5 million, up 21%. Net interest expense of $5 million was down 14% in the quarter. And for the full year, net interest of $21 million was down 7.8% as we continued to reduce our borrowings. Our cash and investments net of short-term borrowings were $75.5 million for 2013, an improvement of $112.3 million over last year. We ended the quarter with only $7 million of borrowings against our revolving credit agreement. Our aggressive balance sheet management resulted in a significant improvement in our borrowing position in 2013, down over 90%. Depreciation and amortization was $55.3 million for the year, while capital expenditures were $49.2 million, down 22.8%. Our debt-to-capital ratio improved to 30.1% from 41.6% in 2012. And yesterday, we reported our 365th consecutive quarterly dividend, payable April 1st to shareholders of record as of March 24th. At Brown Shoe Company we executed on our strategy in 2013 and improved our operating performance, delivering steady improvement toward our long-term financial goals by driving sustainable profitability. For 2014, we expect to continue to deliver towards our long-term goals while balancing our realistic outlook, in terms of the economy, the consumer, and the weather, especially this early in the year. So, before we begin Q&A, I'd like to provide our first look at fiscal 2014 guidance. And at this juncture, we expect consolidated net sales of $2.58 billion to $2.60 billion, same-store sales at Famous Footwear up low-single-digits, specialty retail sales down low-single-digits due to store closures, net sales at wholesale operations up low to mid-single-digits, gross margin up approximately 10 basis points, SG&A of $920 million to $930 million with continued leverage, net interest expense of $20 million to $21 million, and an effective tax rate of 33% to 35%. We see depreciation and amortization of $51 million to $54 million and capital expenditures, we expect to be $53 million to $57 million, with earnings per diluted share expected to be between $1.45 and $1.55. We believe we’re approaching 2014 with a healthy amount of realism. As Dianne mentioned, the first quarter has already been rough in terms of weather-related store closures and spring sales continue to be delayed. While we expect we’ll be able to make up some of these sales in the second quarter, we could see this year's first quarter earnings at or below last year's level. We only have six weeks of 2014 behind us and the third quarter remains our largest. As we move throughout the year, we'll update you on our quarterly progress just as we did last year. And with that, operator we’d be happy to answer all questions.

(Operator Instructions) Your first question comes from the line of Danielle McCoy (Brean Capital, LLC). Danielle McCoy - Brean Capital, LLC: Good morning, guys, congrats on a solid quarter. Diane M. Sullivan: Great, thanks, Danielle.

Thanks Danielle. Danielle McCoy - Brean Capital, LLC: Just a few questions around store openings and closings. Can you give us a little bit more color on the specialty retail, what stores opened and closed in the fourth quarter and how we should expect that going forward? And when we look at the Sam Edelman stores, how many should we expect to open this year? And when I look at Vince, how should we expect the growth and maybe some door expansion or retail expansion with the IPO and their aggressive store expansion plans? Thank you. Diane M. Sullivan: Okay. Thanks, Danielle. Let me start with the last one first on Vince. Obviously, we think the brand's doing its IPO is really just beneficial in total for the opportunity that that brand has with the consumer. Tremendous interest in the brand continues. Sales as I mentioned had doubled as we've shipped to twice as many doors. Our forecast for 2014 really has sales up significantly really based on door count growth and significant performance in terms of sell-throughs. So, we have -- we’re very encouraged by our first 12 to 18 months of retailing with the Vince brand, so feel very good about the opportunity going forward. So, it's a combination of a number of things. And Russ, on the door count?

