CALERES, INC (CAL) Business, 2011

Brown Shoe Company, Inc., founded in 1878 and incorporated in 1913, operates in the footwear industry. Current activities include the operation of retail shoe stores and e-commerce websites as well as the sourcing and marketing of footwear for women, men and children. Our business is seasonal in nature due to consumer spending patterns, with higher back-to-school and Christmas and Easter holiday season sales. Traditionally, the third fiscal quarter accounts for a substantial portion of our earnings for the year.

During 2010, categories of our consolidated net sales were approximately 62% women’s footwear, 23% men’s footwear, 11% children’s footwear and 4% accessories. This composition has remained relatively constant over the past few years. Approximately 70% of 2010 footwear sales represented retail sales, including sales through our e-commerce websites, compared to 72% in 2009 and 69% in 2008, and the remaining 30%, 28% and 31% in the respective years represented wholesale sales. See Note 8 to the consolidated financial statements for additional information regarding our business segments and financial information by geographic area.

We had approximately 13,400 full-time and part-time employees as of January 29, 2011. In the United States, there are no employees employed subject to union contracts. In Canada, we employ approximately 20 warehousing employees under a union contract, which expires in October 2013.

RETAIL OPERATIONS

Our retail operations at January 29, 2011, included 1,369 retail shoe stores in the United States, Canada, China and Guam. The number of our retail footwear stores at the end of each of the last three fiscal years was as follows:

2010 2009 2008 Famous Footwear Family footwear stores that feature a wide selection of brand-name, value-priced footwear; located in shopping centers, outlet malls and regional malls in the United States and Guam; primarily includes stores operated under the Famous Footwear, Famous Footwear Outlet, Factory Brand Shoes and Mind Body Sole names 1,110 1,129 1,138 Specialty Retail Stores selling women’s footwear, primarily Naturalizer, located mostly in regional malls, shopping centers, outlet malls and premier street locations in the United States, Canada and China (through our majority-owned subsidiary, B&H Footwear Company Limited); includes stores operated under the Naturalizer, Brown Shoe Closet, F.X. LaSalle, Via Spiga and Sam Edelman names 259 282 306 Total 1,369 1,411 1,444

With many companies operating retail shoe stores and departments, we compete in a highly fragmented market. Competitors include local, regional and national shoe store chains, department stores, discount stores, mass merchandisers, numerous independent retail operators of various sizes and internet retailers. Quality of products and services, store location, trend-right merchandise selection and availability of brands, pricing, advertising and customer service are all factors that impact retail competition.

Famous Footwear, with 1,110 stores at the end of 2010 and net sales of $1.5 billion in 2010, is one of America’s leading family branded footwear retailers selling value-priced footwear for the entire family, based on the number of stores it operates and sales volume compiled by the Company from published information of its direct competitors. Its target customers are women who buy brand-name fashionable shoes at value prices for themselves and their families. In addition to our retail footwear stores, we operate a FamousFootwear.com website as a Famous Footwear internet retailing store.

Famous Footwear stores feature a wide selection of value-priced brand-name, athletic, casual and dress shoes for the entire family. Brands carried include, among others, Nike, Skechers, New Balance, Puma, Converse, DC, adidas, Asics, LifeStride, Naturalizer, Vans, Dr. Scholl’s, Rocket Dog, Reebok, Bearpaw, Dockers, Hot Kiss, Connie and Madden Girl. We work closely with our vendors to provide our customers with fresh product and, in some cases, product exclusively designed for and available only in our stores. Retail price points typically range from $20 for shoes up to $130 for boots and health and wellness products.

Famous Footwear sells various Company-owned and licensed products. Such products are sold to Famous Footwear by our Wholesale Operations segment at a profit and represent approximately 15% of Famous Footwear net sales of footwear.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

Famous Footwear stores are located in strip shopping centers, as well as outlet and regional malls in all 50 states and Guam. The breakdown by venue is as follows at the end of each of the last three fiscal years:

2010 2009 2008 Strip centers 762 778 759 Outlet malls 174 181 197 Regional malls 174 170 182 Total 1,110 1,129 1,138

The stores open at the end of 2010 and 2009 averaged approximately 7,000 square feet. Total square footage at the end of 2010 decreased 2.4% to 7.7 million square feet compared to 7.9 million at the end of 2009. We currently intend to open approximately 45 new stores and close approximately 40 stores in 2011. New stores typically experience an initial start-up period characterized by lower sales and operating earnings than what is generally achieved by more mature stores or the division as a whole. While the duration of this start-up period may vary by type of store, economic environment and geographic location, new stores typically reach a normal level of profitability within approximately four years.

