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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
 ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    January 29,
    2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-50563
 Bakers Footwear Group,
    Inc.
 (Exact name of Registrant as
    Specified in its Charter)
  Missouri

43-0577980(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)2815 Scott Avenue,
    St. Louis, Missouri(Address of Principal
    Executive Offices)

63103(Zip
    Code)   Registrants telephone number, including area code:
 (314) 621-0699
 Securities registered pursuant to Section 12(b) of the
    Act:
 Title of each class:
 None
 Name of each exchange on which registered:
 None
 Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock, par value $0.0001 per share
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
 Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company þ (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
  Form 10-K
    DOCUMENTS INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
  PART IItem 1.


Business


3Item 1A.


Risk Factors


24Item 1B.


Unresolved Staff Comments


24Item 2.


Properties


24Item 3.


Legal Proceedings


24Item 4.


[Removed and Reserved]


24PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


24Item 6.


Selected Financial Data


26Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


27Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


42Item 8.


Financial Statements and Supplementary Data


42Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


42Item 9A.


Controls and Procedures


42Item 9B.


Other Information


43PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


43Item 11.


Executive Compensation


44Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


45Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


45Item 14.


Principal Accounting Fees and Services


45PART IVItem 15.


Exhibits and Financial Statement Schedules


45EX-10.8EX-10.9EX-10.10EX-10.11EX-10.12EX-23.1EX-24.1EX-31.1EX-31.2EX-32.1   2




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PART I  Item 1.
    Business.  General
      Form 10-K,
  Recent
    Developments
  in-transit
     3




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4




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Form 10-K
  Company
    History
   5




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(314) 621-0699. Form 10-K.
  Improving
    Comparable Store Sales
    
    We attempt to keep our product mix fresh and on target by
    constantly testing new fashions and actively monitoring
    sell-through rates in our stores. Our team of footwear
    retailers, in-house designers and merchants use their industry
    experience, relationships with agents and branded footwear
    producers, and their participation in industry trade shows to
    analyze, interpret and translate fashion trends affecting young
    women into the footwear and accessory styles they desire. To
    complement the introduction of new merchandise, we view the
    majority of our styles as core fashion styles that
    carry over for multiple seasons. Our merchants make subtle
    changes to these styles each season to keep them fresh, while
    reducing our fashion risk exposure.
    We employ a test and react strategy that constantly updates our
    product mix while managing inventory risk. This strategy is
    supported by our relationships with manufacturers, which allow
    our merchandising and buying teams to negotiate short
    lead-times, enabling us to test new styles and react relatively
    quickly to fashion trends and keep fast-moving inventory in
    stock.
    We also seek to improve comparable store sales increases through
    branded and private label accessories. Accessories accounted for
    12.9% of merchandise sales in fiscal year 2010 and we believe
    that there is significant potential to expand our accessory
    sales and margins.
    Our stores sell national branded footwear and accessories
    because we believe that branded merchandise is important to our
    customers, adds credibility to our stores and drives customer
    traffic, increasing our overall sales volume and profitability,
    while reducing our overall exposure to fashion risk. We believe
    the presence of national branded merchandise in our product mix
    will also increase the sales of our private label merchandise.
    We continue to add sought after brands and to enhance the value
    of our private label assortment. Approximately 9.8% of our net
    shoe sales for fiscal year 2010 consisted of branded footwear.
    For fiscal year 2010, our multi-channel sales were
    $11.7 million, a 9.5% increase over fiscal year 2009. We
    believe our Web presence is important in expanding our ability
    to reach our target customer base and enhances the services we
    provide our customers. Furthermore, we believe our Internet
    store and our social media efforts increases customer traffic at
    our Bakers stores and enables potential customers to locate our
    stores.  New Store
    Strategy
     6




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Product
    Development and Merchandising
        Product
    Mix
    Private
    Label.
  tm tm
     7




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10-15%
  and/or
  H by
    Halston.
    National
    Brands.
  ® ® ® ® ® ® ® ®
  Accessories.
  ready-to-wear
 8




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Merchandise
    Mix.
  2008-2010:
  Fiscal YearCategory

2008


2009


2010Private Label Footwear(1)


72.8
%


75.4
%


78.6
%National Branded Footwear


15.5
%


12.5
%


8.5
%Accessories


11.7
%


12.1
%


12.9
%Total


100.0
%


100.0
%


100.0
%     (1)
    
    Private Label includes Bakers, Wild Pair
    and H by Halston.  Planning
    and Allocation.
          Clearance.
    
 9




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Stores
  Store
    Locations and Environment.
       10




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No.StoresAlabama


1Arizona


2Arkansas


2California


38Colorado


2Connecticut


5Delaware


1Florida


18Georgia


12Idaho


1Illinois


17Indiana


2Kansas


2Kentucky


1Louisiana


5Maryland


7Massachusetts


7Michigan


9Missouri


6Nevada


3New Hampshire


1New Jersey


13New Mexico


1New York


21North Carolina


4Ohio


6Oklahoma


2Pennsylvania


6Rhode Island


2South Carolina


2Tennessee


1Texas


22Virginia


8Wisconsin


2Total Stores


232
*Total States


34     *
    
    Excludes our Internet site, which is merchandised as a Bakers
    store. 11




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Store
    Concepts.
      Bakers

Wild PairTarget customer

Women  ages 16-35

Women  ages 17-29Private label sales

87%  90%

40%  45%National branded sales

10%  13%

55%  60%Fashion content

Widely-accepted

Edgy, lifestyle-basedApproximate average store size

2,300 square feet

2,100 square feet   Store
    Operations.
           12




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Sourcing
    and Distribution
          Information
    Systems and Technology
     13




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Marketing
    and Advertising
        e-mail e-mail
  Competition
          
    department stores (such as Bloomingdales, Macys,
    Dillards and Kohls);
    national branded wholesalers (such as Nine West, Steve Madden
    and Vans);
    national branded off-price retailers (such as DSW, Rack Room and
    Shoe Carnival);
    national specialty retailers (such as Finish Line,
    Journeys, Naturalizer and Aldos);
    regional chains (such as Cathy Jean and Sheik);
    discount stores (such as Wal-Mart, Target and K-Mart); and, to a
    lesser extent,
    apparel retailers (such as bebe, Charlotte Russe, Rampage and
    Wet Seal).   14