On the door count for specialty, we started the fourth quarter with 183 stores; we opened one and closed five, so we ended the quarter with 179. And on the Sam stores, we have one and as we mentioned on previous calls, we’re planning on opening a Beverly Hills one in the second quarter this year. Danielle McCoy - Brean Capital, LLC: Okay, great. And just one last one. Could you talk about the performance in Canada for Famous Footwear and maybe some plans going forward? Rick M. Ausick: Yes, Danielle, it's Rick. We had the store open at the end of August -- I'm sorry, end of July, so the first of August, so we had a full six months, outperformed our expectations relatively significantly. So, we've been very pleased with it. And understanding -- it's an open air mall, so we're understanding how that all works because the business obviously the last 60 days has been a little less than we had thought, but we had a lot more business the first 120 days if you will than we had expected, so we're still figuring that out a little bit. Our plans are to continue, we have four signed leases I believe for this year, one's a store opening, we have one opening I believe this month or next month and then the balance of them are towards the back half of the year. We'll continue to build around Toronto. I think there's two of them in the Toronto area and we've also signed some agreements to open a store and possibly two in Montreal. So that's it for the moment. This is our initial plan as we thought about the market and we wanted to get a little broader geographic view of how we could do. And then we'll see how this works and make our plans from there if we continue to find it's a worthwhile opportunity. Danielle McCoy - Brean Capital, LLC: All right. Great. Thanks guys, good luck. Diane M. Sullivan: Thanks Danielle.

Thank you.

Your next question comes from the line of Jeff Stein (Northcoast Research). Jeff Stein - Northcoast Research: Hi guys, a couple questions. First of all Russ, can you talk a little bit about the inventories at Famous Footwear? You indicated that aging is better than last year, yet you are up significantly it looks like on a per store basis. Can you talk about the quality of the inventory and potentially markdown risks that you might see in the first quarter?

Sure. I'll give a little color and then maybe Rick, maybe you'd add a little bit as well. So, when we look at our inventory I mentioned that it had improved almost 100 basis points on aging, and where we're up in our inventories in our areas that are our fasting moving areas, our athletic, our canvas, and brands that are larger, faster moving ones. Rick M. Ausick: Yeah, I think Jeff just to add a little bit to that. Obviously, we missed some sales in the fourth quarter that we had expected to get, and so there's a little bit of that in that number. But we had also planned to come into the season with some higher inventories, particularly in what we call athletic lifestyle businesses. So this would be canvas product, some of the Skechers GOwalk product that's doing so well, so those categories are where we invested for first quarter. Those investments are doing very well even with the weather not being so good, and we're getting a lot more out of our warm stores with it than we are out of cold right now. We expect when that weather changes that those businesses will catch up. So, it was part of the result of not great January selling and part of a result of a strategic effort to get into the categories we thought the customer wanted buy from us. Jeff Stein - Northcoast Research: And Russ do you see working capital being a source or use of cash this year?

Working capital in total should be a source for us this year. Jeff Stein - Northcoast Research: Okay. So, it sounds to me then like you would expect inventories to perhaps even be down a bit for the year?

We do. And in Famous is where we're looking at inventories being flat to down for the year. Jeff Stein - Northcoast Research: Okay. And Diane, question for you. There's a couple of -- I think it's several of your licenses on the wholesale side are scheduled to expire 2014 or at least it looks like you have renewal options and I'm speaking of Carlos and Fergie. Any sense in terms of what you might do there? Diane M. Sullivan: Not yet, Jeff, we’re going to continue to -- we really like what those two brands represent in the portfolio. They have strong following in different segments of the customer base than the rest of our portfolios. So, we'll assess it like everything else as we've done over the last couple of years. It has to fit strategically into our long-term plans and it's going to hit the financial hurdles that we set forward as well. But right now, no decision has been made and we really think it does appeal to a different consumer. Jeff Stein - Northcoast Research: Okay. And with respect to Naturalizer, it does again -- congrats on getting that business stabilized. What should we be looking for on the wholesale side of your business and in that brand particular? And I'm wondering with the general weakness that we saw at retail during the fourth quarter, have you seen any of your retail customers pull back on orders or cancel orders? And I guess final question, with regard to Naturalizer, would you expect it to grow below, in line, or above the growth rate you're expecting for the entire division for the year? Diane M. Sullivan: Okay. Let me see if I can hit all the questions that you asked there, Jeff. First of all, so far season-to-date, we're actually very pleased with the sell-through performance of virtually all of our brands across our wholesale portfolio. It's -- in some ways I really just think it's been a work-in-progress a bit for a while and right now we're seeing as I mentioned in some cases almost double the sell-through rates in a few of our brands. So, I would tell you today, I don't see any pulling back, despite the fact that the weather has been a bit sluggish. As we think about the forecast for 2014, in total, we're planning our wholesale operations sales up low to mid-single-digits, that's really where we're at and it's obviously, there's some growing faster than that, some growing a little slower than that. And in terms of Naturalizer, we actually think that that's going to be in the mid to high-single-digit growth. So, it could potentially grow a little faster in next year than the overall wholesale portfolio. Jeff Stein - Northcoast Research: Okay. Diane M. Sullivan: I mean -- again, I think that's new product, new launches, and frankly, just we had to improve the performance there, so it was about time. Jeff Stein - Northcoast Research: And where are the laggards in the portfolio, because when you add Naturalizer to what's going on in contemporary brands, it would seem to me that a low to mid-single-digit sales increase for wholesale would be a fairly conservative projection. Diane M. Sullivan: Yes. The laggards would be -- Ryka would be the one that is still in that transition phase of we moved it this year, Deb Krivelow and the team are doing terrific work about repositioning it. And so therefore, that's going to take a little bit of time. So, I would expect we're talking 2015 before we really are feeling that they're going to positively comp. I would say the second one would be Via Spiga. While the early signals of it are good right now so far in the first six weeks, seven weeks of the quarter. It's coming off of a low base last year, so we’re pretty conservative in our projection on it. So, those probably would be the two that would be lagging. Jeff Stein - Northcoast Research: Great. Thank you very much. Diane M. Sullivan: Okay Jeff.