Sales per square foot were $187 in 2010, which was up from $167 in 2009. Same-store sales improved 10.5% during 2010. Same-store sales changes are calculated by comparing the sales in stores that have been open at least 13 months.

Famous Footwear relies on merchandise allocation systems and processes that utilize allocation criteria, customer segmentation and inventory data in an effort to ensure stores are adequately stocked with products and to differentiate the needs of each store based on location, customer segmentation and other factors. Famous Footwear’s distribution systems allow for merchandise to be delivered to each store weekly or on a more frequent basis. Famous Footwear also utilizes third-party-owned regional pooled distribution sites across the country. We operate three leased distribution centers located in Sun Prairie, Wisconsin; Lebanon, Tennessee; and Bakersfield, California, for our retail operations. Famous Footwear’s in-store point-of-sale systems provide detailed sales transaction data to the corporate offices in St. Louis, Missouri, for daily update and analysis of the perpetual inventory and merchandise allocation systems. These systems also are used for training employees and communicating between the stores and the main office.

Famous Footwear’s marketing programs include print, national television, radio, in-store advertisements, viral and digital marketing and social networking, all of which are designed to further develop and reinforce the Famous Footwear concept and strengthen our connection with consumers. Most marketing and advertising programs are tailored on a region-by-region basis to reach target customers. We execute certain advertising campaigns to correspond to regional differences such as the important back-to-school season, which begins at various times throughout the country. The key to our successful campaigns is highlighting key categories when most appropriate and tailoring the timing of such messaging to adapt to seasonal shopping patterns. In 2010, we spent approximately $58.0 million to advertise and market Famous Footwear to our target customer and her family, a portion of which is recovered from suppliers. In addition, Famous Footwear has a robust customer loyalty program (“Rewards”), which informs and rewards frequent customers with product previews, earned incentives based upon purchase continuity, and other periodic promotional offers. In 2010, more than half of our Famous Footwear net sales were generated by our Rewards members. Additionally, continued intense focus on social media throughout 2010 is building a stronger connection with our customers, allowing us to both listen to and communicate with our core market. We will continue to seek to expand ways for customers to connect to Famous Footwear (beyond email, Facebook, Twitter, YouTube and proprietary mobile applications) to drive our fans from the digital world into profitable and loyal customers in our multi-channel selling environments.

Our Specialty Retail segment, composed of 259 stores as of January 29, 2011, includes the following retail concepts and our Shoes.com and other e-commerce businesses, with the exception of FamousFootwear.com, which is included in the Famous Footwear segment.

Naturalizer

The Naturalizer retail stores are complementary to and a showcase for our Naturalizer brand of women’s shoes. These stores are designed and merchandised to appeal to the Naturalizer customer, who is style- and comfort-conscious and who seeks quality and value in her footwear selections. The Naturalizer stores offer a selection of women’s footwear styles, including casual, dress, boots and sandals, primarily under the Naturalizer brand. Retail price points typically range from $59 for shoes to $169 for boots.

At the end of 2010, we operated 110 Naturalizer stores in the United States and 105 Naturalizer stores in Canada. Of the total 215 stores, approximately 64% are located in regional malls, with a few stores having street locations, and average approximately 1,200 square feet in size. The other 36% of stores are located in outlet malls and average approximately 2,400 square feet in size. Total square footage at the end of 2010 was 354,000 compared to 390,000 in 2009. In 2010, we closed 29 Naturalizer stores and opened six stores in the United States and Canada, primarily in regional malls. We currently plan to open 12 Naturalizer stores and close 21 stores in 2011.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

At the end of 2010, through our majority-owned subsidiary, B&H Footwear Company Limited (“B&H Footwear”), we also operated 15 stores in several of China’s largest cities. We currently plan to open eight stores in China in 2011. In addition, our joint venture partner, Hongguo International Holdings Limited (“Hongguo”), operated 45 stores at the end of 2010 and plans to open approximately 20 stores in 2011. Naturalizer footwear is distributed through these stores operated by B&H Footwear and Hongguo. See Note 17 to the consolidated financial statements for additional information about B&H Footwear.

