<PAGE>
Filed pursuant to Rule 424(b)(4)
Registration Number 333-05033
1,950,000 SHARES
(JUST FOR FEET LOGO)
COMMON STOCK
Of the 1,950,000 shares of Common Stock offered hereby, 800,000 are being
sold by Just For Feet, Inc. (the "Company") and 1,150,000 are being sold by
certain shareholders of the Company (the "Selling Shareholders"). See
"Principal and Selling Shareholders." The Company will not receive any of the
proceeds from the shares sold by the Selling Shareholders.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"FEET." The last sale price of the Common Stock on June 13, 1996 as reported
on the Nasdaq National Market was $51.375 per share. See "Price Range of
Common Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount (1) Company(2) Shareholders(2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........ $51.375 $2.52 $48.855 $48.855
Total(3)......... $100,181,250 $4,914,000 $39,084,000 $56,183,250
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting estimated offering expenses of $450,000 payable by the
Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase
up to 292,500 additional shares of Common Stock solely to cover over-
allotments, if any. If the Underwriters exercise this option in full, the
Price to Public will total $115,208,438, the Underwriting Discount will
total $5,651,100 and the Proceeds to Company will total $53,374,088. See
"Underwriting."
The shares of Common Stock are offered by the several Underwriters named
herein subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing the shares will be made against payment therefor at
the office of Montgomery Securities on or about June 19, 1996.
----------------
MONTGOMERY SECURITIES
THE ROBINSON-HUMPHREY COMPANY, INC.
WILLIAM BLAIR & COMPANY
ROBERTSON, STEPHENS & COMPANY
June 13, 1996
<PAGE>
[PHOTOGRAPH DEPICTS OUTSIDE VIEW OF JUST FOR FEET STORE.]
[PHOTOGRAPH DEPICTS CROWD AT GRAND OPENING.]
GRAND OPENING HUNTSVILLE, AL -- JULY 1995
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE IN ACCORDANCE WITH RULE 10B-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus and incorporated by reference herein. Unless otherwise
indicated, all information in this Prospectus (i) gives effect to 3-for-2
splits of the Common Stock effected as stock dividends on each of November 30,
1994 and July 10, 1995, and (ii) assumes no exercise of the Underwriters' over-
allotment option. The Company's fiscal year ends on January 31. References to
fiscal years by date refer to the fiscal year beginning February 1 of that
calendar year; for example "fiscal 1995" began on February 1, 1995 and ended on
January 31, 1996. This Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors."
THE COMPANY
Just For Feet, Inc. (the "Company" or "Just For Feet") is a rapidly growing
operator of superstores specializing in brand-name athletic and outdoor
footwear. The Company's goal is to become the leading athletic and outdoor
footwear retailer in each of its markets by offering the largest selection of
brand-name shoes, superior customer service and technical sales assistance in a
high-energy, entertaining store environment. The Company, which began with a
single mall-based store in 1977, opened its first superstore in 1988 and since
that time has focused on developing and refining its superstore concept. There
are presently 40 "Just For Feet" stores operating in twelve states, including
seven stores operated by the Company's only franchisee.
Just For Feet's prototype 15,000 to 20,000 square foot superstore
(approximately two-thirds of which is devoted to selling space) offers
approximately 2,500 to 4,500 styles of athletic and outdoor shoes as compared
to an estimated 200 to 700 styles typically offered by conventional mall-based
athletic footwear retailers, department stores and sporting goods superstores.
The Company carries most of the leading athletic footwear brands including
Nike, Reebok, New Balance, Adidas, Fila, Asics and Converse, as well as outdoor
footwear brands such as Timberland and Rockport. The Company seeks to offer
virtually all styles in the brands it carries. Just For Feet superstores are
primarily free standing and are typically located on outparcels of or adjacent
to shopping malls.
The Company strives to create an exciting and high-energy shopping experience
in its superstores through the use of bright colors, upbeat music, an enclosed
"half-court" basketball court for use by customers, a multi-screen video bank,
a snack bar featuring popcorn and Chicago-style hot dogs, and appearances by
sports celebrities. The Just For Feet prototype superstore features 18 separate
branded "concept shops," which display the brand's product line. The "concept
shops" are typically built and periodically updated by vendors to tie into
their national advertising campaigns. The Company also sponsors creative
promotional events such as trade-in days and "Midnight Madness" sales.
The Company believes that the level of customer service it provides is an
important competitive advantage. The Company seeks to offer a level of customer
service comparable to that typically provided by the leading specialty footwear
retailers. Just For Feet trains its employees in all aspects of footwear
technology, the performance attributes of the Company's merchandise and common
foot problems. The Company staffs its stores with a high ratio of sales
associates to customers to assure prompt and personalized service.
Just For Feet guarantees that it will match any competitor's advertised price
and offers a family frequent buyer plan under the slogan "Just For Feet--Where
the 13th Pair is FREE!"(R), through which the Company gives participating
customers the thirteenth pair of shoes free (up to the average purchase price
of the previous twelve pairs). In addition, the Company seeks to enhance its
reputation for value oriented pricing by offering a limited selection of close-
out merchandise at prices generally ranging from 30% to 60% below
manufacturers' suggested retail prices displayed in an area at the front of
each store called the "Combat Zone." The Company believes that offering a wide
selection of competitively priced, brand-name footwear provides superior value
to its customers.
3
<PAGE>
The Company's expansion strategy is to open stores in new and existing
metropolitan markets, including those markets with the potential for multiple
sites, which enables the Company to capture advertising and operating
efficiencies. In addition, the Company will continue to open stores in smaller,
single store markets. The Company's strategy is to concentrate its efforts on
opening Company operated stores. During fiscal 1996 and the first quarter of
fiscal 1997, Just For Feet expects to open a total of 27 stores, with
approximately 16 new stores expected to open in fiscal 1996 and approximately
11 new stores expected to open in the first quarter of fiscal 1997. The Company
intends to open six additional stores prior to the end of fiscal 1997, for a
total of 60 Company operated stores. The Company has opened six Company stores
to date in fiscal 1996. In addition to its prototype stores, the Company has
opened three high-visibility, high-profile "flagship" stores, including its
original Las Vegas store. The Company has plans to open an additional four
flagship stores in selected locations. Initial capital expenditures associated
with opening such flagship stores are higher than for prototype stores;
however, the Company believes that such increased costs will be offset by
additional revenue generated by the enhanced entertainment and visibility
provided by such stores, and that the overall profitability of such stores will
be equivalent to that of the Company's prototype stores. In order to access
markets too small to support a traditional Just for Feet superstore, the
Company is contemplating the introduction of a smaller store, offering a more
limited selection of athletic and outdoor footwear. Management anticipates that
it may develop this smaller store concept either internally or through the
acquisition of an existing footwear retailer currently operating in the manner
envisioned for the new stores.
RECENT DEVELOPMENTS
. New Store Openings. The Company has opened six new Company stores to date
in fiscal 1996 and expects to open approximately 21 additional new stores
during the remainder of fiscal 1996 and the first quarter of fiscal 1997.
The Company intends to open six additional stores prior to the end of
fiscal 1997, for a total of 60 Company operated stores.
. Additions to Management. To support its continuing rapid growth, the
Company has added key personnel in the areas of regional management,
finance and accounting, new store construction and development and
management information systems. The Company has continued its commitment
to employee training and education by refining and improving the "Just
For Feet University" training program, whereby all new store managers
undergo an extensive two- to three-week training program to enhance their
understanding of all aspects of the Company's business.
. Three Months Operating Results. For the three months ending April 30,
1996, the Company had net sales of $49.1 million compared to net sales of
$21.1 million in the comparable period of fiscal 1995. This 132.5%
increase in net sales resulted from the opening of 14 new stores since
April 30, 1995 and the increase in comparable store sales of
approximately 42.0% for the first three months of fiscal 1996. Net income
increased to $3.5 million or $0.19 per share, a 111% per share increase
over the prior year period.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company...... 800,000 shares
Common Stock offered by the Selling 1,150,000 shares
Shareholders............................
Common Stock to be outstanding after the 18,491,368 shares(1)
offering................................
Use of proceeds.......................... To finance new store openings and for
general corporate purposes, including
possible future acquisitions.
Nasdaq National Market symbol............ FEET
</TABLE>
- --------
(1) Excludes (a) 1,412,333 shares of Common Stock issuable as of May 31, 1996
upon the exercise of outstanding stock options, 363,187 of which are
exercisable within the next 60 days, and (b) 1,587,667 shares reserved for
future issuance under the Company's Stock Option Plans.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(In thousands, except per share and selected operating data)
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED APRIL 30,
---------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.............. $8,468 $17,155 $23,678 $56,363 $119,819 $21,136 $49,150
Gross profit........... 3,141 6,895 9,611 23,871 50,850 8,859 20,753
Store contribution(1).. 1,046 2,106 2,853 6,975 14,874 2,264 5,804
Executive options ex-
pense................. -- -- 1,222 (2) -- -- -- --
Litigation settlement
expense............... 647 -- -- -- -- -- --
Operating income
(loss)................ (139) 1,087 53 (3) 4,770 11,628 1,588 4,405
Net income (loss)...... (198) 559 (203)(3) 3,218 9,722 1,459 3,473
Net income (loss) per
share................. $(0.03) $ 0.08 $ (0.03)(3) $ 0.27 $ 0.57 $ 0.09 $ 0.19
Weighted average shares
outstanding........... 7,016 7,016 7,605 11,966 17,030 15,983 18,640
SELECTED OPERATING DATA:
Company Store Data:
Increase in comparable
store sales(4)........ 16.3% 11.8% 6.2% 10.2% 17.9% 10.4% 42.0%
Number of stores at end
of period............. 2 3 5 15 27 16 30
Franchise Store Data:
Number of stores at end
of period............. 1 2 4 5 7 7 7
</TABLE>
<TABLE>
<CAPTION>
APRIL 30, 1996
--------------------
AS
ACTUAL ADJUSTED(5)
-------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $102,479 $141,113
Total assets.............................................. 192,776 231,410
Long-term debt obligations................................ 6,730 6,730
Shareholders' equity...................................... 152,700 191,334
</TABLE>
- --------
(1) Computed as gross profit less store operating expenses and pre-opening
expenses.