Thanks Jeff.

Your next question comes from the line of Steve Marotta (CL King & Associates). Steve Marotta - CL King & Associates: Good morning, everybody. Diane M. Sullivan: Good morning Steve.

Good morning, Steve. Steve Marotta - CL King & Associates: Commenting on the inventory again given that it was up roughly 9% at Famous Footwear, have you changed the promotional cadence at all during spring-to-date or over the next couple of weeks in order to try to lighten inventory levels?

I think mostly Steve; we've managed the business pretty consistently if merchandise -- if things are selling at the rates we expect, we leave prices. If we are not, we lower prices. There are some things we're lowering prices on, but nothing egregious, nothing out of the way, out of the ordinary, so I don't think at this point. So far, we haven't done that. The products that we have in inventory, again maybe we've gone out and adjusted our flows on our second and third orders on things in order to make sure that we don't overbuy on that end of it. But I don't see anything that tells me we have a lot of big issues in our inventory. We always have issues, but nothing that seems to be overwhelming and that would hit the margins in a big way. Steve Marotta - CL King & Associates: Okay. And I just want to understand this right. You lost 6% of days in February, that's accurate?

Well, so if you think about it we have call it roughly 1,000 stores, and there's 28 days, so we have 28,000 potential store days. So, yes, we had store closings or partial openings on about 6% of those days, so that's whatever that is, 1,600 days, right that we did not have a full day or any days' worth of selling in parts of the country. So, that's how we look at it. Steve Marotta - CL King & Associates: You wouldn't want to give a little color on specific comp quarter-to-date?

Quarter-to-date we're down 1%. If we actually took the first week of February out, we would be up low-single-digits. Because that was the week we had the biggest impact on our store closures, and that's very, very erratic. Our stores in hot and warm markets are up high-single-digits and our stores in cold markets are down double-digits. So, it's just a matter of that. We hate -- I hate to say that all the time, because everybody just doesn't believe you, but it's very significant. So, anyway it's the biggest spread between our markets that I've seen in quite a while. Typically they move in much more concert. Steve Marotta - CL King & Associates: Okay, just to reiterate, comps quarter-to-date down only 1% including the dismal first week of February? Okay, great. Last question I have surrounding the $55 million expected this year committed to CapEx; can you talk a little bit about the projects that are specified there? Rick M. Ausick: Sure. So, besides the stores, we're continuing our brand build out on the stores and the Victory Towers and signage. We're also investing in the omnichannel throughout both Famous and our other brands. As you know, we've opened the Sam brand just recently as well and those are the main investments that we're doing. Steve Marotta - CL King & Associates: Terrific, thank you very much.

Your next question comes from the line of Jill Nelson (Johnson Rice & Company L.L.C.). Jill Nelson - Johnson Rice & Company L.L.C.: Good morning. Diane M. Sullivan: Good morning, Jill.

