Brown Shoe Company Inc. announced on Thursday that it would be consolidating its operations, moving the headquarters of Famous Footwear to Clayton, Missouri, a suburb of St. Louis. Some 270 jobs will be moved out of the Madison offices of the company located on the west side.
Brown CEO Ronald A. Fromm and Famous Footwear President Joe Wood have "invited" the Madison employees to move to St. Louis with the consolidated company. As detailed in the statement from Brown:
All of the approximately 270 Madison-based employees will be offered jobs and relocation assistance. For those employees who choose to remain in Madison, Brown Shoe will offer generous severance packages including at least one and a half weeks of compensation per year of employment, with a minimum of four weeks; outplacement assistance; and job fairs. In addition, Brown Shoe will continue its support of major charitable and civic partners in the Madison community for at least the next three years, and honor all longer-term commitments.
"Moving our Madison office, which has the smaller population of the two, will be the least disruptive to our business and our employees, enabling us to continue providing great products and service to our customers. Nevertheless, we understand this will be difficult for some of our people, and we are committed to easing this transition for them," said Wood.
Brown Shoe expects the relocation of employees from Madison to St. Louis to begin during the second quarter and be substantially complete by the end of the third quarter of 2008. The company expects to incur pre-tax expenses of $25 to $30 million ($0.37 to $0.44 per diluted share) to implement the transition. These expenses include people-related costs for relocation, severance and retention, as well as asset write-off and lease termination costs.
Madison Mayor Dave Cieslewicz issued a statement later Thursday in response to the news. He says:
"I am very disappointed by this decision. The City of Madison worked closely with the Wisconsin Department of Commerce, the Greater Madison Chamber of Commerce and others to develop an attractive package of incentives for Brown Shoe. I personally traveled to St. Louis to make the case for Madison, and City staff and I were in frequent communication with the company.
"Despite this decision by Brown Shoe, Madison's economy remains very strong. Our 3.5% unemployment rate is the lowest of any city in Wisconsin, and one of the lowest in the nation. But today's news reminds us that if we want our economy to remain strong, we need to aggressively implement our new economic development plan and other initiatives."
The mayor sent a letter to Brown Shoes in October 2007, looking to sell the company on consolidating its operations in Madison rather than the Missouri city. A PDF copy of this letter is available in the related downloads at right.