(2) Represents the expense attributable to the issuance of certain executive
options, which is primarily a non-cash charge. See Note 11 to the Company's
Consolidated Financial Statements incorporated herein by reference from the
Company's Annual Report on Form 10-K for the year ended January 31, 1996.
(3) Excluding the executive options expense, primarily a non-cash charge,
operating income, net income and net income per share would have been
$1,275,000, $736,000 and $0.10, respectively, for fiscal 1993.
(4) Company operated stores (one to sixteen stores during the periods
presented) are included in the comparable store sales calculation beginning
generally in the thirteenth month of operation or upon their acquisition
assuming at least twelve months of prior operations.
(5) Adjusted to give effect to the sale by the Company of 800,000 shares of
Common Stock and the application of the net proceeds therefrom as described
under "Use of Proceeds."
5
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing any of the shares of Common Stock offered
hereby. Except for historical information contained in this Prospectus and in
the documents incorporated in this Prospectus by reference, the matters
discussed herein and therein contain forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those suggested in the forward-looking statements, including without
limitation, the effect of economic conditions, product demand, competitive
products and other risks detailed herein and in the Company's other filings
with the Securities and Exchange Commission (the "Commission").
EXPANSION PLANS
The Company's growth is dependent, in large part, on its ability to open new
superstores and to operate such stores profitably. The Company opened 12 of
its 33 Company operated stores in fiscal 1995 and has opened six Company
stores to date in fiscal 1996. The Company expects to open a total of 27 new
stores during fiscal 1996 and the first quarter of fiscal 1997, with
approximately 16 new stores expected to open in fiscal 1996 and approximately
11 new stores expected to open in the first quarter of fiscal 1997. The
Company also intends to open six additional stores prior to the end of fiscal
1997, for a total of 60 Company operated stores. Of these new stores, the
Company intends to open four high-visibility, high profile "flagship" stores,
modeled on its original Las Vegas store, in selected locations. Initial
capital expenditures associated with opening such flagship stores are higher
than for prototype stores. The Company may accelerate the opening of new
stores in any one fiscal quarter. The Company has not previously opened more
than seven stores in any fiscal quarter. The Company's ability to open these
numbers of stores on a timely basis will depend upon a number of factors,
including the identification and acquisition or leasing of suitable sites on
acceptable terms, the construction or refurbishment of sites, the hiring,
training, and retention of skilled managers and personnel and other factors,
some of which may be beyond the Company's control. In addition, adverse
weather conditions may affect the ability of the Company to complete
construction of new stores on schedule. As a result, there can be no assurance
that Just For Feet will be able to achieve its targets for opening new stores.
The Company's expansion plans include the opening of additional stores in
market areas where the Company has already opened stores. There can be no
assurance that opening such additional stores in the same market area will not
reduce sales at existing Company stores located in that area. In addition, the
Company continues to evaluate select opportunities to expand internationally,
but presently has no formal plans for such expansion. There can be no
assurance that the Company's new or acquired stores will be profitable or
achieve sales and profitability comparable to the Company's existing stores.
To support the Company's continued growth, the Company is evaluating the
possibility of constructing a new corporate headquarters facility. Failure to
construct a new headquarters facility in a cost effective and timely manner
without disrupting the Company's operations may have a material adverse effect
on the Company. If the Company's management is unable to manage growth
effectively, the Company's business, results of operations and financial
condition could be materially and adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Expansion Strategy."
FLUCTUATIONS IN COMPARABLE STORE SALES
A variety of factors affect the Company's comparable store sales results
including, among others, economic conditions, fashion trends, the retail sales
environment, sourcing and distribution of products and the Company's ability
to execute its business strategy efficiently. The Company's quarterly
6
<PAGE>
comparable store sales results have fluctuated significantly in the past. The
Company's comparable store sales results were 6.2%, 10.2% and 17.9% in fiscal
1993, 1994 and 1995, respectively, and 42.0% in the first quarter of fiscal
1996. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The Company does not expect comparable store sales to
continue to increase at similar rates in the future and there can be no
assurance that the Company will continue to generate comparable store sales
increases. The Company's comparable store sales results could cause the price
of the Common Stock to fluctuate substantially.
POTENTIAL DEVELOPMENT OF SMALL STORE CONCEPT
In order to access markets too small to support a traditional Just For Feet
superstore, the Company is contemplating the introduction of a smaller store
offering a more limited selection of athletic and outdoor footwear. The new
stores would be operated by a separate division and largely managed
independently of Just For Feet. Management anticipates that, should it elect
to pursue this new concept, the new stores and the new operating division
would be developed either internally by Just For Feet or through the
acquisition of an existing athletic and outdoor footwear retailer currently
operating in the manner envisioned for the new stores. The Company has engaged
in preliminary discussions with an existing athletic footwear retailer
regarding a potential acquisition by the Company, but such discussions are in
the very early stages and no prediction can be made as to whether this or any
other acquisition by the Company will be pursued or consummated. Regardless of
the means by which it may be developed, implementation of such new concept
could involve significant start-up costs.
No assurance can be given that the Company will proceed with the development
of the new concept or, if implemented, that it will be successful or that it
will not have a material adverse effect on the Company's operating results due
to start-up costs, potential diversion of management's attention or
cannibalization of sales from existing stores. If the Company chooses to
implement the concept through the acquisition of an existing business, there
can be no assurance that the Company will be able to successfully integrate
the acquired business into its operations.
POTENTIAL ACQUISITIONS
Although the Company has no current commitments or understandings with
respect to the acquisition of any entity, the Company has explored and
continues to explore acquisitions, including acquisitions of entities
employing an alternative format to that of Just For Feet. There can be no
assurance that the Company will be able to identify and acquire appropriate
businesses or obtain financing for such acquisitions on satisfactory terms.
Any acquisitions may be financed through the issuance of Common Stock, which
may dilute the Company's stockholders, or through the incurrence of additional
indebtedness. The process of integrating acquired businesses into the
Company's operations may result in unforeseen difficulties and may require a
disproportionate amount of resources and management's attention, and there can
be no assurance that the Company will be able to successfully integrate
acquired businesses into its operations. In addition, any businesses acquired
by the Company may have lower margins than the Company, which would adversely
affect the Company's results of operations for the period in which any such
acquisition occurs and subsequent periods until the acquired business is fully
integrated.
RELIANCE ON KEY VENDORS
The Company's business is dependent to a significant degree upon its ability
to purchase brand-name merchandise at competitive prices. For the three months
ended April 30, 1996, approximately 73% of the Company's net sales were sales
of merchandise purchased from five vendors, including approximately 57%
7
<PAGE>
purchased from Nike and Reebok combined. The loss of certain key vendors could
have a material adverse effect on the Company's business. Just For Feet
believes that its relationships with its key vendors are satisfactory and that
the Company has adequate sources of brand-name merchandise; however, there can
be no assurance that the Company will be able to acquire such merchandise at
competitive prices or on competitive terms in the future. Certain merchandise
that is high profile and in high demand is allocated by vendors based upon the
vendors' internal criteria. The Company also purchases close-out merchandise
from vendors at significant price discounts. Although the Company has been
able to purchase sufficient quantities of allocated and close-out merchandise
in the past, there can be no assurance that the Company will be able to obtain
sufficient amounts of such merchandise in the future. A fundamental element of
Just For Feet's merchandising strategy is the use of "concept shops" to
display a leading brand's product line on fixtures typically designed to tie
into national advertising campaigns. These "concept shops" are typically
designed, built and periodically updated by the Company's vendors. There can
be no assurance that this form of vendor support, which provides substantial
financial and merchandising benefits to the Company, will continue in the
future. In addition, the Company's vendors provide support to the Company
through cooperative advertising allowances, employee training, and promotional
events. There can be no assurance that such assistance from the Company's
vendors will continue in the future.
MERCHANDISE TRENDS
The Company's success depends in part on its ability to anticipate and
respond to changing merchandise trends and consumer demands in a timely
manner. Accordingly, any failure by the Company to identify and respond to
emerging trends could adversely affect consumer acceptance of the merchandise
in the Company's stores, which in turn could adversely affect the Company's
business. If the Company miscalculates either the market for the merchandise
in its stores or its customers' purchasing habits, it may be required to sell
a significant amount of unsold inventory at below average markups over the
Company's cost, or below cost, which could have an adverse effect on the
Company's financial condition or results of operations.
RELIANCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a significant
extent upon the efforts and abilities of Harold Ruttenberg, its founder,
Chairman, President and Chief Executive Officer. The loss of his services
could have a material adverse effect on the Company. The Company carries key
man life insurance on Mr. Ruttenberg in the amount of $1,709,000.
SMALL STORE BASE
The Company opened its first superstore in 1988. The Company currently
operates 33 Just For Feet stores, and another seven stores are operated by a
single franchisee of the Company. Nine of the Company operated stores and two
franchise stores were opened in fiscal 1994, twelve Company operated stores
and two franchise stores were opened in fiscal 1995 and six Company operated
stores have been opened to date in fiscal 1996. Consequently, the Company has
a limited history of opening and operating superstores. The comparable store
base used for the calculation of comparable store data currently consists of
only 16 stores. The results achieved to date by the Company's relatively small
store base may not be indicative of the results that may be achieved from a
larger number of stores. Accordingly, the results of any single store may have
a significant impact on the overall comparable store data. In addition, should
any new store be unprofitable or should any existing store experience a
decline in profitability, the effect on the Company's results of operations
could be significant. Although the Company believes it has planned carefully
for the implementation of its expansion program, there can be no assurance
that such plans can be executed as envisioned or that the implementation of
those plans will not have an adverse effect on existing operations or results
of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
8
<PAGE>
MANAGEMENT INFORMATION SYSTEMS
To manage its expansion, the Company is continually evaluating the adequacy
of its existing systems and procedures, including financial controls,
management information systems and superstore management. In fiscal 1995, the
Company spent $2.1 million to upgrade and expand its existing management
information systems. This upgrade and expansion was substantially implemented
in December 1995 on a Company-wide basis. The Company believes that such
Company-wide implementation was successful, and that the completed upgrade and
expansion will support the Company's growth during the foreseeable future;
however, there can be no assurance of such success. In addition, there can be
no assurance that the Company will continue to anticipate all of the changing
demands which its expanding operations will impose on such systems and
procedures. The Company's failure to expand or successfully implement internal
systems or procedures as required could adversely affect its future operating
results.
COMPETITION
The retail athletic footwear industry is highly competitive. The Company
competes primarily with sporting goods superstores, athletic footwear
specialty stores, department stores, discount stores, traditional shoe stores,
traditional sporting goods stores and mass merchandisers and other athletic
footwear superstores, many of which are units of national or regional chains
that have substantially greater financial and marketing resources than the
Company and several of which have developed their own superstore concepts.
Within the past several years, new independent athletic footwear retailers
have opened superstores similar in format to those of the Company that, in
some instances, are competing directly with the Company. The Company may face
periods of intense competition in the future which could have an adverse
effect on its financial results.
QUARTERLY AND SEASONAL FLUCTUATIONS AND GENERAL ECONOMIC CONDITIONS
The Company's quarterly results of operations may fluctuate materially
depending on the timing of new store openings and related pre-opening
expenses, net sales contributed by new stores and increases or decreases in
comparable store sales. New store openings will have a significant impact on
quarterly operating results for the foreseeable future due to the Company's
small base of existing stores. The Company's operating results may be
adversely affected by unfavorable local, regional or national economic
conditions, especially those affecting the southeastern and southwestern
regions of the United States, where most of the Company's stores are located.
The Company's business is also subject to some seasonal fluctuation, with
slightly heavier concentrations of sales during the spring, back-to-school and
Christmas selling seasons.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has risen substantially since
its initial public offering in March 1994. The Common Stock has experienced
substantial price volatility and such volatility may occur in the future,
particularly as a result of quarter to quarter variations in the actual or
anticipated financial results of the Company or other companies in the retail
industry or in the markets served by the Company. In addition, the stock
market has experienced extreme price and volume fluctuations that have
affected the market price of many retail stocks in particular and that have
often been unrelated or disproportionate to the operating performance of these
companies. The Company's Common Stock currently trades at a relatively high
price-earnings multiple, due in part to analysts' expectations of continued
earnings growth. Accordingly, even a relatively small shortfall in earnings
from, or change in, analysts' expectations may cause an immediate and
substantial decline in the Company's Common Stock price. These and other
factors may adversely affect the market price of the Common Stock. See "Price
Range of Common Stock."
9
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 800,000 shares offered
by the Company hereby (after deducting the underwriting discount and estimated
offering expenses payable by the Company) are estimated to be approximately
$38.6 million ($52.9 million if the Underwriters' over-allotment option is
exercised in full). The Company intends to use the net proceeds primarily to
finance new store openings and for general corporate purposes including
possible future acquisitions (although the Company has no current commitments
or understandings with respect to any particular acquisition). Pending such
uses, the net proceeds will be invested in short-term, interest-bearing,
investment grade securities.
The Company will not receive any proceeds from the sale of shares by the
Selling Shareholders.
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the Nasdaq National Market under the symbol
"FEET." The following table sets forth, for the Company's fiscal periods
indicated, the high and low sale prices per share for the Common Stock, as
reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1994
First Quarter (From March 8, 1994)............................ $ 7.45 $ 5.78
Second Quarter................................................ 7.45 4.78
Third Quarter................................................. 13.89 6.89
Fourth Quarter................................................ 15.56 11.17
FISCAL 1995
First Quarter................................................. $20.25 $12.92
Second Quarter................................................ 30.63 18.58
Third Quarter................................................. 35.88 22.63
Fourth Quarter................................................ 37.00 24.13
FISCAL 1996
First Quarter................................................. $49.38 $28.13
Second Quarter (through June 13, 1996)........................ 57.38 46.88
</TABLE>
On June 13, 1996, the last sale price of the Common Stock as reported on the
Nasdaq National Market was $51.375 per share. As of May 31, 1996, there were
approximately 215 holders of record of the Common Stock.
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on its Common Stock.
The Company intends to retain its earnings to finance the growth and
development of its business and does not anticipate paying cash dividends on
its capital stock in the foreseeable future. The payment of any future
dividends will be at the discretion of the Company's Board of Directors and
will depend upon, among other things, future earnings, operations, capital
requirements, contractual restrictions, the general financial condition of the
Company and general business conditions.
10
<PAGE>
CAPITALIZATION
The following table sets forth the short-term obligations and capitalization
of the Company at April 30, 1996 on an actual basis and as adjusted to give
effect to the sale of the 800,000 shares of Common Stock offered by the
Company hereby and the application of the net proceeds therefrom as described
under "Use of Proceeds."
<TABLE>
<CAPTION>
APRIL 30, 1996
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term borrowings..................................... $ -- $ --
Current maturities of long-term obligations............... 878 878
-------- --------
Total short-term obligations.......................... $ 878 $ 878
======== ========
Long-term debt less current maturities.................... $ 5,166 $ 5,166
Capital lease obligations less current maturities......... 1,564 1,564
Shareholders' equity(1):
Preferred stock--par value $.0001 per share; 5,000,000
shares authorized; no shares issued and outstanding.... -- --
Common stock, par value $.0001 per share; 20,000,000(2)
shares authorized; 17,551,861 and 18,351,861 shares
issued and outstanding on an actual and as adjusted
basis, respectively(3)................................. 2 2
Paid-in capital......................................... 135,082 173,716
Retained earnings....................................... 17,616 17,616
-------- --------
Total shareholders' equity............................ 152,700 191,334
-------- --------
Total capitalization................................ $159,430 $198,064
======== ========
</TABLE>
- --------
(1) For a description of shares of Common Stock reserved for issuance pursuant
to options granted under the Company's Stock Option Plans, see Note 11 of
Notes to the Consolidated Financial Statements incorporated herein by
reference from the Company's Annual Report on Form 10-K for the year ended
January 31, 1996.
(2) On May 28, 1996, the shareholders of the Company approved an increase in
the number of authorized shares of Common Stock from 20,000,000 shares to
70,000,000 shares.
(3) Excludes (a) 1,412,333 shares of Common Stock issuable as of May 31, 1996
upon the exercise of outstanding stock options, 363,187 of which are
exercisable within the next 60 days, and (b) 1,587,667 shares reserved for
future issuance under the Company's Stock Option Plans.