Good morning, Jill. Jill Nelson - Johnson Rice & Company L.L.C.: First question is on gross margin guidance, up 10 basis points for the year. I guess could you talk about the components of that given you're seeing some nice lift on Famous being less promotional, but on the flip side, I would expected wholesale margins to be tracking higher just given you've improved that brand mix.

Yeah, that's exactly where we do see the margins going higher Jill, is in the wholesale. We actually don't see that in the Famous side, we see those pretty flat. But we do see in wholesale, especially -- it's on both healthy and contemporary, but as contemporary continues to grow faster, we will see that higher margin impact. Jill Nelson - Johnson Rice & Company L.L.C.: Okay. And then could you talk about maybe in the fourth quarter on wholesale, it looked like gross margins were hit. Could you talk about was that more of just greater markdown allowances, is there kind of what -- what were the factors driving that pressure in the fourth quarter?

So, fourth quarter, our wholesale margins were at 28.9% versus 29.2% adjusted, down a bit and most of that was just due to mix between wholesale, contemporary, and healthy living. We did take; as we talked about on the last call, a little bit of markdowns in the Ryka, the older inventory that we were marking down to dispose of before we brought out the new product. Jill Nelson - Johnson Rice & Company L.L.C.: Okay. And then just last question, given that the weather has been an impact, could you talk about how your ecommerce business trended fourth quarter and maybe first quarter to-date, if you saw some relief there given store traffic has been challenging with weather. Rick M. Ausick: Yeah, I think the problem is Jill that our customer buys when they need it. So, if the weather doesn't seem to have helped -- at least not helped our e-commerce sides that much. The customers, they’re buying -- they're still buying boots, but it's really on a value basis and they haven't fully embraced the spring business because they are not able to buy now and wear now. We also had some changes in our promotional calendar that we talked about at holiday for the Famous with three less BOGO weeks, that has a huge impact on our dotcom. That customer is a lot more value driven, so when there's value and promotion in our business model, our online business is stronger. When it's not there, we lose a significant piece of business. So, that was impacted greater in the fourth quarter than you would have thought because of the less BOGO, so. Jill Nelson - Johnson Rice & Company L.L.C.: All right. Appreciate it. Thank you.

Your next question comes from the line of Ben (indiscernible).

Hi, how are you? Thank you for taking my question. Diane M. Sullivan: Hi Ben.

Good morning, Ben.

Conversion rate in Famous Footwear for the fourth quarter, what was that?

It's good. It was up.

Okay, great. And then can you help us on the algorithm for the comps of Famous Footwear for 2014, ASPs, conversions, how are you thinking about getting to that low-single digits, low to mid? Rick M. Ausick: It's primarily around continued improvement in the market basket size. So, whether it's additional pairs or additional average selling price and a continued improvement in our conversion with traffic flat to down slightly.

Okay, great. And then in terms of trends, it sounds like athletic and canvas continue to be strong for you guys. What are you seeing in terms of fashion, on the fashion side of things? Rick M. Ausick: Yeah, Diane can talk a little bit about what she sees from other wholesale brands. But at Famous, we're still a little early on the sandal business, but flat sandals in our hot and warm markets are doing very well, some of the early deliveries. We haven't got a lot of thongs in yet, but this is mostly banded flat sandals and a variety of uppers, primarily the upper being more covered, more foot covering, more covering whether it's a gladiator style of any of those kind of looks. The customer seems to be responded that on the sandal side. Our wedge business is very strong. We primarily transition from rope bottom to a cork -- cork like or wood like bottom, if you will. Those things are performing very well in those markets. And then there's this -- its crochet-type, if you will. So we have a couple of junior flats that have crochet uppers, we even have some missy things that have crochet uppers, have a few wedges that have crochet. Everything that has that look on it is selling very well. So that seems to be something that we can -- we'll do well as the weather gets warm around the country. So that's primarily the things that are working well on the non-athletic side. Diane M. Sullivan: Yeah. I think Rick covered most of them. The thing I would guess I would add is there is a bit of -- in dress -- no, it's not traditional dress. It's much more caged kind of looks that are selling right now, lot of upfront on the foot kind of looks that are working. A little more casual vibe in everything that the consumer is purchasing today, a little more relax. So you even see soft new box and washed metallic leathers trending pretty well right now. And then, in the spirit of sort of the lifestyle categories that Rick was talking about across all of our brands if we have a little slip-on Vans kind of like sneaker, we're seeing those sell through extremely well as well. So that would probably the advent to what Rick said.