Marketing programs for the Naturalizer stores have complemented our Naturalizer brand advertising, building on the brand’s consumer recognition and value proposition, and reinforcing the brand’s focus on effortless style, comfort and quality. Naturalizer utilizes a database-marketing program, which targets frequent customers through catalogs and other mailings that display the brand’s product offerings. Customers can purchase the products in these catalogs from our stores, via the internet at Naturalizer.com and Naturalizer.ca, or by telephone through our Consumer Services call center.

E-Commerce/Direct-To-Consumer

We own Shoes.com, Inc., a pure-play internet retailing company. Shoes.com offers a diverse selection of footwear and accessories to women, men and children that includes footwear purchased from outside suppliers, Company-branded and licensed footwear, and certain merchandise sold in Famous Footwear stores.

In connection with our multi-channel approach to reach consumers, we also operate FamousFootwear.com, Naturalizer.com, Naturalizer.ca and ViaSpiga.com, which offer substantially the same product selection to consumers as sold in their respective retail stores. Additional websites such as ShoeSteal.com, DrSchollsShoes.com, SamEdelman.com, CarlosShoes.com, LifeStride.com, FergieShoes.com and FrancoSarto.com function as retail outlets for the online consumer and serve as additional brand-building vehicles for the Company.

References to our website addresses do not constitute incorporation by reference of the information contained on the websites, and the information contained on the websites is not part of this report.

Other Store Concepts

Our Specialty Retail segment also includes other store concepts that sell other premium brands. These include retail stores operated under the Brown Shoe Closet, F.X. LaSalle, Via Spiga and Sam Edelman names.

At the end of 2010, we operated 15 Brown Shoe Closet retail stores located in United States outlet malls, averaging approximately 2,100 square feet. These multi-branded outlet stores primarily carry Brown Shoe brands, including Etienne Aigner, Franco Sarto, Dr. Scholl’s, Carlos by Carlos Santana, Fergie and Nickels, with price points typically ranging from $49 to $89 for shoes and up to $179 for boots. We currently plan to close three stores in 2011.

At the end of 2010, we operated 12 F.X. LaSalle retail stores, primarily in the Montreal, Canada, market, that sell better-grade women’s and men’s branded and private-label footwear. Canadian dollar retail price points for this footwear typically range from $110 to $250 per pair. These stores average approximately 2,300 square feet. We plan to close one F.X. LaSalle store in 2011.

At the end of 2010, we operated one Via Spiga concept store and one Sam Edelman concept store. The Via Spiga concept store is located in Manhattan’s SoHo neighborhood in New York City. The store sells primarily Via Spiga product, including women’s footwear and accessories and men’s footwear with footwear price points typically ranging from $175 for shoes to $425 for boots. The Sam Edelman concept store is located in an upscale Palm Beach, Florida, shopping center, exclusively sells Sam Edelman styles with footwear price points typically ranging from $100 to $250 per pair and is intended to be a short-term location. We currently plan to open two Sam Edelman stores and close the Palm Beach, Florida, store in 2011.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

WHOLESALE OPERATIONS

Our Wholesale Operations segment designs, sources and markets branded and nonbranded casual, dress and athletic footwear for women, men and children at a variety of price points. Certain of our branded footwear products are developed pursuant to licensing agreements. Our footwear is distributed to over 2,000 retailers, including national chains, department stores, mass merchandisers, independent retailers, catalogs and online retailers throughout the United States and Canada as well as approximately 50 other countries (including intersegment sales). The most significant wholesale customers include many of the nation’s largest retailers, including national chains such as TJX Corporation (including TJ Maxx and Marshalls), Retail Ventures (including DSW), Ross Stores and Kohl’s; department stores such as Macy’s, Nordstrom, Dillard’s, Bon-Ton and Belk; and mass merchandisers such as Walmart, Collective Brands, Inc. (including Payless ShoeSource), Target and Sears. The loss of any one or more of our significant customers could have a material adverse effect on our Wholesale Operations as well as the consolidated Company. We also sell product to a variety of international retail customers and distributors. The vast majority of our wholesale customers also sell shoes purchased from competing footwear suppliers. Those competing footwear suppliers own and license brands, many of which are well-known and marketed aggressively. Many retailers, who are our wholesale customers, are increasing the amount of products that carry private brand names that they source directly from factories or through agents. In 2010, our Wholesale Operations segment sold its customers approximately 61 million pairs of shoes.