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History
    of Bakers Shoe Stores
    Employees
    Properties
      Intellectual
    Property and Proprietary Rights
  tm ®
  Seasonality
  back-to-school,
 15




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Cautionary
    Note Regarding Forward-Looking Statements and Risk
    Factors
  Form 10-K Form 10-K
    
    our ability to identify and respond to changing consumer fashion
    preferences;
    our ability to comply with the covenants and restrictions under
    our lending arrangements;
    our susceptibility to operating losses;
    our ability to maintain adequate liquidity to operate our
    business as desired;
    the accuracy of our estimates regarding our capital requirements
    and needs for additional financing;
    the limited trading of our common stock and our ability to
    obtain financing;
    our ability to retain members of our senior management team;
    our expectations regarding future financial results or
    performance;
    the execution of our business strategy;
    the effect of a substantial portion of our stock ownership being
    concentrated among a relatively small number of shareholders;
    any of our other plans, objectives, expectations and intentions
    contained in this Annual Report on
    Form 10-K
    that are not historical facts; and
    changes in general economic and business conditions.  Risk
    Factors
  Our
    failure to identify and respond to changing consumer fashion
    preferences in a timely manner would negatively impact our
    sales, profitability, liquidity and our image as a fashion
    resource for our customers.
   16




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If we
    cannot maintain generally positive sales trends, we could fail
    to maintain a liquidity position adequate to support our ongoing
    operations.
    The
    terms of our revolving credit facility contain certain financial
    covenants with respect to our performance and other covenants
    that restrict our activities. If we are unable to comply with
    these covenants, we would have to negotiate an amendment to the
    loan agreement or the lender could accelerate the repayment of
    our indebtedness.
       17




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Our
    operations could be constrained by our ability to obtain funds
    under the terms of our revolving credit facility.
    The
    report issued by our independent registered public accounting
    firm on our fiscal year 2010 financial statements contains
    language expressing substantial doubt about our ability to
    continue as a going concern.
    The
    departure of members of our senior management team could
    adversely affect our business.
    A
    decline in general economic conditions could lead to reduced
    consumer demand for our footwear and accessories and could lead
    to reduced sales.
    Our
    overall profitability is highly dependent upon our fourth
    quarter results.
   18




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Our
    operations are subject to quarterly fluctuations that can impact
    our profitability and liquidity.
    
    fashion trends;
    the effectiveness of our inventory management;
    changes in our merchandise mix;
    weather conditions;
    changes in general economic conditions; and
    actions of competitors, mall anchor stores or co-tenants.    We are
    subject to risks associated with leasing our stores, including
    those stores where we acquired the lease through bankruptcy
    auctions.
  debtor-in-possession,
  Our
    market share may be adversely impacted at any time by a
    significant number of competitors.
    We
    were recently delisted from the Nasdaq Stock Market. Our common
    stock is not quoted on a national exchange, and there is
    relatively limited trading in our common stock, which limits the
    ability of our shareholders or potential shareholders to
    purchase or sell shares of our common stock and limits our
    ability to obtain financing.
   19




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Our
    failure to maintain good relationships with our manufacturers
    could harm our ability to procure quality inventory in a timely
    manner.
    We
    rely on a small number of buying agents and private label
    vendors for a substantial portion our merchandise purchases, and
    our failure to maintain good relationships with any of them
    could harm our ability to source our products.
    Our
    merchandise is manufactured by foreign manufacturers; therefore,
    the availability and costs of our products may be negatively
    affected by risks associated with international
    trade.
    
    adverse fluctuations in currency exchange rates;
    changes in import tariffs, duties or quotas;
    the imposition of taxes or other charges on imports; 20




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
    the imposition of restrictive trade policies or sanctions by the
    United States on one or more of the countries from which we
    obtain footwear and accessories;
    expropriation or nationalization;
    compliance with and changes in import restrictions and
    regulations;
    exposure to different legal standards and the burden of
    complying with a variety of foreign laws and changing foreign
    government policies;
    international hostilities, war or terrorism and pirates;
    changes in foreign governments, regulations, political unrest,
    work stoppages, shipment disruption or delays; and
    changes in economic conditions in countries in which our
    manufacturers and suppliers are located.    and/or
  A
    decline in the value of the United States dollar relative to
    other currencies, especially the Chinese yuan could negatively
    impact our gross margins.
    Our
    reliance on manufacturers in China exposes us to supply
    risks.
    Our
    ability to expand into some territorial and foreign
    jurisdictions under the trademarks Bakers and
    Wild Pair is restricted.
   21




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Our
    potential inability or failure to renew, register or otherwise
    protect our trademarks could have a negative impact on the value
    of our brand names.
    We
    would be adversely affected if our distribution operations were
    disrupted.
    The
    market price of our common stock may be materially adversely
    affected by market volatility.
    
    actual or anticipated variations in comparable store sales or
    operating results;
    changes in financial estimates by research analysts;
    actual or anticipated changes in the United States economy or
    the retailing environment;
    changes in the market valuations of other footwear or retail
    companies; and 22




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
    announcements by us or our competitors of significant
    acquisitions, strategic partnerships, divestitures, joint
    ventures, financing transactions, securities offerings or other
    strategic initiatives.  We are
    controlled by a small group of shareholders whose interests may
    differ from other shareholders.
      The
    public sale of our common stock by selling shareholders could
    adversely affect the price of our common stock.
    There
    is relatively limited trading in our common stock.
    Our
    charter documents and Missouri law may inhibit a takeover, which
    may cause a decline in the value of our stock.
   23




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Executive
    Officers of the Registrant
    Item 1A.
    Risk
    Factors.    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    [Removed
    and Reserved] PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information and Holders
     24




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mark-up,
    High


Low2009First quarter (ended May 2, 2009)

$
1.47


$
0.17Second quarter (ended August 1, 2009)


1.20



0.63Third quarter (ended October 31, 2009)


0.98



0.68Fourth quarter (ended January 30, 2010)


