According to the NPD Fashionworld consumer panel, or NPD Fashionworld, for the twelve months ended October 2004, the total U.S. footwear market generated sales of $38.7 billion.

Women’s footwear accounted for $18.8 billion in sales, representing 48.5% of the market, while men’s footwear generated $14.8 billion, representing 38.3% of the total market.

The Company’s core focus is to create a distinctive store experience that satisfies both the rational and emotional shopping needs of the customers by offering them a vast, exciting selection of in-season styles combined with the convenience and value they desire. The Company believes this combination of selection, convenience and value differentiates it from its competitors and appeals to consumers from a broad range of socioeconomic and demographic backgrounds.

The Company has evolved into a distinctive, consumer-friendly retail concept that allows customers to personalize their shopping experience by offering a “sea of shoes” that are accessible, easy-to-shop, and fulfill a broad range of style and fashion desires. The Company caters to customers who take pleasure in the “thrill of the hunt” for the perfect shoe and value the shopping experience itself as an enjoyable pastime.

Typical Company’s stores are approximately 25,000 square feet, with over 85% of total square footage used as selling space. Over 30,000 pairs of shoes in more than 2,000 styles are displayed on the selling floor of most of the Company’s stores, compared to a significantly smaller product offering at typical department stores. The Company’s stores feature self-service fixtures that allow customers to view, touch, and try on the product without relying on salespeople to check availability.

The Company’s locations have clear signage, and well-trained sales associates are available to assist customers as desired. New footwear merchandise is organized by style on the main floor, and clearance goods are organized by size in the rear of the store. Accessories and impulse items are featured at the front.

The store layout allows customers who do not have time for relaxed browsing to swiftly identify the shoe styles they are seeking and shop in a targeted, time-efficient manner. The Company separates its merchandise into four total categories — women’s dress and casual footwear; men’s dress and casual footwear; athletic footwear; and accessories.

While shoes are the main focus of the Company, it also offers a complementary assortment of handbags, hosiery and other accessories.

The Company plans to continue to strengthen its position as a leading specialty branded footwear retailer by expanding its store base,

driving sales through enhanced merchandising and leveraging its operating model.

Gross profit for the thirty-nine weeks ended October 30, 2004 increased $58.4 million to $212.0 million from $153.6 million in the comparable thirty-nine weeks in fiscal 2003.

Operating expenses for the thirty-nine weeks ended October 30, 2004 increased $33.1 million from the comparable period of fiscal 2003 to $165.8 million, which represented 22.8% of sales.

Operating profit for the thirty-nine weeks ended October 30, 2004 was $46.2 million compared to $20.9 million in the comparable thirty-nine weeks of fiscal 2003.

Interest expense, net of interest income, increased $0.3 million to $2.5 million for the thirty-nine weeks ended October 30, 2004 from $2.2 million for the comparable period of fiscal 2003.