11
<PAGE>
SELECTED FINANCIAL DATA
(In thousands, except per share and selected operating data)
The following income statement and balance sheet data at the end of and for
fiscal 1991, 1992, 1993, 1994 and 1995 have been derived from the Company's
audited consolidated financial statements. The selected financial data for the
three months ended April 30, 1995 and 1996 have been derived from unaudited
consolidated financial statements of the Company. In the opinion of the
Company, the unaudited financial information contains all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations for such periods. The results for
the three months ended April 30, 1996 may not be indicative of the results to
be achieved for the entire fiscal year. The information set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company's Consolidated Financial
Statements and related notes and other financial information included
elsewhere or incorporated by reference herein.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED APRIL 30,
---------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $8,468 $17,155 $23,678 $56,363 $119,819 $21,136 $ 49,150
Cost of sales........... 5,327 10,260 14,067 32,492 68,969 12,277 28,397
------ ------- ------- ------- -------- ------- --------
Gross profit.......... 3,141 6,895 9,611 23,871 50,850 8,859 20,753
Franchise fees and
royalties earned....... 82 257 417 379 485 105 122
Operating expenses:
Store operating....... 2,095 4,649 6,628 16,197 33,264 6,085 13,905
Pre-opening costs..... -- 140 130 699 2,712 509 1,044
General and
administrative....... 620 1,276 1,995 2,584 3,731 782 1,521
Executive options..... -- -- 1,222 (1) -- -- -- --
Litigation
settlements.......... 647 -- -- -- -- -- --
------ ------- ------- ------- -------- ------- --------
Operating income
(loss)............... (139) 1,087 53 (2) 4,770 11,628 1,588 4,405
Interest income (ex-
pense), net............ (170) (185) (85) 376 2,930 492 958
------ ------- ------- ------- -------- ------- --------
Income (loss) before
income taxes......... (309) 902 (32) 5,146 14,558 2,080 5,363
Provision (benefit) for
income taxes........... (111) 343 171 1,928 4,836 621 1,890
------ ------- ------- ------- -------- ------- --------
Net income (loss)..... $ (198) $ 559 $ (203)(2) $ 3,218 $ 9,722 $ 1,459 $ 3,473
====== ======= ======= ======= ======== ======= ========
Net income (loss) per
share.................. $(0.03) $ 0.08 $ (0.03)(2) $ 0.27 $ 0.57 $ 0.09 $ 0.19
====== ======= ======= ======= ======== ======= ========
Weighted average shares
outstanding............ 7,016 7,016 7,605 11,966 17,030 15,983 18,640
SELECTED OPERATING DATA:
Company Store Data:
Increase in comparable
store sales(3)........ 16.3% 11.8% 6.2% 10.2% 17.9% 10.4% 42.0%
Number of stores at end
of period............. 2 3 5 15 27 16 30
Franchise Store Data:
Number of stores at end
of period............. 1 2 4 5 7 7 7
<CAPTION>
JANUARY 31, APRIL 30,
---------------------------------------------- -----------------
1992 1993 1994 1995 1996 1995 1996
------ ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $1,400 $ 668 $ 2,192 $64,617 $108,304 $55,571 $102,479
Total assets............ 4,174 7,342 16,012 89,505 243,580 104,451 192,776
Long-term debt
obligations............ 1,398 865 902 3,102 6,696 3,168 6,730
Redeemable convertible
preferred stock........ -- -- 3,017 -- -- -- --
Shareholders' equity.... 870 1,431 1,483 72,983 149,270 74,459 152,700
</TABLE>
- -------
(1) Represents the expense attributable to the issuance of certain executive
options, primarily a non-cash charge. See Note 11 to the Company's
Consolidated Financial Statements incorporated herein by reference from
the Company's Annual Report on Form 10-K for the year ended January 31,
1996.
(2) Excluding the executive option expense, primarily a non-cash charge,
operating income, net income and net income per share would have been
$1,275,000, $736,000 and $0.10, respectively, for fiscal 1993.
(3) Company operated stores (one to sixteen stores during the periods
presented) are included in the comparable store sales calculation
beginning generally in the thirteenth month of operation or upon their
acquisition assuming at least twelve months of prior operations.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Just For Feet was founded in 1977 by its current Chairman and Chief
Executive Officer, Harold Ruttenberg, with the opening of a small mall-based
store in Birmingham, Alabama. In 1988, Just For Feet opened its first
superstore adjacent to the Galleria Mall in Birmingham. As a result of the
success and high sales volume generated by the larger store format, since that
time the Company has focused on developing and refining its superstore
concept.
There are presently 40 Just For Feet stores operating in twelve states,
including seven stores operated by the Company's only franchisee. Of the 33
Company operated stores, 12 stores were opened in fiscal 1995 and six have
been opened during fiscal 1996. The Company expects to open a total of 27 new
stores during fiscal 1996 and the first quarter of fiscal 1997, with
approximately 16 new stores expected to open in fiscal 1996 and approximately
11 new stores expected to open in the first quarter of fiscal 1997. The
Company intends to open six additional stores prior to the end of fiscal 1997
for a total of 60 Company operated stores. The Company may accelerate the
opening of new stores in any one fiscal quarter.
In addition to its prototype stores, the Company has opened three high-
visibility, high-profile "flagship" stores, including its original Las Vegas
store. The Company has plans to open an additional four flagship stores in
selected locations. Initial capital expenditures associated with opening such
flagship stores are higher than for prototype stores; however, the Company
believes that such increased costs will be offset by additional revenue
generated by the enhanced entertainment and visibility provided by such
stores, and that the overall profitability of such stores will be equivalent
to that of the Company's prototype stores.
In order to access markets too small to support a traditional Just For Feet
superstore, the Company is contemplating the introduction of a smaller store,
offering a more limited selection of athletic and outdoor footwear. Management
anticipates that, should it elect to pursue this new concept, it would be
developed either internally or through the acquisition of an existing footwear
retailer currently operating in the manner envisioned for the new stores.
Regardless of the means by which it may be developed, implementation of this
new concept could involve significant start-up costs.
In recent years, the Company has achieved positive comparable store sales
growth on an annual basis. Comparable store sales increased 16.3%, 11.8%,
6.2%, 10.2% and 17.9% in fiscal years 1991 through 1995. During the first
three months of fiscal 1996, comparable store sales increased 42.0%. The
Company does not expect comparable store sales to continue to increase at such
rates, nor can any assurance be given that comparable store sales will
continue to increase.
For fiscal 1996, the Company adopted a bonus plan for all corporate level
employees. Under the plan, such employees are eligible to receive a year-end
bonus equal to a percentage of their annual salaries based on the Company's
fiscal 1996 per share operating results in excess of a target level. A maximum
of $2.5 million can be distributed to participants under the plan.
13
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, income statement
data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED APRIL 30,
----------------------- ----------------
1993 1994 1995 1995 1996
----- ----- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Net sales................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............... 59.4 57.7 57.6 58.1 57.8
----- ----- ----- ------- -------
Gross profit.............. 40.6 42.3 42.4 41.9 42.2
Franchise fees and royalties
earned..................... 1.7 0.6 0.5 0.5 0.2
Operating expenses:
Store operating........... 28.0 28.7 27.8 28.8 28.3
Pre-opening costs......... 0.5 1.2 2.3 2.4 2.1
General and administra-
tive..................... 8.4 4.6 3.1 3.7 3.1
Executive options......... 5.2 -- -- -- --
----- ----- ----- ------- -------
Operating income........ 0.2(1) 8.4 9.7 7.5 8.9
Interest income (expense),
net........................ (0.3) 0.7 2.4 2.3 2.0
----- ----- ----- ------- -------
Income (loss) before income
taxes...................... (0.1) 9.1 12.1 9.8 10.9
Provision for income taxes.. 0.8 3.4 4.0 2.9 3.8
----- ----- ----- ------- -------
Net income (loss)......... (0.9)%(1) 5.7% 8.1% 6.9% 7.1%
===== ===== ===== ======= =======
</TABLE>
- --------
(1) Excluding the expense attributable to the issuance of certain executive
options, primarily a non-cash charge, operating income and net income
would have been 5.4% and 3.1%, respectively, for fiscal 1993.
THREE MONTHS ENDED APRIL 30, 1996 COMPARED TO THREE MONTHS ENDED APRIL 30,
1995
Net Sales. Net sales increased $28.1 million or 133% to $49.2 million in the
first quarter of fiscal 1996 compared to net sales of $21.1 million for the
first quarter of fiscal 1995. This increase was primarily attributable to 14
new stores opened since April 30, 1995, and an increase in comparable store
sales of 42.0%. This calculation for comparable store sales currently includes
a total of 16 stores. The comparable store sales increase was primarily due to
an increase in the number of footwear units sold.
Gross Profit. Gross profit as a percentage of net sales increased to 42.2%
in the first quarter of fiscal 1996 from 41.9% in the first quarter of fiscal
1995.
Store Operating Expenses. Store operating expenses increased $7.8 million or
128% to $13.9 million in the first quarter of fiscal 1996 from $6.1 million in
the first quarter of fiscal 1995. The increase was primarily attributable to
the operating expenses of the 14 stores opened since April 30, 1995. As a
percentage of net sales, store operating expenses decreased to 28.3% in the
first quarter of fiscal 1996 from 28.8% in the first quarter of fiscal 1995.
Store Pre-Opening Costs. Store pre-opening costs, which are amortized over
the 12 months following a store opening, increased to $1.0 million in the
first quarter of fiscal 1996 from $509,000 in the first quarter of fiscal
1995, as a result of new store openings.
General and Administrative Expenses. General and administrative expense
increased $739,000 or 94.5% but decreased as a percentage of net sales from
3.7% to 3.1% in the first quarter of fiscal 1996. The dollar increase was
primarily due to increased personnel and infrastructure costs associated with
store operations and management information systems, as well as the accrual of
amounts related to the corporate bonus plan. The percentage decrease resulted
from greater efficiencies of scale in the Company's operations.
Operating Income. Operating income increased to $4.4 million in the first
quarter of fiscal 1996 from $1.6 million in the first quarter of fiscal 1995.
As a percentage of net sales, operating income increased to 8.9% in the first
quarter of fiscal 1996 from 7.5% in the first quarter of fiscal 1995.
14
<PAGE>
Net Interest Income. Net interest income was $958,000 in the first quarter
of fiscal 1996 compared to $492,000 in the first quarter of fiscal 1995. This
increase was primarily attributable to investing the proceeds of the Company's
January and September 1995 public offerings of Common Stock.