1.75



0.552010First quarter (ended May 1, 2010)

$
3.55


$
0.95Second quarter (ended July 31, 2010)


2.80



0.55Third quarter (ended October 30, 2010)


1.10



0.55Fourth quarter (ended January 29, 2011)


1.49



0.80   Dividends
    Recent
    Sales of Unregistered Securities
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
   25




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Item 6.
    Selected
    Financial Data.  Form 10-K.
  Fiscal Year Ended(1)February 2,


January 31,





January 29,February 3,


2008


2009


January 30,


20112007(2)


(3)(4)(5)(6)


(5)(7)(8)


2010(5)(8)


(5)(8)(9)Net sales

$
204,753,062


$
186,279,987


$
183,661,789


$
185,368,696


$
185,625,844Gross profit


62,202,028



47,461,122



50,551,662



53,368,600



49,571,907Loss before income taxes


(2,452,971
)


(16,965,898
)


(14,910,754
)


(9,082,096
)


(9,479,199
)Provision for (benefit from) income taxes(6)


(909,860
)


691,367



84,847







(187,462
)Net loss

$
(1,543,111
)

$
(17,657,265
)

$
(14,995,601
)

$
(9,082,096
)

$
(9,291,737
)Net loss per common share

$
(0.24
)

$
(2.70
)

$
(2.13
)

$
(1.24
)

$
(1.14
)Total assets

$
83,158,859


$
67,558,951


$
58,508,192


$
48,618,467


$
48,005,687Long-term debt and capital lease obligations, less current
    portion

$
57,863


$
4,000,000


$



$



$
8,123,327     (1)
    
    Because of the changes in the number of stores for each period,
    our operating results for each period and future periods may not
    be comparable in some significant respects. See
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations for a
    reconciliation and discussion of certain store openings and
    closings by period. We currently have no plans to pay dividends.
    See the information under the caption Item 5. Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities 
    Dividends, which is incorporated herein by reference.(2)
    
    We base our fiscal year on a 52/53 week period. The fiscal
    year ended February 3, 2007 was a 53-week period. For more
    information regarding our fiscal year, please see
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Fiscal
    Year.(3)
    
    During fiscal year 2007, we completed a private placement of
    $4,000,000 in aggregate principal amount of subordinated
    convertible debentures. we received net proceeds of $3,578,752.(4)
    
    During fiscal year 2007, we entered into an agreement to
    terminate a long-term below market operating lease, in exchange
    for an immediate $5,050,000 cash payment and the right to
    continue occupying the space through January 8, 2009. We
    recognized a net gain of $4,700,000 from this transaction in
    fiscal year 2007.(5)
    
    During fiscal years 2007, 2008, 2009 and 2010, we recognized
    $3,131,169, $2,609,589, $2,762,273 and $1,415,979, respectively,
    in noncash charges related to the impairment of long-lived
    assets of underperforming stores.(6)
    
    During fiscal year 2007, our pretax losses exceeded our
    operating loss carryback potential. Therefore, we concluded that
    the realizability of net deferred tax assets was no longer more
    likely than not, and established a valuation allowance against
    its net deferred tax assets. As of February 2, 2008, the
    valuation allowance was $7,186,389, resulting in a net provision
    for income tax expense of $691,367 for fiscal year 2007. As of
    January 31, 2009, January 30, 2010 and
    January 29, 2011, the valuation allowance had increased to
    $12,896,006, $16,363,420 and $19,742,497, respectively.(7)
    
    During fiscal year 2008, we obtained net proceeds of
    $6.7 million from the entry into a $7.5 million
    subordinated secured term loan and the issuance of
    350,000 shares of common stock.(8)
    
    In fiscal years 2008 and 2009, the entire balance of the
    subordinated secured term loan and the subordinated convertible
    debentures was classified as a current liability because of our
    potential inability to comply with 26




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certain financial covenants contained in the subordinated
    secured term loan. With the repayment of the subordinated
    secured term loan at the end of fiscal year 2010, the
    classification of the subordinated convertible debentures has
    been returned to non-current liabilities.(9)
    
    In fiscal year 2010 we obtained net proceeds of
    $4.5 million from the entry into a $5 million
    subordinated debenture and the issuance of 1,844,860 shares
    of common stock.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The following Managements Discussion and Analysis of
    Financial Condition and Results of Operations contains
    forward-looking statements that involve risks and uncertainties.
    Our actual results may differ materially 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 Item 1. Business  Cautionary
    Note Regarding Forward-Looking Statements and Risk Factors
    and Item 1. Business  Risk Factors
    and elsewhere in this annual report. The following section is
    qualified in its entirety by this more detailed information and
    our Financial Statements and the related Notes thereto, included
    elsewhere in this Annual Report on
    Form 10-K.
  Overview
           27




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Debt
    Agreements
         28




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Form 10-K
      Critical
    Accounting Policies
      Merchandise
    inventories
  first-in,
 29




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Store
    closing and impairment charges
  store-by-store start-up
  Stock-based
    compensation expense
        Deferred
    income taxes
   30




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Fiscal
    Year
   31




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Results
    of Operations
    Fiscal Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Net sales


100.0
%


100.0
%


100.0
%Cost of merchandise sold, occupancy and buying expense


72.5



71.2



73.3Gross profit


27.5



28.8



26.7Selling expense


23.0



22.0



21.8General and administrative expense


9.4



8.6



8.2Loss on disposal of property and equipment


0.2



0.2



Impairment of long-lived assets


1.4



1.5



0.8Operating loss


(6.5
)


(3.5
)


(4.1
)Other income, net


0.1



0.1



0.1Interest expense


(1.8
)


(1.5
)


(1.1
)Provision for (benefit from) income taxes










(0.1
)Net loss


(8.2
)%


(4.9
)%


(5.0
)%     Fiscal Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Number of stores at beginning of period


249



239



238Stores opened or acquired during period


2



4



4Stores closed during period


(12
)


(5
)


(10
)Number of stores at end of period


239



238



232   Fiscal
    Year Ended January 29, 2011 Compared to Fiscal Year Ended
    January 30, 2010
  Net sales.
  Gross profit.
  Selling expense.
 32