Our sales force solicits wholesale orders for shoes and is generally responsible for managing our relationships with wholesale customers. We generally accept orders as a result of these sales efforts before the shoes are sourced, with delivery generally within three to four months thereafter. We sell footwear to wholesale customers on both a landed and first-cost basis. Landed sales are those in which we obtain title to the footwear from our overseas suppliers and maintain title until the footwear clears United States customs and is shipped to our wholesale customers. Landed sales generally carry a higher margin rate than first-cost sales as a result of the brand equity associated with the product along with the additional customs, warehousing and logistics services provided to customers and the risks associated with inventory ownership. First-cost sales are those in which we obtain title to footwear from our overseas suppliers and typically relinquish title to customers at a designated overseas port. Many of these customers then import this product into the United States. We carry inventories of certain high-volume styles, particularly in the Naturalizer, LifeStride, Franco Sarto, Dr. Scholl’s, Sam Edelman, Via Spiga, Carlos by Carlos Santana, Etienne Aigner and Vera Wang Lavender lines, to allow prompt shipment on reorders.

We continue to build on the heritage and recognition of our wholesale brands to create differentiation and consumer loyalty. Marketing teams are responsible for the development and implementation of marketing programs for each brand, both for us and for our retail partners. In 2010, we spent approximately $27 million in advertising and marketing support, including cooperative advertising, in-store promotions and events, in-store displays and fixtures, consumer print advertising, direct mail, public relations and internet advertising with our wholesale customers. The marketing teams are also responsible for driving the development of branding and content for our brand websites. We continually focus on enhancing the effectiveness of these marketing efforts through market research, product development and marketing communications that collectively address the ever-changing lives and needs of our consumers. In 2010, the marketing teams were instrumental in the development and execution of new product launches, including target consumer identification, branding, positioning and marketing to both the consumer and trade audiences. We intend to continue the growth of our social media presence, especially with our largest wholesale brands (Naturalizer and Dr. Scholl’s). We believe increasing our focus on social media will help drive us into the next generation of marketing, allowing us to connect even more intimately with consumers.

Our Wholesale Operations segment offers retailers a portfolio of leading fashion brands, each targeted to a specific customer segment within the marketplace. Our brands are differentiated by style point of view, design level, material costs and quality, consumer-focused marketing and price points. Products sold under license agreements accounted for Wholesale Operations’ sales of approximately 44% in 2010, 48% in 2009 and 49% in 2008.

Naturalizer: Introduced in 1927, Naturalizer has become a global family of comfort lifestyle footwear brands meeting the needs of women across the marketplace with uncompromising comfort, fit and style. Our flagship Naturalizer brand, offering our exclusive N5 Comfort ElementsTM, is a leading women’s brand sold primarily at department stores, independent retailers, national chains, online retailers and our Naturalizer retail stores. The brand is distributed in 50 countries around the world. Suggested retail price points range from $69 for shoes to $179 for boots. NaturalSoul by Naturalizer, introduced in 2007 to provide women with uncompromising value, is our fastest growing brand sold primarily in national chains, our Naturalizer outlet stores and Famous Footwear retail stores. Suggested retail price points range from $59 for shoes to $99 for boots. Naya, the newest member of the brand family, introduced in March 2010, combines feminine style, premium comfort and materials designed to leave a softer footprint on the Earth. Naya is sold primarily at department stores, independent and online retailers. Suggested retail price points range from $130 for shoes to $285 for boots. Naya is sold in 16 countries around the world.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

Dr. Scholl’s: Dr. Scholl’s is an iconic global comfort brand, delivering unique, proprietary comfort technology and design. This footwear features Dr. Scholl’s insole technology and is primarily distributed through mass merchandisers, national and shoe chains and our Famous Footwear retail stores at suggested retail price points of $20 for sandals to $70 for boots. Dr. Scholl’s holds the No. 8 market share position in the comfort zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group. We also sell the Dr. Scholl’s Shoes line of women’s fashion footwear under this license. Dr. Scholl’s Shoes offers hip comfort for the fashion consumer with cool, casual styling and comfort technology. It is sold through national chains, our Famous Footwear and Naturalizer retail stores and department stores at suggested retail prices ranging from $29 for sandals to $79 for boots. We have a long-term license agreement, which is renewable through 2026 for the United States and 2014 for Canada and Latin America, to market the Dr. Scholl’s brand of affordable casual, athletic, work and dress shoes for women, men and children.