Net Income. As a result of the above factors, net income increased to $3.5
million in the first quarter of fiscal 1996 from net income of $1.5 million in
the first quarter of fiscal 1995.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Sales. Net sales increased $63.4 million or 113% for fiscal 1995 to
$119.8 million compared to net sales of $56.4 million for fiscal 1994. This
increase was primarily attributable to the 12 new stores opened during the
year. These new stores accounted for $29.7 million in additional net sales
compared with fiscal 1994. In addition, there was an increase in comparable
store sales of 17.9%. The calculation of comparable store sales for the period
includes 15 stores.
Gross Profit. Gross profit as a percentage of net sales increased to 42.4%
in fiscal 1995 compared to 42.3% for fiscal 1994.
Store Operating Expenses. Store operating expenses increased $17.1 million
or 105.6% to $33.3 million in fiscal 1995 from $16.2 million in fiscal 1994.
This increase was primarily attributable to the operating expenses of the 12
new stores opened during fiscal 1995. As a percentage of net sales, store
operating expenses decreased to 27.8% in fiscal 1995 from 28.7% in fiscal
1994.
Store Pre-opening Costs. Store pre-opening costs, which are amortized over
the 12 months following a store opening, increased to $2.7 million in fiscal
1995 from $699,000 in fiscal 1994 as a result of 12 new store openings during
fiscal 1995.
General and Administrative Expense. General and administrative expense
increased $1.1 million or 44.4% but decreased as a percentage of net sales in
fiscal 1995 to 3.1% from 4.6% in fiscal 1994. The dollar increase was
primarily due to increasing the store operations and management information
systems infrastructure, while the percentage decrease resulted from greater
efficiencies of scale in the Company's operations.
Operating Income. Operating income increased to $11.6 million in fiscal 1995
from $4.8 million in fiscal 1994 and increased as a percentage of net sales to
9.7% in fiscal 1995 from 8.4% in the prior year. Both the dollar and
percentage increases were primarily due to 12 new stores opened during fiscal
1995.
Net Interest Income. Net interest income was $2.9 million in fiscal 1995
compared to $376,000 in fiscal 1994. The increase was primarily attributable
to investing the proceeds of two public offerings of the Company's common
stock during January and September 1995.
Net Income. As a result of the above factors, net income increased to $9.7
million in fiscal 1995 from $3.2 million in fiscal 1994, representing a 203.1%
increase over the prior period.
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company does not experience significant seasonal fluctuations in its
business. However, the highest sales periods for the Company are the spring,
back-to-school and Christmas selling seasons. The Company also generally
experiences lower gross margins during January and February due to retail
markdowns taken to clear seasonal merchandise. Quarterly results may fluctuate
materially depending on the timing of new store openings and related pre-
opening expenses, net sales contributed by new stores and increases or
decreases in comparable store sales.
The following table sets forth certain unaudited results of operations for
the Company's last five quarters ended April 30, 1996. The unaudited
information includes all normal recurring adjustments which
15
<PAGE>
management considers necessary for a fair presentation of the information
shown. All amounts shown are in thousands, except per share and store data.
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1996
------------------------------- -----------
FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $21,136 $25,435 $34,770 $38,478 $49,150
Gross profit....................... 8,859 10,811 14,287 16,893 20,753
Operating income................... 1,588 2,691 3,307 4,041 4,405
Net income......................... 1,459 2,056 2,951 3,256 3,473
Net income per share............... $ 0.09 $ 0.13 $ 0.17 $ 0.18 $ 0.19
Weighted average shares
outstanding....................... 15,983 16,372 17,565 18,506 18,640
Company stores at end of period.... 16 21 24 27 30
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Just For Feet's primary sources of working capital are the proceeds of two
public offerings of common stock in January and September 1995, and the
Company's ability to borrow under its line of credit. The Company had working
capital of $2.2 million, $64.6 million, $108.3 million and $102.5 million at
January 31, 1994, 1995 and 1996, and April 30, 1996, respectively. The
principal use of working capital has been to purchase inventory, equipment and
fixtures. During fiscal 1995, the Company acquired property and equipment of
$6.9 million to open 12 new stores, invested $2.1 million to upgrade its
management information systems and spent $2.2 million on the construction of
the new corporate headquarters facility. The Company's short-term operational
cash requirements are not highly seasonal. The Company had $86.2 million in
cash and marketable securities as of April 30, 1996.
In September 1995, the Company completed a public offering of 2,100,000
shares of Common Stock at $33.00 per share. Net proceeds of approximately
$65.6 million are being used to acquire fixed assets and inventory for the
opening of new stores. A portion of such net proceeds was also used to upgrade
and expand the Company's management information systems.
As of April 30, 1996, the Company had no borrowings under its revolving bank
line of credit. The line of credit, which expires July 1, 1996, permits the
Company to borrow up to $10.0 million for general working capital purposes.
The Company is negotiating a new credit line, and expects such new credit line
to be in place by July 1, 1996. Borrowings under the existing line of credit
bear interest at either the bank's prime rate (8.25% at April 30, 1996) or a
rate based on LIBOR, and are unsecured. The line of credit contains certain
financial covenants and other restrictions. The Company also has several lease
arrangements with leasing companies that the Company uses to finance certain
store fixtures, point-of-sale equipment and management information systems.
Just For Feet's primary capital requirements are for the openings of new
superstores. The Company estimates that the total cash required to open a new
15,000 to 20,000 square foot prototype superstore, including store fixtures
and equipment, leasehold improvements, net working capital and pre-opening
costs, typically ranges from $1.2 to $2.0 million, depending on the amount of
vendor and landlord assistance, while the total cash required to open a
flagship store ranges from $2.0 to $2.5 million. During fiscal 1996 and the
first quarter of fiscal 1997, the Company expects to open a total of 27
stores, with approximately 16 stores expected to open in fiscal 1996 and
approximately 11 stores expected to open in the first quarter of fiscal 1997.
Six of such 27 stores have been opened during fiscal 1996 to date. The Company
intends to open six additional stores prior to the end of fiscal 1997, for a
total of 60 Company operated stores. Of the new stores to be opened, four are
expected to be flagship stores.
The Company is not currently planning any major capital expenditures other
than new store openings. Although the Company has no current commitments or
understandings with respect to the
16
<PAGE>
acquisition of any entity, the Company has explored and continues to explore
acquisitions, including acquisitions of entities employing an alternative
format to that of Just For Feet. The Company may utilize an acquisition to
develop the new smaller store concept currently being considered by
management. Regardless of whether the Company utilizes an acquisition to
implement its new concept or develops the concept internally, the Company may
incur significant start-up costs. In addition, to support the Company's
continued growth, the Company plans to continue to invest in information
systems and personnel, and is evaluating the possibility of constructing a new
corporate headquarters. The Company believes that whether or not the Company
makes any acquisitions or constructs a new corporate headquarters, the
proceeds of its public stock offerings, internally generated funds, cash on
hand and its line of credit will be adequate to fund its anticipated needs
through at least the end of fiscal 1997.
IMPACT OF INFLATION
The Company does not believe that inflation has had a material, adverse
effect on net sales or results of operations. The Company has generally been
able to pass on increased costs through increases in selling prices.
17
<PAGE>
BUSINESS
GENERAL
Just For Feet is a rapidly growing operator of superstores specializing in
brand-name athletic and outdoor footwear. The Company's goal is to become the
leading athletic and outdoor footwear retailer in each of its markets by
offering the largest selection of brand-name shoes, superior customer service
and technical sales assistance in a high-energy, entertaining store
environment. The Company, which began with a single mall-based store in 1977,
opened its first superstore in 1988 and since that time has focused on
developing and refining its superstore concept. There are presently 40 "Just
For Feet" stores operating in twelve states, including seven stores operated
by the Company's only franchisee.
To support its continuing rapid growth, the Company has added new personnel
in the areas of regional management, finance, new store construction and
management information systems. The Company has implemented a
divisional/regional management structure to more efficiently direct
the operation of the growing number of Company stores. The Company believes
that this structure will improve the Company's ability to control and monitor
individual store performance as Just For Feet continues its new store growth.
ATHLETIC AND OUTDOOR FOOTWEAR INDUSTRY
In 1995, total retail sales of athletic and outdoor footwear in the United
States were over $11 billion. The industry historically has been served by a
variety of distribution channels, including mall-based specialty athletic
footwear retailers, department stores, traditional shoe stores, traditional
sporting goods stores and, more recently, sporting goods superstores. The
Company believes each of these formats has inherent limitations. For example,
while mall-based specialty athletic footwear retailers, department stores and
traditional sporting goods stores typically carry the leading brands of
athletic footwear at manufacturers' suggested retail prices, these stores can
offer only a limited number of styles and sizes due to the limited floor space
available. In addition, sporting goods superstores and other discount
retailers generally offer a limited selection of brands and styles.
To address these limitations, the Company has developed a prototype 15,000
to 20,000 square foot superstore (approximately two-thirds of which is devoted
to selling space). Its larger store format allows the Company to display and
support a dominant selection of brand-name athletic and outdoor shoes, with
between five to 10 times the number of styles found in the stores of most
competing retailers. Further, by emphasizing the training and testing of its
sales associates in the increasingly sophisticated and rapidly changing
technology employed by the manufacturers of athletic and outdoor shoes, the
Company has been able to provide a level of service which it believes exceeds
that found in most traditional specialty retailers of athletic footwear.