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General and administrative expense.
  Gain/loss on disposal of property and
    equipment.
  Impairment of long-lived assets.
  Interest expense.
  Income tax expense.
  Net loss.
  Fiscal
    Year Ended January 30, 2010 Compared to Fiscal Year Ended
    January 31, 2009
  Net sales.
  Gross profit.
  Selling expense.
  General and administrative expense.
  Loss on disposal of property and
    equipment.
  Impairment of long-lived assets.
 33




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Interest expense.
  Income tax expense.
  Net loss.
  Seasonality
    and Quarterly Fluctuations
    Fiscal Year Ended January 31, 2009(1)Thirteen

Thirteen

Thirteen

ThirteenWeeks Ended

Weeks Ended

Weeks Ended

Weeks EndedMay 3,

August 2,

November 1,

January 31,2008

2008

2008

2009Net sales

$
43,537,503


$
43,568,099


$
41,075,064


$
55,481,123Gross profit


11,249,973



12,879,165



8,996,887



17,425,637Operating expenses


15,319,099



14,236,601



16,623,909



16,148,228Operating income (loss)


(4,069,126
)


(1,357,436
)


(7,627,022
)


1,277,409   Fiscal Year Ended January 30, 2010(1)Thirteen

Thirteen

Thirteen

ThirteenWeeks Ended

Weeks Ended

Weeks Ended

Weeks EndedMay 2,

August 1,

October 31,

January 30,2009

2009

2009

2010Net sales

$
44,976,621


$
43,720,271


$
39,042,191


$
57,629,613Gross profit


12,696,440



12,922,107



6,766,363



20,983,690Operating expenses


14,600,044



14,076,667



16,293,982



14,853,036Operating income (loss)


(1,903,604
)


(1,154,560
)


(9,527,619
)


6,130,654   Fiscal Year Ended January 29, 2011(1)Thirteen

Thirteen

Thirteen Weeks

Thirteen WeeksWeeks Ended

Weeks Ended

Ended

EndedMay 1,

July 31,

October 30,

January 29,2010

2010

2010

2011Net sales

$
43,524,036


$
43,293,127


$
40,575,879


$
58,232,802Gross profit


10,736,296



11,932,912



6,350,181



20,552,518Operating expenses


13,646,509



13,536,391



14,825,328



15,095,604Operating income (loss)


(2,910,213
)


(1,603,479
)


(8,475,147
)


5,456,914     (1)
    
    During the third quarters of fiscal year 2008, 2009 and 2010 we
    recognized $2,609,588, $2,762,273, and $1,415,979, respectively,
    in noncash charges related to the impairment of long-lived
    assets of underperforming stores.  back-to-school,
 34




---



##### Table of Contents



Liquidity
    and Capital Resources
        Debt
    Agreements
     35




---



##### Table of Contents



Form 10-K
 36




---



##### Table of Contents



January 30,


January 29,2010


2011Cash

$
154,685


$
146,263Inventories


20,233,207



25,911,508Total current assets


23,010,037



28,513,463Property and equipment, net


24,757,395



18,405,166Total assets


48,618,467



48,005,687Accounts Payable


10,138,635



16,009,847Revolving credit facility


10,531,687



10,449,299Subordinated convertible debentures


4,000,000



4,000,000Subordinated debenture






4,123,327Subordinated secured term loan


2,785,112



Total current liabilities


37,294,558



37,211,199Total shareholders equity (deficit)


2,140,153



(5,987,111
)Net working capital (deficit)(1)


(14,284,521
)


(8,707,737
)Unused borrowing capacity(2)


1,928,913



3,060,582     (1)
    
    Subordinated convertible debentures were reclassified from
    short-term liabilities at January 30, 2010 to long-term
    liabilities at January 29, 2011.(2)
    
    As calculated under the terms of our revolving credit facility.  Operating
    activities
         37




---



##### Table of Contents



Investing
    activities
        Financing
    activities
    Revolving
    Credit Facility
   38




---



##### Table of Contents



Subordinated
    Convertible Debentures
     39




---



##### Table of Contents



Subordinated
    Debenture
     40




---



##### Table of Contents



Subordinated
    Secured Term Loan
      Contractual
    Obligations
    Payments Due in PeriodLess Than








More ThanContractual Obligations

Total


1 Year


1-3 Years


3-5 Years


5 YearsLong-term debt obligations(1)

$
14,069,056


$
935,278


$
5,292,111


$
1,100,000


$
6,741,667Operating lease obligations(2)


113,089,551



24,272,384



41,511,070



30,731,849



16,574,248Purchase obligations(3)


28,784,919



24,284,919



3,000,000



1,500,000



Total

$
155,943,526


$
49,492,581


$
49,803,181


$
33,331,849


$
23,315,915     (1)
    
    Includes principal and interest payments on our subordinated
    convertible debentures and our subordinated debenture.(2)
    
    Includes minimum payment obligations relating to our store
    leases.(3)
    
    Includes merchandise on order, minimum royalty payments related
    to the H by Halston license, and payment obligations relating to
    store construction and miscellaneous service contracts. 41




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##### Table of Contents



Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
    Impact of
    Inflation
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.    Item 8.
    Financial
    Statements and Supplementary Data.  page F-1
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure Controls and Procedures. Rules 13a-15(e) 15d-15(e)
  Managements Annual Report on Internal Control Over
    Financial Reporting. Rules 13a-15(f) 15d-15(f)
   42




---



##### Table of Contents



Changes in Internal Control Over Financial
    Reporting.
  Item 9B.
    Other
    Information.   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Regulation S-K.
  Executive
    Officers of the Registrant
    Name

Age

PositionPeter A. Edison


55


Chairman of the Board, Chief Executive Officer and PresidentMark D. Ianni


50


Executive Vice President and Chief Merchandising OfficerStanley K. Tusman


64


Executive Vice President and Chief Planning OfficerJoseph R. VanderPluym


59


Executive Vice President and Chief Operations OfficerCharles R. Daniel, III


52


Executive Vice President and Chief Financial Officer,
    Controller, Treasurer and Secretary   Peter A. Edison
  Mark D. Ianni
 43