Sam Edelman: In 2010, we acquired the remaining interest in Edelman Shoe, Inc. (“Edelman Shoe”), resulting in Edelman Shoe becoming a wholly-owned subsidiary of the Company. Sam’s eponymous brand is designed for women who radiate fashion, style and chic sophistication. Innovative and fresh, his creations exude the energy of luxury shoes without the high-end price tag. The brand is sold primarily through department stores and independent retailers at suggested retail price points ranging from $79 for sandals, flats and heels to $300 for boots. Sam Edelman holds the No. 7 market share position in the bridge/designer zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group.

Franco Sarto: The Franco Sarto brand has a loyal, career-focused consumer who is as passionate about the brand’s modern Italian-inspired style, fit and quality as she is about the man behind the design. Franco Sarto’s personal appearances in select retail venues generate lines of consumers anxious to meet the designer himself. Through licensed relationships, Franco Sarto has expanded its offering into other categories including handbags and eyewear. The brand is sold in the better zone of major national chains, department stores and independent retailers at suggested retail price points from $79 for shoes to $250 for boots. Franco Sarto ranked No. 3 in market share position in the better zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group. Our license to sell Franco Sarto product is a multi-year agreement that expires in December 2012, with an extension option through December 2019.

LifeStride: A leading entry-level price point women’s brand, LifeStride footwear offers feminine, fashionable styling at value pricing. The brand is sold in department stores, national and shoe chains, and our Famous Footwear retail stores. The LifeStride target consumer seeks great fashion-at-a-price. Suggested retail price points range from $39 for sandals to $89 for boots. LifeStride ranked No. 3 in market share position in the moderate zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group.

Buster Brown: Our heritage children’s brand, Buster Brown, was launched in 1904 and is sold primarily through national chains including our Famous Footwear stores. We leverage the strength and recognition of the Buster Brown name by marketing children’s footwear under the Buster Brown & Co. umbrella. This product features numerous popular characters from children’s entertainment companies, including Hasbro, Nickelodeon, Fisher Price, Marvel and Barbie characters. The terms of the license agreements vary. We sell these products to mass merchandisers and national chains including Collective Brands, Inc. (including Payless ShoeSource), Walmart, Target and Sears as well as our Famous Footwear retail stores. The Buster Brown & Co. umbrella provides customers with the assurance that these licensed products contain the quality that they are accustomed to receiving from the Buster Brown brand.

Via Spiga: Via Spiga provides chic, sophisticated footwear for the cosmopolitan woman who wants to make a fashion statement every day. The brand is sold in the bridge/designer zone in premier department stores and upscale boutiques. Via Spiga designs fashion footwear that is true to its Italian heritage with attention to detail and quality. Through licensed relationships, Via Spiga has expanded its offering into other categories including outerwear, men’s footwear, eyewear, handbags, hosiery and belts, growing the brand’s reputation as a true fashion brand. This brand sells at suggested retail price points from $198 for shoes to $398 for boots. The brand holds the No. 5 market share position in the bridge/designer zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group.

Etienne Aigner: Etienne Aigner, known for its timeless style and designer heritage, appeals to a target customer who seeks classic footwear styling. It is sold in the better zone of national chains, department stores and our Famous Footwear retail stores at price points ranging from $69 for shoes to $185 for boots. Etienne Aigner holds the No. 12 market share position in the better zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group. The Etienne Aigner name is licensed under a multi-year agreement that expires in December 2017, with an extension option through December 2022.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

Carlos by Carlos Santana: In 2001, we launched the Carlos by Carlos Santana collection of women’s footwear to the better zone at major department stores, national chains and our Famous Footwear and Naturalizer retail stores. Marketed under a license agreement with legendary musician Carlos Santana, this brand targets trend-conscious consumers with hot, fashionable shoes inspired by the passion and energy of Santana’s music. Suggested retail price points range from $79 for shoes to $199 for boots. Carlos by Carlos Santana holds the No. 14 market share position in the better zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group. Our license to sell Carlos by Carlos Santana product expires in 2011, with an extension option through 2016.

Vera Wang Lavender: Launched in 2009, the Vera Wang Lavender shoe collection includes a complete lifestyle collection aimed at the contemporary customer and includes ballerina flats, espadrilles, sandals, clogs, pumps and boots. The collection interprets Vera’s fun, youthful, whimsical spirit and offers the customer unique product for her contemporary, fashion-savvy lifestyle. The brand is sold in the designer section in premier department stores, and retail prices range from $250 for shoes to $495 for boots. It holds the No. 10 market share position in the bridge/designer zone within the women’s fashion footwear category across point-of-sale channels at the end of 2010, according to NPD Group. Our license to sell Vera Wang Lavender product expires in 2013, with an extension option through 2016.