BUSINESS STRATEGY
The Company's goal is to become the leading retailer of brand-name athletic
and outdoor footwear in each of the markets it serves. The key components of
its strategy to achieve this goal are:
Dominant Selection of Brand-Name Athletic and Outdoor Footwear. The Company
seeks to offer a larger selection of brand-name athletic and outdoor footwear
in terms of styles, sizes, and price points than any of its competitors. Just
For Feet carries most of the leading athletic brands, such as Nike, Reebok,
New Balance, Adidas, Fila, Asics and Converse, as well as outdoor footwear
brands such as Timberland and Rockport. The Company seeks to offer virtually
all styles in the brands it carries. The Company sells shoes for almost every
sport and recreational activity, including running, basketball, cross
training, tennis, aerobics, hiking, golf, football, baseball, soccer, walking
and wrestling. In addition, in the first quarter of fiscal 1995, the Company
added a selection of in-line skates. The Company carries shoes in sizes
ranging from infants' size one to men's size 21. Just For Feet superstores
carry approximately 2,500 to 4,500 styles of athletic and outdoor footwear as
compared to an estimated 200 to 700 styles typically offered by conventional
mall-based athletic footwear retailers, department stores and sporting goods
superstores. In addition to offering most sizes in most styles, Just For Feet
carries a complete selection of widths in those styles which are offered in
multiple widths.
18
<PAGE>
Entertaining Shopping Experience. The Company strives to create an exciting
and high-energy shopping experience in its prototype superstores through the
use of bright colors, upbeat music, an enclosed "half-court" basketball court
for use by customers, a multi-screen video bank, a snack bar featuring popcorn
and Chicago-style hot dogs and appearances by sports celebrities. In addition,
certain of the Company's newer superstores feature an hourly laser light show
and an updated store design which depicts the structure of a stadium around
the perimeter of the main selling floor. The Just For Feet prototype
superstore features 18 separate branded "concept shops," each displaying the
brand's product line and typically built and periodically updated by the
vendors to tie into their national advertising campaigns. Each Just For Feet
store benefits from the upscale appearance of the branded fixturing. The
Company also sponsors creative promotional events such as "Midnight Madness"
sales and a family frequent buyer program.
Superior Customer Service and Technical Sales Assistance. The Company
believes that the level of service it provides to customers is an important
competitive advantage. Just For Feet is committed to making shopping for
athletic and outdoor footwear an enjoyable experience through the employment
of knowledgeable, well-trained and energetic sales associates. Because of the
large selection of footwear carried and to further differentiate its
superstores from other retailers, the Company devotes substantial time and
resources to training and testing its employees in footwear technology, the
performance attributes of the Company's merchandise and common foot problems.
The initial phase of employee training entails a two-week program in which the
new employee shadows experienced employees to learn the sales and technical
aspects of the business. Employees are allowed to sell the Company's more
technical products as they demonstrate increased proficiency. In addition, new
store managers and other store management personnel undergo an intensive two-
to three-week training program at "Just For Feet University" to enhance their
understanding of all aspects of the Company's business. Each employee receives
ongoing training through frequent clinics sponsored by vendors and
consultation with the Company's technical specialists. The Company is also
exploring the possible use of satellite technology for two-way, interactive
broadcasting between corporate headquarters and individual superstores. The
Company believes that such satellite technology, if properly employed, could
be an effective and cost-efficient way to facilitate communication and
continuing education on a company-wide basis.
The Company strives to staff its stores with a high ratio of sales
associates to customers to assure prompt and personalized service. Because the
Company sells almost every athletic shoe offered by leading brands, its sales
associates are able to act as problem solvers for customers and to recommend
the ideal shoe with less risk of losing a sale. The Company seeks to retain
its nucleus of well-trained sales personnel through bonus payments and
opportunities for advancement.
Competitive Pricing. Just For Feet guarantees that it will match any
competitor's advertised price and offers a family frequent buyer program under
which the Company gives participating customers the thirteenth pair of shoes
free (up to the average purchase price of the previous twelve pairs). In
addition, the Company seeks to enhance its reputation for value oriented
pricing by offering a limited selection of close-out merchandise at prices
generally ranging from 30% to 60% below manufacturers' suggested retail prices
displayed in an area at the front of each store called the "Combat Zone." The
Company believes that providing a wide selection of competitively priced,
brand-name footwear provides superior value to its customers.
EXPANSION STRATEGY
The Company intends to strengthen its position as a leading operator of
athletic footwear superstores by opening a total of 27 new stores during
fiscal 1996 and the first quarter of fiscal 1997, with approximately 16 stores
expected to open in fiscal 1996 and approximately 11 stores expected to open
in the first quarter of fiscal 1997. The Company intends to open six
additional stores prior to the end of fiscal 1997, for a total of 60 Company
operated stores. In addition to its prototype stores, the Company
19
<PAGE>
has opened three, and has plans to open an additional four, high-visibility,
high-profile "flagship" stores in selected locations. Flagship stores, which
are not necessarily larger than the prototypical Just For Feet store, provide
added entertainment features designed to generate and maintain customer
excitement. The Company's expansion strategy is to open stores in new and
existing metropolitan markets, including those markets with the potential for
multiple sites, which enables the Company to capture advertising and operating
efficiencies. In addition, the Company will continue to open stores in
smaller, single store markets. The Company has either executed or negotiated
leases with respect to all 27 stores currently slated to open during fiscal
1996 and the first quarter of fiscal 1997. The Company is actively reviewing
numerous additional sites.
Management generally seeks to open one store in a chosen market for every
400,000 to 500,000 residents. As a result, multiple stores opened in larger
markets such as Atlanta, Phoenix, and Kansas City derive significant benefit
from advertising and operating efficiencies. More recently, the Company has
also focused on opening single superstores in mid-sized metropolitan markets
such as Huntsville, Alabama and Knoxville, Tennessee. In addition, the Company
continues to evaluate select opportunities to expand internationally, but
presently has no formal plans for such expansion. The Company has explored and
may continue to explore aquisitions of entities employing an altered format to
that of Just For Feet.
Because the Company's vendors drop ship merchandise directly to the stores,
the Company's expansion plans are dependent more on the attractiveness of
individual store sites than the logistical constraints that would be imposed
by a central distribution center. The Company plans to open primarily
free-standing stores in high traffic, high visibility locations typically on
outparcels of or adjacent to shopping malls. The Company's strategy is to
concentrate its efforts on opening Company operated stores.
The Company leases all but three of its existing stores and intends to lease
all new stores. The Company estimates that its total cash requirements to open
each new prototype superstore, including store fixtures and equipment,
leasehold improvements, net working capital and pre-opening costs, typically
ranges from $1.2 to $2.0 million, depending on the extent of vendor and
landlord assistance, while the total cash outlay required to open a flagship
superstore typically approximates $2.5 million.
In order to access markets too small to support a traditional Just For Feet
superstore, the Company is contemplating the introduction of a smaller store
offering a more limited selection of athletic and outdoor footwear. These
stores, which would operate under a name other than "Just For Feet," would be
located in either smaller markets not served by a Just For Feet superstore
with populations less than 200,000, or in certain areas of markets currently
served by Just For Feet. Management anticipates that, should it elect to
pursue this new concept, it would be developed either internally by Just For
Feet or through the acquisition of an existing athletic and outdoor footwear
retailer currently operating in the manner envisioned for the new stores. The
Company has engaged in preliminary discussions with an existing athletic
footwear retailer regarding a potential acquisition by the Company, but such
discussions are in the very early stages and no prediction can be made as to
whether this or any other acquisition by the Company will be pursued or
consummated. In addition, no assurance can be given that the Company will
proceed with the development of the new concept or, if implemented, that it
will be successful or that it will not have a material adverse effect on the
Company's operating results.
20
<PAGE>
STORE LOCATIONS
The following map shows the location of existing Just For Feet stores as of
May 31, 1996:
[MAP APPEARS HERE]
JUST FOR FEET SUPERSTORE
Large Store Format. The prototype 15,000 to 20,000 square foot Just For Feet
superstore has approximately three to four times the selling space of leading
mall-based specialty athletic footwear retailers. This large store format
enables each Just For Feet superstore to offer approximately 2,500 to 4,500
styles as compared to an estimated 200 to 700 styles typically offered in a
conventional mall-based athletic footwear store. The store layout permits
customers to locate shoes by brand (e.g. Nike, Reebok, New Balance) or
category (e.g. running, basketball, tennis). One shoe of each regularly
stocked style is located in the appropriate branded concept shop and the other
is presented on a full three-wall display arranged by category which surrounds
the fitting area at the back of the store. These displays, which emphasize
current, in-season products, are complemented by the "Combat Zone," where Just
For Feet regularly highlights special values on close-outs and other special-
purchase merchandise. The Company strives to create an exciting and high-
energy shopping experience in its superstores through the use of bright
colors, upbeat music, an enclosed "half-court" basketball court for use by
customers, a multi-screen video bank and a snack bar featuring popcorn and
Chicago-style hot dogs.
In-Store Warehousing. The Company does not operate a centralized
distribution center but typically devotes approximately one-third of the
square footage of each superstore to warehouse space. Each store receives
regular shipments directly from vendors and stocks merchandise in an area
behind (or above) the selling floor not visible to customers. The Company
employs warehouse personnel at each store in order to free sales associates to
attend to customers and to enhance inventory control. This decentralized
distribution system enables the Company to receive merchandise at each store
on a timely basis and avoid the time and expense of handling merchandise
twice. The Company believes its in-store warehousing strategy also permits it
to maintain deep inventory positions in core styles and to stock its stores
more fully in advance of peak selling periods.
