Centennial Club: Brown Shoe Marks 100 Years on NYSE

When George Warren Brown took his company public in 1914, he likely didn’t imagine that a passion project would one day grow into a global footwear empire.

Founded in 1878, St. Louis-based Brown Shoe Co. — initially named Bryan, Brown & Co. — took in $110,000 in revenue in its first year of operation, producing 150 pairs of shoes daily. Last year, the firm racked up $2.5 billion in revenue and sold 48 million pairs of Brown Shoe brands through its wholesale and owned retail channels.

“Given the long amount of time we’ve been on the [public] market, you just know how successful Brown Shoe has been and how often we had to be reinvented,” said Brown’s current chairman, president and CEO, Diane Sullivan. “At different points in time, we stood for different things. And the way the founders thought about shoes and fashion is a testament to the company we are today — they found a way to not only survive but thrive.”

Since listing on the market, the firm has endured two World Wars, the Great Depression, the Great Recession and numerous other disruptive events that have caused many companies to close their doors.

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Brown, on the other hand, has emerged stronger than ever, with plans to embark on the next 100 years by expanding its global footprint and online presence. Today, the retail and wholesale company is known for its portfolio brands that include

Via Spiga, Franco Sarto, Naturalizer, LifeStride, Dr. Scholl’s, Carlos by Carlos Santana, Fergie, Sam Edelman and Vince. The company operates roughly 1,100 Famous Footwear retail stores, which contribute more than half of Brown’s annual sales.

“It’s remarkable that one company could have remained independent … in a highly competitive and consolidating industry. That is a vociferous testament to the fortitude of its unique corporate culture,” said Steve Marotta, an analyst at CL King & Associates. “I am thrilled for Diane and her entire team, as the centennial celebration is occurring simultaneous to the stock ascension.” (The stock reached a 52-week high of $28.73 on March 17.)

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John Malpiedi, SVP and GM of Naturalizer, noted that the firm’s four core values — trust and transparency; personal accountability; a passion for winning; and integrity — have defined Brown through the years. “The remarkable skills and talents of the people who have shaped Brown have driven its success,” he said.

Sullivan said that making it past the 100-year mark “shows you can’t think about something for the short term. Everybody who has been part of this company in some way has thought about the long term and what the firm’s legacy needs to be.”

Operating under the microscope of Wall Street analysts, while also adapting to the changing retail environment, requires a fine balance and forward planning, she added.

“One of the biggest challenges of being a publicly traded company is making sure you’re totally connecting with your customers in a way that is profitable for your shareholders,” Sullivan said. “You have to deliver on your commitments and show integrity, and that’s true for the public market and the consumer. It’s about making sure you continue to deliver the products they love.” Through the Years

Brown Shoe has changed dramatically, starting out as a U.S.-based footwear manufacturing firm and undergoing several strategic shifts that transformed it into the retail and wholesale multibrand company it is today.

George Brown started the business with just $7,000 in his pocket and $5,000 from other sources, joining forces with partners Alvin Bryan and Jerome Desnoyers, and employing New England shoemakers to manufacture product.

Speaking to Brown’s rich heritage, Michael Oberlander, SVP, general counsel and corporate secretary, observed that each decade is a chapter in the company’s very long story.

After purchasing the rights to the characters and imagery from the popular “Buster Brown” comic strip in 1904, the firm started children’s line Buster Brown Shoes.

Its first women’s brand — Naturalizer — launched in 1927 to fill a gap in the market.

“Naturalizer was the first brand to study the structure of a woman’s foot so that her shoes fit better, and it was the first American fashion footwear brand designed specifically for women,” Malpiedi said.

The brand’s tagline, “The shoe with the beautiful fit,” heralded a new era in women’s shoemaking, he added.

After expanding into the women’s market with Naturalizer, Brown began to build a footwear industry epicenter in the Midwest, taking advantage of plentiful supplies, labor and the evolution of new manufacturing processes in the U.S.

The firm’s ability to adapt in the face of challenging times is evidenced by its move to capitalize on the demand for troop shoes and boots during World War I, said Oberlander, as Brown landed several large military contracts.

“Brown was committed to supporting the war effort and achieved a large contract to supply boots to the Army,” Oberlander said. “An example of the passion and integrity of Brown employees was, when there were material shortages and delays in the factories in the Midwest, management carried the footwear components as personal baggage on overnight trains because they were so committed to fulfilling their obligations.”

From 1922 to 1925, the firm’s average earnings growth rate was 29 percent, while sales expanded 75 percent on average over the same period, according to data from Investor’s Business Daily.

In the early 1950s, the creation of LifeStride and the acquisition of Wohl Shoe Co. helped Brown gain momentum and expand its portfolio. And in 1952, the company shifted its headquarters to larger premises in Clayton, Mo.

“To grow, we realized we needed to get into businesses beyond footwear,” Oberlander said. “We became a mini-conglomerate for 17 years, but over time we realized we weren’t able to run the other businesses as well as footwear. Leadership in the 1980s and ’90s closed down all the side businesses and decided to focus solely on shoes.”

After consolidating the non-core operations, Brown expanded its retail footprint by purchasing the 36-store Famous Footwear chain in 1981.