Great. Thank you. And then last for you, Russ. Occupancy cost on a per store basis this year, is that going to be up and roughly by how much?

We do have this normal lease -- over the terms of the lease increments that occur which are normally in that 3% range. So I would expect it to be a little less than that actually with the turnovers that we're going to have on our leases.

Okay. Great. Thank you so much. Diane M. Sullivan: Thanks Ben.

Your next question comes from the line of Chris Svezia (Susquehanna Financial Group). Christopher Svezia - Susquehanna Financial Group: Hi everyone. Good morning. Diane M. Sullivan: Hi. Good morning, Chris.

Good morning, Chris. Christopher Svezia - Susquehanna Financial Group: Nice job. Diane M. Sullivan: Thank you. Christopher Svezia - Susquehanna Financial Group: Sure. I guess I have a bunch of things here. I guess first to talk to the -- you, Rick, I guess first. Just I guess first Easter impact being what, three weeks or so later this year? May be talk about what that does for Famous Footwear, good or bad? Rick M. Ausick: Yeah, yeah. We'll find out. I think the opportunity this year obviously is with the later Easter. It's helpful since we had a slower start. I think the -- we would suspect that the weather will change here sometime in the next 30 days and that would give us still time, two to three weeks or four weeks out from Easter itself to start to move through a lot of our spring product. So again, historically, in the old days right, we used to like have early Easter and -- because we could then have another event for Mother's Day, so we'd have Easter would be more dress-driven business and Mother's Day would be more casual-driven business. But that's all changed as the customers gotten more casual in their lifestyle. So we see less of that. So I think right now I'm kind of happy that Easter is later. It gives us a chance to get our inventories in really good shape. And hopefully, as the weather converts in bigger parts of the country, drives some real volume at the end of March and into early April that will help. Christopher Svezia - Susquehanna Financial Group: Okay. That makes sense. Advertising, last year you did Good Morning America. What's the game plan this year? I assume that helped drive traffic, any thoughts about this year from an advertising perspective? Rick M. Ausick: Yeah. We're still working on it. Probably won't be Good Morning America. We got a good deal last year, but not so much this year. Christopher Svezia - Susquehanna Financial Group: I know. Rick M. Ausick: But we're still looking. We will do some TV, a national TV campaign in May, which is different. So that was part of the plan to mitigate the Good Morning America. So we will do that which will help we hope lead into to back-to-school. And we're still looking for another type of event, whether its broadcast or partnership with another -- somebody else to help drive our -- all this business, but we haven't quite got there yet. Christopher Svezia - Susquehanna Financial Group: Okay. And I'll ask one product question for you. Any thoughts about the both shoe category business as you kind of think about spring into early summer this year. Rick M. Ausick: Yeah. Lot of conversation around, but I think we're finding, again, that the traditional product, the actual leather boat shoe is actually doing pretty well. And it's a stable business now, Chris. I think you might be right in the sense it's less of a fashion item and there's some of these customers themes, particularly they're transitioning into something else. But we still are selling very nicely our basic boat shoe business. We have a couple of canvas styles, particularly on the men's side. They are very, very strong with lace-less type of things on a boat bottom, but they