---



##### Table of Contents



Stanley K. Tusman
  Joseph R. VanderPluym
  Charles R. Daniel, III
    Section 16(a)
    Beneficial Ownership Reporting Compliance
    Code of
    Ethics
  Form 10-K.
  Item 11.
    Executive
    Compensation.   44




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.     PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.    Financial Statements: page F-1. page F-1
  Financial Statement Schedules:
  Exhibits: Form 10-K:
 45




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##### Table of Contents



SIGNATURES
  Form 10-K
    By
    /s/  PETER
    A. EDISON   Chairman of the Board, Chief Executive Officer
 and President (Principal Executive Officer)
      Signature

Title

Date/s/  PETER
    A. EDISON(Peter
    A. Edison)

Chairman of the Board, Chief Executive Officer, President and
    Director (Principal Executive Officer)

April 29, 2011/s/  CHARLES
    R. DANIEL, III(Charles
    R. Daniel, III)

Executive Vice President and Chief Financial Officer,
    Controller, Treasurer and Secretary (Principal Financial Officer
    and Principal Accounting Officer)

April 29, 2011*(Timothy
    F. Finley)

Director

April 29, 2011*(Harry
    E. Rich)

Director

April 29, 2011*(Scott C. Schnuck)

Director

April 29, 2011     *
    
    Peter A. Edison, by signing his name hereto, does sign this
    document on behalf of the above noted individuals, pursuant to
    powers of attorney duly executed by such individuals which have
    been filed as an Exhibit to this Report.  PETER
    A. EDISON
    Attorney-in-Fact
 46




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##### Table of Contents



EXHIBIT INDEX
  Exhibit No.

Description3
.1

Restated Articles of Incorporation of the Company (incorporated
    by reference to Exhibit 3.1 to the Companys Annual
    Report on
    Form 10-K
    for the fiscal year ended January 3, 2004 filed on
    April 2, 2004 (File
    No. 000-50563)).3
.2

Restated Bylaws of the Company (incorporated by reference to
    Exhibit 3.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended January 3, 2004 filed on
    April 2, 2004
    (File No. 000-50563)).4
.1

Form of common stock certificate (incorporated by reference to
    Exhibit 4.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended January 31, 2009 filed on
    April 24, 2009
    (File No. 000-50563)).4
.2

Subordinated Convertible Debenture Purchase Agreement dated
    June 13, 2007 by and among the Company and the Investors
    named therein (incorporated by reference to Exhibit 4.1 to
    the Companys Current Report on
    Form 8-K
    filed on July 2, 2007 (File
    No. 000-50563)).4
.3

9.5% Subordinated Convertible Debentures issued by the
    Company to Investors on June 26, 2007 (incorporated by
    reference to Exhibit 4.2 to the Companys Current
    Report on
    Form 8-K
    filed on July 2, 2007 (File
    No. 000-50563)).4
.4

Subordination Agreement dated June 26, 2007 by and among
    the Company, the Investors named therein and Bank of America,
    N.A. (incorporated by reference to Exhibit 4.3 to the
    Companys Current Report on
    Form 8-K
    filed on July 2, 2007 (File
    No. 000-50563)).4
.5

First Amendment to Subordinated Convertible Debentures and
    Subordinated Convertible Debenture Purchase Agreement dated
    April 20, 2010 (incorporated by reference to
    Exhibit 4.3 to the Companys Current Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).4
.6

Registration Rights Agreement dated June 26, 2007 by and
    among the Company and the Investors named therein (incorporated
    by reference to Exhibit 4.5 to the Companys Current
    Report on
    Form 8-K
    filed on July 2, 2007 (File
    No. 000-50563)).4
.7

Amendment Number 3 to Loan Documents dated September 3,
    2009 by and among the Company, Private Equity Management Group,
    Inc. and the Lender named therein (incorporated by reference to
    Exhibit 4.11 to the Companys Quarterly Report on
    Form 10-Q
    filed on September 10, 2009
    (File No. 000-50563)).4
.8

Amendment Number 4 to Loan Documents dated March 23, 2010
    by and among the Company, Private Equity Management Group, Inc.
    and the Lender named therein (incorporated by reference to
    Exhibit 4.12 to the Companys Current Report on
    Form 8-K
    filed on March 25, 2010
    (File No. 000-50563)).4
.9

Amendment Number 5 to Loan Documents dated August 26, 2010
    by and among the Company, Private Equity Management Group, Inc.
    and the Lender named therein (incorporated by reference to
    Exhibit 4.8 to the Companys Quarterly Report on
    Form 10-Q
    filed on September 14, 2010
    (File No. 000-50563)).4
.10

Debenture and Stock Purchase Agreement dated August 26,
    2010 by and among the Company and Steven Madden, Ltd.
    (incorporated by reference to Exhibit 4.1 to the
    Companys Current Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).4
.11

Debenture issued by the Company to Steven Madden, Ltd. on
    August 26, 2010 (incorporated by reference to
    Exhibit 4.2 to the Companys Current Report on
    Form 8-K
    filed on August 27, 2010
    (File No. 000-50563)).4
.12

Voting Agreement dated August 26, 2010 by and among the
    Company, Peter A. Edison, and Steven Madden, Ltd. (incorporated
    by reference to Exhibit 4.3 to the Companys Current
    Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)). 47




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##### Table of Contents



Exhibit No.