Fergie/Fergalicious by Fergie: We have created two namesake footwear lines in collaboration with entertainment superstar Fergie (Stacy Ferguson) to fully capture the multifaceted aspects of Fergie’s life as an award-winning singer, songwriter and actress. Fergie footwear portrays the artist’s confident, individual style in a line of sophisticated, sexy footwear with a glam rock influence. The brand launched in spring of 2009 at better department stores, boutiques, independent retailers and online at retail price points of $69 for sandals to $129 for boots. Fergalicious by Fergie shoes have a fun, funky attitude inspired by her pop rock persona. Fergalicious by Fergie also launched in spring 2009 and is available at Famous Footwear, FamousFootwear.com and other national chains at retail price points of $39 for sandals to $79 for boots. Our license to sell Fergie/Fergalicious by Fergie product is a multi-year agreement that expires in 2012, with an extension option through 2014.

At January 29, 2011, our Wholesale Operations had a backlog of unfilled orders of approximately $244 million compared to $246 million on January 30, 2010. Most orders are for delivery within the next 90 to 120 days, and although orders are subject to cancellation, we have not experienced significant cancellations in the past. The backlog at any particular time is affected by a number of factors, including seasonality, the continuing trend among customers to reduce the lead time on their orders, capacity shifts in China and, in some cases, the timing of licensed product movie releases. Accordingly, a comparison of backlog from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments or the growth rate of sales from one period to the next. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Highlights for further discussion on the challenges faced during the second half of 2010 that impacted the timeliness of order fulfillment and related deliveries. Additionally, backlog at January 29, 2011, excludes any impact related to the acquisition of American Sporting Goods Corporation (“ASG”), which closed on February 17, 2011, and is discussed further in the Subsequent Event – Acquisition of American Sporting Goods Corporation section below and Note 2 to the consolidated financial statements.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

The following is a listing of our brands and licensed products:

Women’s Men’s and Athletic Children’s ASG AirStep Big Country Backyardigans(9) AND1 Carlos by Carlos Santana(1) Dr. Scholl’s(2) Barbie(10) Apex Connie Francois Xavier Collection Buster Brown Avia Dr. Scholl’s(2) F.X. LaSalle Captain America Movie(11) Nevados EA by Etienne Aigner(3) FX Dr. Scholl’s(2) Nice Skate Shoes Etienne Aigner(3) Regal Fergalicious by Fergie(5) rykä Eurosole Studio Via Spiga Firstkiss(4) Turntec Eurostep TX Traction Fisher Price(10) Yukon Eurowalker Via Spiga Go Diego Go(12) Fanfares Zodiac American Original iCarly(12) Firstkiss(4) Iron Man 2 Movie(11) Fergie Footwear(5) Marvel classic characters, including: Fergalicious by Fergie(5) Spider-Man, Wolverine and Hulk(11) Franco Sarto(6) Spectacular Spider-Man(11) Francois Xavier Collection The Avengers Movie(11) F.X. LaSalle Thor Movie(11) FX Toe Zone(13) HOTKISS(4) Zodiac American Original Libby Edelman LifeStride LS Studio Maserati Natural Sole Natural Soul Natural Soul by Naturalizer Naturalizer Naturalizer Sport Natural Sport Naya Naya by Naturalizer Nickels Nickels Soft Opale Dr. Scholl’s Shoes(2) Paloma Reba(7) Sam Edelman Samuel SE Boutique Signature Naturalizer Studio Paolo TX Traction Unity by Carlos Santana(1) Vera Wang Lavender(8) Via Spiga V Via Spiga VS VS Via Spiga Zodiac Zodiac American Original

As denoted, these brands are used with permission from and, in most cases, are registered trademarks of:

(1) Santana Tesoro, LLC (9) Nelvana, Inc. (2) Schering-Plough Healthcare Products, Inc. (10) Mattel, Inc. (3) Etienne Aigner, Inc. (11) Marvel Entertainment LLC (4) HK WORLDWIDE, LLC (12) MTV Networks (5) Krystal Ball Productions (13) Sole Concepts, Inc. (6) Fashion Shoe Licensing LLC (7) RebaWear LLC (8) Vera Wang Licensing LLC

Brands listed under ASG above were acquired with the ASG acquisition on February 17, 2011. See Note 2 to the consolidated financial statements for further information.