have an oxford upper and they're lace-less. Those shoes are doing very well. So, it's a combination of things of business. Boat shoe silhouette itself is probably reducing a little bit. We're probably reducing our impact with that -- with the silhouette, but there's still a pretty good size business. And we expect it to be pretty good all the way through back-to-school, not what it was, won't be the same kind of increases, but we still expect to grow the business to some degree. Christopher Svezia - Susquehanna Financial Group: Okay. Fair enough. And I ask you, Rick, this question because I know Russ is going to sandbag it, but I mean just in terms of -- in terms of Famous Footwear, be a bit at a low single-digit comp can you get EBITD margin extension. I know you're kind of at the 7% range, which is pretty high, but just thoughts about the ability to incrementally not saying you did, but just incrementally expand on that. Rick M. Ausick: I think we still think it's in that 1.5% to 2%. Once we get pass those numbers I think we still believe we can leverage the business. Christopher Svezia - Susquehanna Financial Group: Okay. Fair enough. Thank you. And then, I guess, just on the Franco purchase, I'm just curious, when do you do that? And number two, now there's no longer that licensing stream. I mean, this is fair to say that that could have a meaningful impact on profitability, or their investments you need to make now that it's more yours to drive the business. I'm just curious, how we should think about that? Diane M. Sullivan: Yeah. Good question, Chris. We completed the transaction very early in February, and again have been working on it a while, but completed I think was on February 24. You're exactly right. We do expect that it can enhance our overall operating margin over time. But in the short term, there will be some investments that we need to make, additional design investments. And you can't really look at just Franco in isolation because we're going to be making significant investments in the Sam Edelman brand this year as well. So it's certainly should over time, we are excited about it. We think it's the right thing to do, and we have very high expectations for it over time. Christopher Svezia - Susquehanna Financial Group: Okay. And between Franco and Sam which are putting up sort of double-digit kind of growth? I mean how sustainable is that? I mean you think Sam is pretty much given, but I'm just curious the momentum that you're seeing there and your comments about early spring really not… Diane M. Sullivan: Yeah. Christopher Svezia - Susquehanna Financial Group: …seeing too much of a negative impact. I mean it seems like there's definitely some strong momentum sustainability behind that. Can you maybe talk to that? Diane M. Sullivan: Yeah. I think the way we sort of think about our -- because of how powerfully strong Sam was this year. Our forecast for '14 really has them up in their low double-digits, so not quite as strong as it has been. And for Franco, we're really thinking about it in the low single-digits at this point in time until we get a little further into the year. Christopher Svezia - Susquehanna Financial Group: Okay. And then just on -- great to see the EBIT margin improvement fourth quarter at wholesale and for the year. You made the comment that you're making some investments. I mean, do we still -- maybe end of the day, I mean crux of the story is really getting that wholesale business back to, kind of, call it 10% EBIT where. I mean you've been there before. Diane M. Sullivan: Right. Christopher Svezia - Susquehanna Financial Group: So I'm just curious. I mean you still anticipate I guess EBIT margin directionally improving at wholesale just kind of low to mid-single-digit, even though you met with some…