Description4
.13

Registration Rights Agreement dated August 26, 2010 by and
    among the Company and Steven Madden, Ltd. (incorporated by
    reference to Exhibit 4.4 to the Companys Current
    Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).4
.14

Subordination Agreement dated August 26, 2010 by and among
    the Company, Bank of America, N.A., and Steven Madden, Ltd.
    (incorporated by reference to Exhibit 4.5 to the
    Companys Current Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).4
.15

Subordination Agreement dated August 26, 2010 by and among
    the Company, Private Equity Management Group, Inc., in its
    capacity as administrative agent for GVECR II 2007 E Trust dated
    December 17, 2007, and Steven Madden, Ltd. (incorporated by
    reference to Exhibit 4.6 to the Companys Current
    Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).4
.16

Subordination Agreement dated August 26, 2010 by and among
    the Company, the holders of $4 million aggregate principal
    amount of the Companys 9.5% Subordinated Convertible
    Debentures due June 30, 2012, and Steven Madden, Ltd.
    (incorporated by reference to Exhibit 4.7 to the
    Companys Current Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).10
.1

Bakers Footwear Group, Inc. 2003 Stock Option Plan, as amended
    (incorporated by reference to Exhibit 10.3 to the
    Companys Current Report on
    Form 8-K
    filed on March 21, 2007
    (File No. 000-50563)).10
.1.1

Form of Nonqualified Option Award Agreement under Bakers
    Footwear Group, Inc. 2003 Stock Option Plan (incorporated by
    reference to Exhibit 10.2 to the Companys Current
    Report on
    Form 8-K
    filed on March 21, 2007 (File
    No. 000-50563)).10
.2

Bakers Footwear Group, Inc. Cash Bonus Plan (incorporated by
    reference to Exhibit 10.2 of Amendment No. 3 to the
    Companys Registration Statement on
    Form S-1
    filed on January 8, 2004 (File
    No. 333-86332)).10
.3

Letter to Peter Edison outlining 2010 bonus levels (incorporated
    by reference to Exhibit 10.4 to the Companys Current
    Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).10
.4

Letter to Joe VanderPluym outlining 2010 bonus levels
    (incorporated by reference to Exhibit 10.5 to the
    Companys Current Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).10
.5

Letter to Mark Ianni outlining 2010 bonus levels (incorporated
    by reference to Exhibit 10.6 to the Companys Current
    Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).10
.6

Letter to Stan Tusman outlining 2010 bonus levels (incorporated
    by reference to Exhibit 10.7 to the Companys Current
    Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).10
.7

Letter to Charlie Daniel outlining 2010 bonus levels
    (incorporated by reference to Exhibit 10.8 to the
    Companys Current Report on
    Form 8-K
    filed on April 23, 2010 (File
    No. 000-50563)).10
.8

Letter to Peter Edison outlining 2011 bonus levels.10
.9

Letter to Joe VanderPluym outlining 2011 bonus levels.10
.10

Letter to Mark Ianni outlining 2011 bonus levels.10
.11

Letter to Stan Tusman outlining 2011 bonus levels.10
.12

Letter to Charlie Daniel outlining 2011 bonus levels.10
.13

Bakers Footwear Group, Inc. 2005 Incentive Compensation Plan
    (incorporated by reference to Appendix A to the
    Companys 2005 Proxy Statement filed on April 27, 2005
    (File
    No. 000-50563)).10
.13.1

Form of Notice of Award of Performance Shares under Bakers
    Footwear Group, Inc. 2005 Incentive Compensation Plan
    (incorporated by reference to Exhibit 10.4 to the
    Companys Current Report on
    Form 8-K
    filed on March 22, 2006 (File
    No. 000-50563)).10
.13.2

Form of Restricted Stock Award Agreement under Bakers Footwear
    Group, Inc. 2005 Incentive Compensation Plan (incorporated by
    reference to Exhibit 10.4 to the Companys Current
    Report on
    Form 8-K
    filed on October 9, 2007 (File
    No. 000-50563)). 48




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##### Table of Contents



Exhibit No.

Description10
.14

Summary of base salaries for specified executive officers
    (incorporated by reference to Exhibit 10.25 to the
    Companys Annual Report on Form 10-K for the fiscal year
    ended February 2, 2008 filed on May 2, 2008 (File
    No. 000-50563)).10
.15

Summary of April 20, 2010 stock option grants to executive
    officers of the Company (incorporated by reference to Exhibit
    10.1 to the Companys Current Report on Form 8-K filed
    on April 23, 2010 (File No. 000-50563)).10
.16

Assignment of Rights dated June 23, 1999 between the
    Company and Edison Brothers Stores, Inc. (incorporated by
    reference to Exhibit 10.10 to the Companys
    Registration Statement on
    Form S-1
    filed on April 16, 2002 (File
    No. 333-86332)).10
.17

Employment Agreement dated January 12, 2004 by and between
    the Company and Peter Edison (incorporated by reference to
    Exhibit 10.15 of Amendment No. 4 to the Companys
    Registration Statement on
    Form S-1
    filed on January 20, 2004 (File
    No. 333-86332)).10
.18

Employment Agreement dated September 16, 2002 by and
    between the Company and Stanley K. Tusman (incorporated by
    reference to Exhibit 10.20 of Amendment No. 4 to the
    Companys Registration Statement on
    Form S-1
    filed on January 20, 2004 (File
    No. 333-86332)).10
.19

Employment Agreement dated September 5, 2006 by and between
    the Company and Joe VanderPluym (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K
    filed on September 7, 2006 (File
    No. 000-50563)).10
.20

Employment Agreement dated August 31, 2006 by and between
    the Company and Mark Ianni (incorporated by reference to
    Exhibit 10.3 to the Companys Current Report on
    Form 8-K
    filed on September 7, 2006 (File
    No. 000-50563)).10
.21

Summary of Compensation of Non-management Directors as of
    March 15, 2007 (incorporated by reference to
    Exhibit 10.12 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended May 5, 2007 filed on June 19,
    2007 (File
    No. 000-50563)).10
.22

Second Amended and Restated Loan and Security Agreement dated as
    of August 31, 2006 by and between Bank of America, N.A. and
    the Company (incorporated by reference to Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    filed on September 7, 2006 (File
    No. 000-50563)).10
.22.1

Amended and Restated Revolving Credit Note dated as of
    August 31, 2006 by and between Bank of America, N.A. and
    the Company (incorporated by reference to Exhibit 10.2 to
    the Companys Current Report on
    Form 8-K
    filed on September 7, 2006 (File
    No. 000-50563)).10
.22.2

Waiver and Consent Agreement dated as of April 18, 2007 by
    and between Bank of America, N.A. and the Company (incorporated
    by reference to Exhibit 10.14.2 to the Companys
    Annual Report on
    Form 10-K
    for the fiscal year ended February 3, 2007 filed on
    April 24, 2007 (File
    No. 000-50563)).10
.22.3