21
<PAGE>
Operations. The Company has established a three-tiered management system for
store operations, presently consisting of four regional directors, 12
divisional directors and a store director for each store. Each store is
managed by a store director, two store managers, and up to six assistant
managers, depending on the sales volume of the store. Store directors report
to a divisional director, who in turn reports to a regional director.
The sales staff of individual stores ranges from approximately 20 to 85
employees depending on the size of the store and the time of year. The
Company's policy is to staff its stores sufficiently to ensure that all
customers receive prompt personalized attention. Store directors and managers
are paid a salary, while all other store employees are paid on an hourly
basis. The Company provides an incentive compensation plan for virtually all
employees. Store director and manager incentive plans are based primarily upon
store profitability and inventory shrinkage compared to budget. Sales
associates are eligible for semi-annual bonus payments based on their
individual sales performances.
The Company experiences inventory shrinkage rates which it believes are
below the retail industry average. Management attributes its low shrinkage
rate to stocking footwear off the selling floor, employment of security
personnel at each superstore, the use of surveillance systems and the reduced
handling associated with the Company's in-house warehousing system.
Customer Convenience. Just For Feet stores operate seven days per week. To
enhance customer convenience, normal hours for superstores located on
outparcels of shopping malls are thirty minutes prior to the mall's opening
until thirty minutes after the mall's closing. Superstores are open on all
holidays except Christmas, Thanksgiving and Easter.
MANAGEMENT INFORMATION SYSTEM
Control of the Company's merchandising activities is currently maintained by
a fully integrated point-of-sale (POS), inventory, and management information
system which permits management personnel to monitor inventory and store
operations on a daily basis and to determine weekly operating results by
store. Bar-coding all merchandise and using scanners at the point of sale
allows the inventories of all stores to be automatically adjusted and sales
automatically logged as customers check out. Purchasing, tracking and
receiving systems provide efficient and timely distribution of merchandise to
each store. Systems are in place to review sales information by store,
category or employee in order to focus on store needs and employee
productivity and motivation. In-store information systems are linked directly
to the corporate office by leased lines.
In addition, in order to improve operational productivity, facilitate timely
decision making and support the Company's future growth, in December 1995 the
Company substantially completed implementation of enhanced systems
capabilities utilizing a fully integrated software system on an IBM AS/400
platform. The Company invested $2.1 million in the upgrade. The Company's
enhanced systems provide management with the capability to track sales, gross
margin and inventory levels by store, by stock keeping unit and by sales
associate on a real-time basis. Management believes that the Company's
enhanced systems will be able to support the Company's planned growth for the
foreseeable future.
COMPETITION
The retail athletic footwear industry is highly competitive. The Company
competes primarily with sporting goods superstores, athletic footwear
specialty stores, department stores, discount stores, traditional shoe stores,
traditional sporting goods stores and mass merchandisers and other athletic
footwear superstores, many of which are units of national or regional chains
that have substantially greater financial and marketing resources than the
Company and several of which have developed their own superstore concepts.
Within the past two years, new independent athletic footwear retailers have
opened
22
<PAGE>
superstores similar in format to those of the Company that, in some instances,
are competing directly with the Company. The Company may face periods of
intense competition in the future which could have an adverse effect on its
financial results.
TRADEMARKS
The Company owns the following federally registered service marks (in design
form): "Just For Feet," "Just For Feet, World's Largest Athletic Shoe Store,"
and "Just For Feet, Where The 13th Pair is FREE!". The Company believes its
marks are valuable and, accordingly, intends to maintain its marks and the
related registrations. The Company is not aware of any pending claims of
infringement or other challenges to the Company's right to use its marks in
the United States.
23
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Harold Ruttenberg....... 53 Chairman of the Board, President and Chief Executive Officer
Robert C. Wabler........ 47 Executive Vice President, Chief Financial Officer and Director
Adam J. Gilburne........ 33 Executive Vice President
Don-Allen Ruttenberg.... 29 Vice President
Scott C. Wynne.......... 29 Vice President and Secretary
Bart Starr, Sr.......... 62 Director
Michael P. Lazarus...... 40 Director
Randall L. Haines....... 53 Director
David F. Bellet......... 49 Director
</TABLE>
Mr. Harold Ruttenberg is the founder of the Company and has served as its
Chairman, President and Chief Executive Officer since its inception in 1977.
Mr. Wabler has been employed by the Company since May 1993 and was elected
Executive Vice President, Chief Financial Officer and a director in August
1993. From 1989 to May 1993, Mr. Wabler was Senior Vice President--Finance and
Administration of The Athlete's Foot Group where his responsibilities included
personnel, inventory systems, financial controls and reporting, and commercial
and investment banking relationships.
Mr. Gilburne served as Vice President--Store Operations of the Company from
March 1994 to December 1994, at which time he was promoted to Executive Vice
President--Merchandising. Mr. Gilburne previously owned and operated a
franchised Just For Feet store in San Antonio, Texas, which the Company
acquired in March 1994. From 1986 until 1993, Mr. Gilburne was the President
of a chain of baby and children's furniture stores located in Las Vegas,
Nevada.
Mr. Don-Allen Ruttenberg has served as Vice President since 1987 and was
elected Vice President--Merchandising in January 1994. Since 1987, Mr.
Ruttenberg has been actively involved in the merchandising aspects of the
Company, focusing on footwear technology. Mr. Ruttenberg is the son of Mr.
Harold Ruttenberg.
Mr. Wynne has been employed by the Company since 1985 and has served as
operations manager since 1990 with specific responsibilities in inventory
control, distribution, management information systems and traffic. He was
elected Vice President--Store Operations in January 1994 (which title was
changed to Vice President--Administration in March 1994) and corporate
secretary in August 1995.
Mr. Starr has served as a director of the Company since August 1993. He has
served as the Chairman of the Board of Healthcare Realty Management, a real
estate development company, since 1990 and from 1984 to 1990 was a partner in
RAL Management Group, also a real estate development company. From 1956 to
1972, Mr. Starr was a professional football player for the Green Bay Packers
of the National Football League. He presently serves as a spokesperson for the
Company.
24
<PAGE>
Mr. Lazarus has served as a director of the Company since August 1993. Mr.
Lazarus has served as a Managing Partner of Weston Presidio Capital
Management, L.P., a venture capital firm, since 1991. From 1986 to 1991, he
served as Managing Director and Director of the Private Placement Department
of Montgomery Securities.
Mr. Haines has served as a director of the Company since May 1994. Mr.
Haines has served as President of Compass Bank-Birmingham since February 1996.
From January 1993 to January 1996, Mr. Haines served as President of Compass
Bank of Huntsville, Alabama. From 1986 to January 1993, Mr. Haines served as
Commercial Banking Manager of Compass Bank of Birmingham, Alabama.
Mr. Bellet has been Chairman of Crown Advisors Ltd., a private investment
counseling firm, since founding the firm in 1981. He is also a general partner
in the limited partnerships managed by Crown in the venture capital industry.
From 1969 to 1981, Mr. Bellet was a Vice President of Citibank in the
Investment Management Group. Mr. Bellet also serves on the Board of Directors
of One Price Clothing Stores.
25
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
Based solely on information furnished to the Company, the following table
sets forth information regarding the beneficial ownership of the Common Stock
of the Company as of the date of this Prospectus (unless otherwise indicated)
and as adjusted to give effect to the offering, by (i) each person who is
known by the Company to beneficially own more than five percent of the
Company's Common Stock, (ii) each director and executive officer of the
Company, and (iii) all officers and directors as a group.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
PRIOR TO THE BENEFICIAL OWNERSHIP
OFFERING NUMBER OF SHARES AFTER THE OFFERING
----------------- TO BE SOLD -----------------------
NAME OF BENEFICIAL OWNER (1) SHARES PERCENT IN THE OFFERING SHARES PERCENT
---------------------------- --------- ------- ---------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Harold Ruttenberg (2).......... 4,763,256 26.9% 583,186 3,810,596 20.6%
Pamela B. Ruttenberg (3)....... 1,847,372 10.4 369,474 1,477,898 8.0
FMR Corp. (4).................. 1,868,900 10.6 -- 1,868,900 10.1
Metropolitan Life Insurance
Company (5)................... 1,080,100 6.1 -- 1,080,100 5.8
State Street Research &
Management Company (6)........ 986,800 5.6 -- 986,800 5.3
Karl B. Friedman, as Trustee
for the Pamela B. Ruttenberg
Irrevocable Children's Trust
(7)........................... 434,924 2.5 86,985 347,939 1.9
Adam J. Gilburne (8)........... 203,498 1.1 40,700 162,798 *
Robert C. Wabler (9)........... 182,321 1.0 36,464 145,857 *
Ruttenberg Family Foundation
(10).......................... 109,100 * 17,309 91,791 *
Don-Allen Ruttenberg (11)...... 39,705 * 7,941 31,764 *
Scott C. Wynne (11)............ 39,705 * 7,941 31,764 *
Randall L. Haines (12)......... 12,725 * -- 12,725 *
Michael P. Lazarus (13)........ 12,500 * -- 12,500 *
Bart Starr, Sr................. 6,768 * -- 6,768 *
David F. Bellet................ -- -- -- -- *
All executive officers and
directors as a group (8
persons) (14)................. 5,260,478 29.5% 676,232 4,214,772 22.7%
---------
1,150,000
=========
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated, each person has sole voting and investment
power as to all such shares. Shares of Common Stock underlying options to
purchase Common Stock are deemed to be outstanding for the purpose of
computing the outstanding Common Stock owned by the particular person and
by the group, but are not deemed outstanding for any other purpose.