Reflecting on the past 100 years, Rick Ausick, current division president of Famous Footwear, said, “The founders would be incredibly proud. They started with a goal in mind and a plan of how they were going to make their mark. The fact that the company has survived this long and is thriving is because the core values they instilled have lived on.”

Perfecting and tweaking the retailer’s brand portfolio to match changing consumer tastes will be key moving forward, he added. “Whether it’s contemporary fashion brands or lifestyle, it’s about how we re-engineer Famous Footwear to be more relevant to the customer today,” Ausick said.

Shortly after establishing an international division in 1984, Brown began divesting its non-footwear businesses and closing its domestic manufacturing plants amid the shift to China-based sourcing.

New executive talent also was added over the years, helping Brown adjust to the changing retail landscape. Notably, Ron Fromm was named CEO in 1999, a position he held for 11 years.

Brown demonstrated its innovative approach to business and willingness to adapt through the acquisition of online e-commerce retailer Shoes.com in 1999.

It began snapping up women’s fashion footwear brands shortly after, commencing with the purchase of Bennett Footwear Group in 2005, which housed the Via Spiga, Franco Sarto, Etienne Aigner and Nickels Soft brands.

Jay Schmidt, division president of Brown’s contemporary fashion segment, said that reaching the 100-year mark attests to the breadth and depth of expertise at the company, especially in light of the significant changes in shoemaking over the past century.

“The milestone reminds me of the rich heritage that Brown has and points to the authenticity and expertise at the company, which are two variables that have kept it going for such a long time,” he said. “Diane — and before her Ron Fromm — cares about all parts of the Brown portfolio, and our biggest win is the evolution of the portfolio over time.”

Brown now operates across three consumer platforms — family, healthy living and contemporary fashion — and provides a family-focused footwear concept through Famous Footwear.

“The businesses fit nicely into Brown in a cohesive way,” Schmidt added.

After expanding into contemporary fashion footwear, Brown began investing in brands such as Sam Edelman and Fergie in the 2000s, cementing the company’s position as a leader in the women’s category.

Sam Edelman, designer and division president, said, “What attracted me to Brown was the stability and the integrity of what appeared to be a wonderful group of people I believed I could balance well with.”

The [Edelman] brand will continue to see major growth this year, according to Sullivan, with new stores in the works, a push into apparel and a larger e-commerce presence on the agenda.

The Next Chapter

Looking ahead, Malpiedi noted one of the biggest opportunities for Brown is the e-commerce explosion.

“What has led Brown’s most recent success is its ability to understand the fast-growing e-commerce channel, both at our retail channels such as Shoes.com and also across all our brands, and know how they work with our e-commerce partners, like Zappos.com,” he said. “Brown has done an excellent job of building infrastructure and driving considerable success in gaining market advantage in the space.”

Zappos’ VP of merchandising, Steve Hill, said, “Brown Shoe was one of our earliest partners and recognized the power of the Internet when others doubted anyone could sell shoes online. We respect, trust and value their partnership and friendship.”

Ausick agreed that capitalizing on the rapidly transforming e-commerce space will be crucial moving forward.

“The biggest question is, how do you make all the products available simultaneously the way customers want and create a memorable experience for them? Fifteen years ago, we were in the infancy stage of the dot-com and now the mix of stores is very different and we have a mobile app,” he said.

Market watchers lauded Sullivan and her management team for steering the firm through choppy market conditions while delivering an innovative product offering across a portfolio of brands.

“Management is extremely focused on driving the operating ability of the company and they have demonstrated their ability to improve performance over the past eight consecutive quarters,” said Danielle McCoy, an analyst at Brean Capital. “The future is very bright for this company, and they have done an amazing job at adapting online so they can reach their consumer in the way the consumer wants to reach them.”

Retailers and business partners agreed.

Scott Meden, EVP and GMM of Nordstrom’s shoe division, said, “We’ve also been in business more than 100 years and feel like we understand and appreciate what it takes to remain in business for that long. The folks at Brown Shoe Co. are incredible partners and they share our passion for seeing the business through the customer’s eyes.”

A strong ability to adapt is what sets Brown apart from its peers, Meden added. “They are continually evolving the individual brands and looking for new ways to serve more customers.”

Vince CEO Jill Granoff noted that Brown’s creativity, flexibility, long-term stability and successful track record drove her firm’s decision in 2011 to tap Brown as its first licensing partner for women’s shoes.

“We wanted a company that would produce our footwear collections in Italy, hire a designer who knew the contemporary landscape and invest in building the brand with our premier retail partners,” Granoff said. “Brown Shoe checked all of these boxes. Diane and her team have been terrific to work with and we are delighted with the performance of our women’s footwear business to date.”

On the future for Brown, Sullivan said, “100 years on the New York Stock Exchange is a humbling milestone. But now, more than ever before, Brown Shoe is right where it should be. Our past proves we have what it takes to succeed over the long term, and today, our company is full of a lot of good people who work hard and do it with great character.”

She added, “I have no doubt that, with the focus on our amazing brands and shoes, we have what it takes to be even more successful in the future. Together we are transforming Brown Shoe from a company that many have never heard of to one they won’t forget.”


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