First Amendment to Second Amended and Restated Loan and Security
    Agreement dated as of May 17, 2007 by and between the
    Company and Bank of America, N.A. (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K
    filed on May 18, 2007 (File
    No. 000-50563)).10
.22.4

Extension Agreement dated June 26, 2007 between the Company
    and Bank of America, N.A. (incorporated by reference to
    Exhibit 4.4 to the Companys Current Report on
    Form 8-K
    filed on July 2, 2007 (File
    No. 000-50563)).10
.22.5

Second Amendment to Second Amended and Restated Loan and
    Security Agreement dated February 1, 2008 by and among the
    Company and Bank of America, N.A. (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on February 4, 2008 (File
    No. 000-50563)).10
.22.6

Third Amendment to Second Amended and Restated Loan and Security
    Agreement dated April 9, 2009 by and among the Company and
    Bank of America, N.A. (incorporated by reference to
    Exhibit 10.7 to the Companys Current Report on
    Form 8-K
    filed on April 15, 2009 (File
    No. 000-50563)). 49




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##### Table of Contents



Exhibit No.

Description10
.22.7

Fourth Amendment to Second Amended and Restated Loan and
    Security Agreement dated September 8, 2009 by and among the
    Company and Bank of America, N.A. (incorporated by reference to
    Exhibit 10.8 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended August 1, 2009 filed on
    September 10, 2009 (File
    No. 000-50563)).10
.22.8

Fifth Amendment to Second Amended and Restated Loan and Security
    Agreement dated May 28, 2010 by and among the Company and
    Bank of America, N.A. (incorporated by reference to
    Exhibit 10.9 to the Companys Current Report on
    Form 8-K
    filed on May 28, 2010 (File
    No. 000-50563)).10
.22.9

Waiver of Bank of America, N.A., dated August 26, 2010
    (incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).10
.22.10

Consent of Bank of America, N.A., dated August 26, 2010
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed on August 27, 2010 (File
    No. 000-50563)).10
.23

Concurrent Use Agreement dated June 23, 1999 between the
    Company and Novus, Inc. (incorporated by reference to
    Exhibit 10.9 to the Companys Registration Statement
    on
    Form S-1
    filed on April 16, 2002 (File
    No. 333-86332)).11
.1

Statement regarding computation of per share earnings
    (incorporated by reference from Note 15 of the Financial
    Statements).14
.1

Code of Business Conduct (incorporated by reference to
    Exhibit 14.1 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended January 3, 2004 filed on
    April 2, 2004 (File
    No. 000-50563)).23
.1

Consent of Independent Registered Public Accounting Firm.24
.1

Power of Attorney.31
.1

Rule 13a-14(a)/15d-14(a)
    Certification (pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002, executed by Chief Executive Officer).31
.2

Rule 13a-14(a)/15d-14(a)
    Certification (pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002, executed by Chief Financial Officer).32
.1

Section 1350 Certifications (pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002, executed by Chief Executive
    Officer and the Chief Financial Officer).  50




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS
  Contents
  Report of Independent Registered Public
    Accounting Firm


F-1Balance Sheets


F-2Statements of Operations


F-3Statements of Shareholders Equity
    (Deficit)


F-4Statements of Cash Flows


F-5Notes to Financial Statements


F-6  51




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm             /s/ ERNST & YOUNG LLP
    F-1




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  BALANCE
    SHEETS
  January 30,


January 29,2010


2011ASSETSCurrent assets:Cash and cash equivalents

$
154,685


$
146,263Accounts receivable


1,387,358



1,484,809Inventories


20,233,207



25,911,508Prepaid expenses and other current assets


1,234,787



970,883Total current assets


23,010,037



28,513,463Property and equipment, net


24,757,395



18,405,166Other assets


851,035



1,087,058Total assets

$
48,618,467


$
48,005,687LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable

$
10,138,635


$
16,009,847Accrued expenses


7,320,595



8,519,585Subordinated secured term loan


2,785,112



Subordinated convertible debentures


4,000,000



Sales tax payable


1,152,277



1,122,024Deferred income


1,366,252



1,120,444Revolving credit facility


10,531,687



10,449,299Total current liabilities


37,294,558



37,221,199Accrued noncurrent rent liabilities


9,183,756



8,648,272Subordinated convertible debentures






4,000,000Subordinated debenture






4,123,327Shareholders equity (deficit):Preferred stock, $0.0001 par value; 5,000,000 shares
    authorized, no shares outstanding






Common stock, $0.0001 par value; 40,000,000 shares
    authorized, 7,382,856 and 9,228,916 shares outstanding at
    January 30, 2010 and January 29, 2011, respectively


738



923Additional paid-in capital


39,279,600



40,443,888Accumulated deficit


(37,140,185
)


(46,431,922
)Total shareholders equity (deficit)


2,140,153



(5,987,111
)Total liabilities and shareholders equity (deficit)

$
48,618,467


$
48,005,687    F-2




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##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  STATEMENTS
    OF OPERATIONS
  Year Ended


Year Ended


Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Net sales

$
183,661,789


$
185,368,696


$
185,625,844Cost of merchandise sold, occupancy, and buying expenses


133,110,127



132,000,096



136,053,937Gross profit


50,551,662



53,368,600



49,571,907Operating expenses:Selling


42,157,931



40,826,820



40,364,873General and administrative


17,213,142



15,928,472



15,252,338Loss on disposal of property and equipment


347,176



306,164



70,642Impairment of long-lived assets


2,609,588



2,762,273



1,415,979Operating loss


(11,776,175
)


(6,455,129
)


(7,531,925
)Other income (expense):Interest expense


(3,255,087
)


(2,723,566
)


(2,074,628
)Other income (expense), net


120,508



96,599



127,354Loss before income taxes


(14,910,754
)


(9,082,096
)


(9,479,199
)Provision for (benefit from) income taxes


84,847







(187,462
)Net loss

$
(14,995,601
)

$
(9,082,096
)

$
(9,291,737
)Net loss per common share:

$
(2.13
)