We do, we do. I mean, of course, the historic mix had a lot of first-cost business and now we have more sustainable brand, healthy growth and we see both the margin expansion on healthy and contemporary fashion side. Christopher Svezia - Susquehanna Financial Group: Okay. Okay, fair enough. That's all I have at the moment. Thank you very much and I will talk to you guys soon. Diane M. Sullivan: Thanks Chris.

Thanks Chris.

Your next question comes from the line of Scott Krasik (BB&T Capital Markets). Scott Krasik - BB&T Capital Markets: Hi guys. How are you? Diane M. Sullivan: Good morning, Scott. Scott Krasik - BB&T Capital Markets: Chris has always done a great job asking questions. If I repeat any, I'm sorry. I think, Rick, the only category we sort of left out now is molded. Did you comment on molded? Rick M. Ausick: Yeah. Actually, this is actually pretty good. Some of the new silhouettes, less of the traditional things, I mean, we actually have like a little healed slide which we were surprised how good to see. So I think it's interesting that yes, some of the new things are doing well, basic things are still performing, the business is up nicely, again probably less than it had been in the last couple of years, but nothing wrong with that business right now. Scott Krasik - BB&T Capital Markets: And then, if I could just touch on your comment again about you might adjust number two, three or four receipts for spring. Are you selectively replenishing now like the businesses that are doing well, or do you just have to give everybody a haircut because of the late start. Rick M. Ausick: We really try never to do that. And we're not in a position I think right now where we think it's that kind of a 911. So we've been very selective. A lot of us just -- sometime just -- it's moving a delivery 30 days and then maybe looking at the last one we might have had, the one behind that and whether we need to adjust that. So we're trying to be very selective and very pointed on how we do that. We're still buying a lot of shoes of the stuff that we are selling very well. So canvas part of our business is getting a lot of love because we still think there's a lot of opportunity in that business. So that's how we look better. Scott Krasik - BB&T Capital Markets: And then, it seems like at least on the technical side there is a shift towards more cushioning and running, stability versus the lightweight models. You did really well with the lightweight models. I mean are you already transitioning into some of this more cushioned product? Rick M. Ausick: We've always had that in our assortment. It's just a matter of degrees, right? So we've always had shoes like the Torch and things like that that have more of that built into it. And actually those shoes re-colored and re-uppered in the last 60 days, some of these things are going very well. So that will still be a big piece of our business going forward. But the lightweight, and that is still the dominant piece of what selling, it's moving and shifting a little bit, but it's not a full transition from their softening the -- they're stopping buying lightweight bottom. They're going to stability. It's a slight shift in arc and what we're seeing today in our business, Scott. Scott Krasik - BB&T Capital Markets: Okay. And then after platform and Fannie, what's your take on how your buyers are going to buy boots for this year. And are you seeing any shift. I think it was a good cold weather season but not great fashion. Are you seeing any shift towards tall shafted boots? Rick M. Ausick: Yeah. I think we were – we just about final I think we're actually in the process of writing the finishing writing the orders for the first deliveries at least. We believe there will there still a nice opportunity in tall shaft riding boots some different couple of new things on heal hikes, the heals are little a little higher on some of those riding boots. So it's little different than what we've had in the past, little chunkier, still casual. I think that's the one thing even on the boot side it's getting even more casual. It looks like the Lace-up business I think we saw that was a really good business early, probably not as strong in the fourth quarter as we had hoped. So I think we're just making some adjustment in how we flow that, and where we're going to put the investment. The shearling business was very good this year. I think even what people report on a public basis. So told you that because we kind of narrow that into a vendor like one we do it from one guy now. We had a real strong we had a real strong business so we're going to look at making that making sure we're impact there not going crazy on silhouettes, but just making sure we have the right depth on the basic items because it seems like that’s what the customers looking for. So I think those are kind of the major things. I don't -- haven't added up yet so I suspect we're going to be up some. I don't think it's going to be enormous deal. Probably be trending about where the store would be planned to trend so call it low-single-digits would be my guess. But certain categories would be bigger other ones would be smaller. Cold weather. It was great. We had cut back the store base because we thought we've gotten too broad. We won't expand the store base we'll probably have more depth and a couple of more still awaits, and probably in those list of stores where we abandon the true cold weather business. We're looking at putting in making sure we have some waterproof styles because there's a couple of waterproof things where the customers it's not so much about snow, it's about rain and things like that so. We think that might be small opportunity not a big deal but just again to cover that business a little bit. Scott Krasik with BB&T Capital Markets: That's really helpful, Rick. Thanks .and then just one last one Rick for you. You gave us great stats on the percentage of days that were closed this year in February. Can you tell us what February – how many days maybe were closed last year in February, and then also in 4Q. Rick M. Ausick: I'd have to almost believe there was none in February. 4Q we had a few. Actually I think we're coming up on some days this month where we had bad weather. I think it's this weekend actually, end of next week where we have some late weather events in the couple of parts of the country. I don't have at my fingertips, Scott, but I think it was very small in February. I think it was very small in fourth quarter last year. There was some, but it was much, much little. It'd probably 1% or less, I would guess that what we were talking about last year. Scott Krasik - BB&T Capital Markets: Okay. That's really helpful and then just Diane I think about a year ago you said you hope, I think it was in five years men's can be a $40 million business. Can you sort of comment on your updated thoughts on that. I think you've gotten off to a much better start then. Diane M. Sullivan: Well, I think we'll see that in two years. Scott Krasik - BB&T Capital Markets: Okay. And ultimately the size of if you put your arms around it. Diane M. Sullivan: I have heard yes, but it'd be north of the 40 that I thought. Scott Krasik with BB&T Capital Markets: Yeah. Okay. Thanks good luck. Diane M. Sullivan: All right .thanks Scott.

Thanks Scott.

And there are no further questions at this time. Diane M. Sullivan: Thank you very much. Appreciate everybody joining us this morning.

Thank you for participating in today's conference call. You may now disconnect.