(2) Harold Ruttenberg and Pamela B. Ruttenberg are husband and wife. Includes
2,915,884 shares owned directly by Harold Ruttenberg and 1,847,372 shares
held by him as Trustee under a Voting Trust Agreement for the benefit of
Pamela B. Ruttenberg which terminates in 2003. Mr. Ruttenberg's address is
153 Cahaba Valley Parkway North, Birmingham, Alabama 35124.
(3) Represents shares held by Harold Ruttenberg as Voting Trustee for Pamela
B. Ruttenberg, with respect to which Mr. Ruttenberg has voting power. Mrs.
Ruttenberg retains the power to dispose of such shares. Mrs. Ruttenberg's
address is 153 Cahaba Valley Parkway North, Birmingham, Alabama 35124.
(4) Based upon a statement on Schedule 13G dated March 8, 1996 filed by FMR
Corp. These shares include 54,600 shares over which FMR Corp. has sole
voting power and 1,868,900 over which FMR Corp. has sole dispositive
power. The Company makes no representation as to the accuracy or
completeness of the information reported. FMR Corp.'s business address is
82 Devonshire Street, Boston, Massachusetts 02109.
(5) Based upon a statement on Schedule 13G dated February 13, 1996 filed by
Metropolitan Life Insurance Company. The Company makes no representation
as to the accuracy or completeness of the information reported. The
business address of Metropolitan Life Insurance Company is One Madison
Avenue, New York, New York 10010.
(6) Based upon a statement on Schedule 13F dated May 15, 1996 filed by State
Street Research & Management Company ("State Street"). State Street
disclaims any beneficial interest in the shares. The Company makes no
representation as to the accuracy or completeness of the information
reported. State Street's business address is One Financial Center, 30th
Floor, Boston, Massachusetts 02111-2690.
26
<PAGE>
(7) Trust is for the benefit of the three adult children of Harold and Pamela
Ruttenberg. The shares held in the trust are allocated pro rata among the
three children. Mr. Friedman disclaims beneficial ownership of the shares
in the trust.
(8) Includes 48,168 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days. Excludes 109,752 shares
subject to outstanding options to purchase Common Stock which will become
exercisable at various dates in the future.
(9) Includes 27,025 shares owned by Mr. Wabler's wife. Excludes 133,509 shares
subject to outstanding options to purchase Common Stock which will become
exercisable at various dates in the future.
(10) Shares held by the Ruttenberg Family Foundation for the benefit of the
Birmingham Jewish Federation. The Ruttenbergs disclaim beneficial
ownership of the shares held by the Foundation.
(11) Pre-offering amount includes 39,705 shares subject to outstanding options
to purchase Common Stock which are exercisable within 60 days. Excludes
63,970 shares subject to outstanding options to purchase Common Stock
which will become exercisable at various dates in the future.
(12) Includes 12,500 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days. Excludes 27,500 shares
subject to outstanding options to purchase Common Stock which will become
exercisable at various dates in the future.
(13) Represents shares subject to outstanding options to purchase Common Stock
which are exercisable within 60 days. Excludes 27,500 shares subject to
outstanding options to purchase Common Stock which will become
exercisable at various dates in the future.
(14) Includes outstanding options to purchase an aggregate of 152,578 shares
of Common Stock held by executive officers and directors which are
exercisable within 60 days. Excludes 426,201 shares subject to
outstanding options to purchase Common Stock which will become
exercisable at various dates in the future.
27
<PAGE>
UNDERWRITING
The Underwriters, Montgomery Securities, The Robinson-Humphrey Company,
Inc., William Blair & Company, L.L.C. and Robertson, Stephens & Company LLC,
have severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase from the Company and the Selling
Shareholders the number of shares of Common Stock indicated below opposite
their respective names at the public offering price less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters are committed to
purchase all of the shares if they purchase any.
<TABLE>
<CAPTION>
NUMBER
NAME OF UNDERWRITER OF SHARES
------------------- ---------
<S> <C>
Montgomery Securities.............................................. 585,000
The Robinson-Humphrey Company, Inc. ............................... 585,000
William Blair & Company, L.L.C..................................... 390,000
Robertson, Stephens & Company LLC ................................. 390,000
---------
Total............................................................ 1,950,000
=========
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Common Stock to the public on the terms set forth on the cover page
of this Prospectus. The Underwriters may allow to selected dealers a
concession of not more than $1.45 per share; and the Underwriters may allow,
and such dealers may reallow, a concession of not more than $0.10 per share to
certain other dealers. After the offering, the offering price and other
selling terms may be changed by the Underwriters. The Common Stock is offered
subject to receipt and acceptance by the Underwriters, and to certain other
conditions, including the right to reject orders in whole or in part.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a
maximum of 292,500 additional shares of Common Stock to cover over-allotments,
if any, at the same price per share as the initial shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise this option,
the Underwriters will be committed, subject to certain conditions, to purchase
such additional shares in approximately the same proportion as set forth in
the above table. The Underwriters may purchase such shares only to cover over-
allotments made in connection with this offering.
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.
The Company, its directors and officers, certain of the Selling Shareholders
and certain other existing shareholders of the Company have agreed, subject to
certain limited exceptions, that they will not, without the prior written
consent of Montgomery Securities, offer, sell or otherwise dispose of any
shares of Common Stock, or any right to acquire such shares, for a period of
180 days from the date of this Prospectus.
In connection with this offering, certain underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market
making transactions in the Common Stock on the Nasdaq National Market in
accordance with Rule 10b-6A under the Exchange Act during the two business day
period before commencement of offers or sales of the Common Stock. The passive
market making transactions must comply with applicable volume and price limits
and be identified as such. In general, a passive market maker may display its
bid at a price not in excess of the highest independent bid for the security;
however if all independent bids are lowered below the passive market marker's
bid, such bid must then be lowered when certain purchase limits are exceeded.
28
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Smith, Gambrell & Russell, Atlanta, Georgia. Certain matters will
be passed upon for the Underwriters by Alston & Bird, Atlanta, Georgia.
EXPERTS
The consolidated financial statements of Just For Feet, Inc. and
subsidiaries as of January 31, 1996 and for each of the three years in the
period ended January 31, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report incorporated by reference
herein and are so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to certain informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and, in accordance therewith,
files reports and other information with the Commission. Such reports and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates by writing to the Securities
and Exchange Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Company's Common Stock is quoted on the Nasdaq
National Market and reports and other information concerning the Company may
also be inspected and copied at the office of the Nasdaq Stock Market, Inc.
9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed a Registration Statement on Form S-3 (together with
all amendments and exhibits filed or to be filed in connection therewith, the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified
in its entirety by reference to the copy of the applicable document filed with
the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended January
31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1996; and
3. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A as filed with the
Commission on March 4, 1994.
In addition, all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus
and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document
29
<PAGE>
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request of such person, a copy of any and
all of the information that has been incorporated by reference in this
Prospectus (excluding exhibits unless such exhibits are specifically
incorporated by reference into such documents). Please direct such requests to
the Secretary of Just For Feet, Inc. at the Company's principal offices
located at 153 Cahaba Valley Parkway North, Birmingham, Alabama 35124,
telephone number (205) 403-8000.
30
<PAGE>
[PHOTOGRAPH DEPICTS APPAREL AND SHOES IN REEBOK
SECTION OF STORE.]
[PHOTOGRAPH DEPICTS LARGE "SHOE WALL" ON
MAIN SELLING FLOOR.]
[PHOTOGRAPH DEPICTS APPAREL IN TIMBERLAND
SECTION OF STORE.]
[PHOTOGRAPH DEPICTS CUSTOMERS PLAYING BASKETBALL IN
ENCLOSED, IN-STORE BASKETBALL COURT.]
<PAGE>
===============================================================================
No dealer, representative or any other person has been authorized to give in-
formation or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company, the Selling Sharehold-
ers or by the Underwriters. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any date subsequent to
the date hereof. This Prospectus does not constitute an offer to sell or a so-
licitation of an offer to buy any securities offered hereby by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
------------------
TABLE OF CONTENTS
------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 10
Price Range of Common Stock............................................... 10
Dividend Policy........................................................... 10
Capitalization............................................................ 11
Selected Financial Data................................................... 12
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 13
Business.................................................................. 18
Management................................................................ 24
Principal and Selling Shareholders........................................ 26
Underwriting.............................................................. 28
Legal Matters............................................................. 29
Experts................................................................... 29
Available Information..................................................... 29
Incorporation of Certain Documents By Reference........................... 29
</TABLE>
===============================================================================
===============================================================================
1,950,000 SHARES
[JUST FOR FEET LOGO APPEARS HERE]
COMMON STOCK
------------------
PROSPECTUS
------------------
Montgomery Securities
The Robinson-Humphrey
Company, Inc.
William Blair & Company
Robertson, Stephens & Company
June 13, 1996
================================================================================