All other brands are owned by and, in most cases, are registered trademarks of Brown Shoe Company, Inc. or its consolidated subsidiaries.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

Brown Shoe Sourcing and Product Development Operations source and develop footwear for our Wholesale Operations and Specialty Retail segments and a portion of the footwear sold by our Famous Footwear segment. We have sourcing and product development offices in China, Hong Kong, Italy, Macau, New York City and St. Louis and through an agent partnership in Brazil and Central America.

Sourcing Operations

In 2010, the sourcing operations sourced approximately 64 million pairs of shoes with a global network of third-party independent footwear manufacturers. Our structure enables us to source footwear at various price levels from significant shoe manufacturing regions of the world. The majority of our footwear sourced is provided by approximately 15 manufacturers operating approximately 100 manufacturing facilities. In certain countries, we utilize agents to facilitate and manage the development, production and shipment of product. We attribute our ability to achieve consistent quality, competitive prices and on-time delivery to the breadth of our established relationships. While we do not have any significant contractual commitments with our suppliers, we do enter into sourcing agreements with certain independent sourcing agents.

As discussed further below in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Highlights, during the second half of 2010, our wholesale business experienced a continuation of industry-wide sourcing and supply chain issues that led to increased delivery costs and disruption in the timing of deliveries, and order fulfillment was further aggravated by the business process changes, data conversion, and learning curves associated with our systems transition that went live in December 2010. Despite these challenges, and the fact that system transition efforts and alignment of existing business processes are expected to continue into 2011, we are focused on correcting these issues and implementing solutions to minimize their impact in 2011.

We monitor the quality of the components of all of our footwear prior to production and inspect prototypes of every footwear style. We also perform random in-line quality control checks during production and before footwear leaves the manufacturing facility.

In 2010, 98% of the footwear we sourced was from manufacturing facilities in China. The following table provides an overview of our foreign sourcing in 2010:

Country Millions of Pairs China 63.2 Brazil 0.3 All other 0.8 Total 64.3

Product Development Operations

In our Dongguan, China, and our Putien, China, offices, we operate a total of four sample-making facilities with unique and diverse capabilities, including footwear for women, men and children, providing speed, control and execution in product development.

We maintain design teams for our brands in St. Louis, Missouri, New York and China as well as other select fashion locations, including Italy. These teams, which include independent designers, are responsible for the creation and development of new product styles. Our designers monitor trends in apparel and footwear fashion and work closely with retailers to identify consumer footwear preferences. Our design teams create collections of footwear and work closely with our product development and sourcing offices to translate our designs into new footwear styles.

See Subsequent Event – Acquisition of American Sporting Goods Corporation section below for further information on the manufacturing, design, development and distribution facilities associated with ASG.

On February 17, 2011, we entered into a Stock Purchase Agreement with American Sporting Goods Corporation (“ASG”) and ASG’s stockholders, pursuant to which one of our subsidiaries acquired all of the outstanding capital stock of ASG from the ASG stockholders on that date. See Note 2 to the consolidated financial statements for further information.

ASG is a designer, manufacturer and marketer of a broad range of athletic footwear with a strong presence in walking, fitness and basketball. It was founded in 1983 and is headquartered in Aliso Viejo, California.

The acquisition adds performance athletic and outdoor footwear brands to our portfolio, including Avia, rykä, AND1, Nevados and Yukon, complementing our existing fitness and comfort offerings.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

Avia, a multisport endurance brand, offers shoes for endurance athletes, fitness enthusiasts and people seeking a healthy lifestyle. The brand is primarily distributed through national and shoe chains, mass merchandisers and our Famous Footwear retail stores at retail price points of $40 to $130.

rykä is a leading women’s performance lifestyle brand focused on fitness. rykä is managed, designed and solely dedicated to creating women’s performance footwear. The brand is distributed through department stores, specialty retailers and our Famous Footwear retail stores at retail price points of $60 to $130.

AND1 is an authentic basketball brand that caters to hard-core basketball players. Its product offerings appeal to youth and those seeking premium gear at affordable value. AND1 offers this “affordable premium” with retail price points from $20 to $80. The brand is primarily distributed through national and shoe chains and our Famous Footwear retail stores.

ASG operates three primary manufacturing facilities in China as well as other facilities in the United States and China used for design, development, distribution and sales and administrative purposes. ASG leases all of these facilities.

AVAILABLE INFORMATION

Our internet address is www.brownshoe.com. Our internet address is included in this annual report on Form 10-K as an inactive textual reference only. The information contained on our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this report. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). We make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished, as required by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, through our internet website as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC. You may access these SEC filings via the hyperlink to a third-party SEC filings website that we provide on our website.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is a list of the names and ages of the executive officers of the Company and of the offices held by each person. There is no family relationship between any of the named persons. The terms of the following executive officers will expire in May 2011.

Name Age Current Position Ronald A. Fromm 60 Chairman of the Board of Directors and Chief Executive Officer Diane M. Sullivan 55 President and Chief Operating Officer Richard M. Ausick 57 Division President – Retail Mark D. Lardie 50 Division President – Wholesale, Heritage Brands Daniel R. Friedman 50 Division President – Global Sourcing & Supply Chain John W. Schmidt 50 Division President – Wholesale, Better & Image Brands Douglas W. Koch 59 Senior Vice President and Chief Talent & Strategy Officer Mark E. Hood 58 Senior Vice President and Chief Financial Officer Joseph Caro 48 Senior Vice President and Chief Information Officer Michael I. Oberlander 42 Senior Vice President, General Counsel and Corporate Secretary

The period of service of each officer in the positions listed and other business experience are set forth below.

Ronald A. Fromm, Chairman of the Board of Directors and Chief Executive Officer of the Company since January 2004. Chairman of the Board of Directors, President and Chief Executive Officer of the Company from January 1999 to December 2003. President of the Company’s branded division from April 1998 to January 1999. Executive Vice President, Famous Footwear from September 1992 to March 1998. On January 10, 2011, we announced that, effective May 26, 2011, Mr. Fromm will retire as our Chief Executive Officer but retain the position of Chairman of the Board of Directors of the Company.

Diane M. Sullivan, President and Chief Operating Officer since March 2006. President from January 2004 to March 2006. On January 10, 2011, we announced that, effective May 26, 2011, Ms. Sullivan will assume the position of President and Chief Executive Officer.

Richard M. Ausick, Division President – Retail since January 2011. Division President – Famous Footwear from January 2010 to January 2011. Division President, Brown Shoe Wholesale from July 2006 to January 2010. Senior Vice President and Chief Merchandising Officer of Famous Footwear from January 2002 to July 2006.

Mark D. Lardie, Division President – Wholesale, Heritage Brands since January 2011. Division President – Wholesale from January 2010 to January 2011. Senior Vice President, General Merchandise Manager at Famous Footwear from June 2006 to January 2010. Vice President, General Merchandise Manager at Famous Footwear from January 2005 to June 2006.

Daniel R. Friedman, Division President – Global Sourcing & Supply Chain since January 2011. Division President – Wholesale, Product and Sourcing from January 2010 to January 2011. Senior Vice President, Product Development and Sourcing from July 2006 to January 2010. Managing Director at Camuto Group, Inc. from 2002 to July 2006.

John W. Schmidt, Division President – Wholesale, Better & Image Brands since January 2011. Senior Vice President, Better & Image Brands from January 2010 to January 2011. Senior Vice President and General Manager, Better & Image Brands from March 2008 until January 2010. Various positions, including Vice President, President, Group President of Wholesale Footwear for Nine West Group from September 1998 to February 2008.

Douglas W. Koch, Senior Vice President and Chief Talent & Strategy Officer since January 2011. Senior Vice President and Chief Talent Officer from May 2005 to January 2011. Senior Vice President, Human Resources from March 2002 to May 2005.

Mark E. Hood, Senior Vice President and Chief Financial Officer since November 2006. Senior Vice President and Chief Financial Officer of Panera Bread Company from April 2003 to May 2006. Senior Vice President, Finance and Administration of Panera Bread Company from August 2002 to April 2003.

Joseph Caro, Senior Vice President and Chief Information Officer since November 2007. Senior Vice President and Chief Technology Officer of the CitiFinancial International division of Citigroup, Inc. from December 2005 to July 2007.

Michael I. Oberlander, Senior Vice President, General Counsel and Corporate Secretary since March 2006. Vice President, General Counsel and Corporate Secretary from July 2001 to March 2006. Vice President and General Counsel from September 2000 to July 2001.

BROWN SHOE COMPANY, INC. 2010 FORM 10-K