$
(1.24
)

$
(1.14
)    F-3




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##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  STATEMENTS
    OF SHAREHOLDERS EQUITY (DEFICIT)
  Common StockShares





AdditionalIssued and





Paid-In


AccumulatedOutstanding


Amount


Capital


Deficit


TotalBalance at February 2, 2008


6,655,856


$
665


$
37,101,923


$
(13,062,488
)

$
24,040,100Stock-based compensation expense










609,901







609,901Issuance of common stock


400,000



40



794,960







795,000Net loss














(14,995,601
)


(14,995,601
)Balance at January 31, 2009


7,055,856



705



38,506,784



(28,058,089
)


10,449,400Stock-based compensation expense










585,341







585,341Issuance of common stock


250,000



25



187,475







187,500Issuance of restricted stock


77,000



8











8Net loss














(9,082,096
)


(9,082,096
)Balance at January 30, 2010


7,382,856



738



39,279,600



(37,140,185
)


2,140,153Stock-based compensation expense










364,088







364,088Issuance of common stock


1,844,860



184



799,816







800,000Shares issued in connection with exercise of stock options


1,200



1



384







385Net loss














(9,291,737
)


(9,291,737
)Balance at January 29, 2011


9,228,916


$
923


$
40,443,888


$
(46,431,922
)

$
(5,987,111
)    F-4




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  STATEMENTS
    OF CASH FLOWS
  Year Ended


Year Ended


Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Operating activitiesNet loss

$
(14,995,601
)

$
(9,082,096
)

$
(9,291,737
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


7,781,462



6,535,588



5,712,996Accretion of debt discount


667,282



488,663



217,382Stock-based compensation expense


609,901



585,341



364,088Interest expense recognized for issuing common stock related to
    amending the subordinated secured term loan






187,500



Impairment of long-lived assets


2,609,588



2,762,273



1,415,979Loss on disposal of property and equipment


347,176



306,164



70,642Changes in operating assets and liabilities:Accounts receivable


2,294



(13,971
)


65,918Inventories


(2,914,411
)


743,145



(5,678,301
)Prepaid expenses and other current assets


1,657,200



(238,969
)


263,904Other assets


714,785



243,150



98,021Accounts payable


474,770



2,581,651



5,871,212Accrued expenses and deferred income


(596,799
)


(587,711
)


922,929Accrued noncurrent rent liabilities


(395,932
)


(591,073
)


(535,484
)Net cash provided by (used in) operating activities


(4,038,285
)


3,919,655



(502,451
)Investing activitiesPurchase of property and equipment


(923,256
)


(428,054
)


(997,787
)Proceeds from disposition of property and equipment


1,468



416



3,282Net cash used in investing activities


(921,788
)


(427,638
)


(994,505
)Financing activitiesNet borrowings (payments) on line of credit


298,483



(951,175
)


(82,388
)Debt issuance costs


(325,542
)






Net proceeds from exercise of stock options










385Proceeds from issuance of subordinated secured term loan and
    common stock


7,020,000







Proceeds from issuance of subordinated debenture and common stock










4,549,704Principal payments of subordinated secured term loan


(2,000,000
)


(2,520,833
)


(2,979,167
)Principal payments under capital lease obligations


(57,863
)






Net cash provided by (used in) financing activities


4,935,078



(3,472,008
)


1,488,534Net increase (decrease) in cash and cash equivalents


(24,995
)


20,009



(8,422
)Cash and cash equivalents at beginning of period


159,671



134,676



154,685Cash and cash equivalents at end of period

$
134,676


$
154,685


$
146,263Supplemental disclosures of cash flow informationCash paid for interest

$
2,098,519


$
2,032,627


$
1,736,049    F-5




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.



NOTES TO
    FINANCIAL STATEMENTS

January 29,
    2011 1.
    Summary
    of Significant Accounting Policies  Operations
    Fiscal
    Year
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Accounts
    Receivable
    Inventories
  first-in,
 F-6




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Property
    and Equipment
    Impairment
    of Long-Lived Assets
  store-by-store start-up
  Revenue
    Recognition
    Cost
    of Merchandise Sold
    Operating
    Leases
     F-7




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Stock-Based
    Compensation
    Advertising
    and Marketing Expense
  point-of-sale
  Earnings
    per Share
      Income
    Taxes
     F-8




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Deferred
    Income
  12-month 12-month
    Business
    Segment
    Shipping
    and Handling Costs
    Fair
    Value Measurements
           F-9




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Reclassifications
    2.
    Liquidity           F-10




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
            Form 10-K
 F-11




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  3.
    Nasdaq
    Capital Market Delisting    4.
    Revolving
    Credit Agreement      5.
    Subordinated
    Debenture   F-12




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      6.
    Property
    and Equipment    EstimatedUseful


January 30,


January 29,Lives


2010


2011Furniture, fixtures, and equipment


3 to 8 years


$
29,285,427


$
28,758,171Leasehold improvements


up to 10 years



41,710,865



40,817,876Computer equipment and software


3 years



4,354,093



4,121,172Construction in progress






398,333



426,83975,748,718



74,124,058Less accumulated depreciation and amortization






50,991,323



55,718,892$
24,757,395


$
18,405,166     7.
    Accrued
    Expenses    January 30,


January 29,2010


2011Employee compensation and benefits

$
1,974,366


$
1,934,943Accrued rent


303,723



304,136Other


5,042,506



6,280,506$
7,320,595


$
8,519,585  F-13




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  8.
    Operating
    Leases      Fiscal year:2011

$
24,272,3842012


22,187,6552013


19,323,4152014


17,253,4702015


13,478,379Thereafter


16,574,248$
113,089,551   9.
    Subordinated
    Convertible Debentures      Derivatives
    and Hedging
 F-14




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  10.
    Subordinated
    Secured Term Loan          Fiscal year:2011

$
2012


4,000,0002013


2014


2015


Thereafter


4,123,327$
8,123,327   11.
    Employee
    Benefit Plan   F-15




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    12.
    Commitments
    and Contingencies      13.
    Income
    Taxes  Income Taxes,
     F-16




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended


Year Ended


Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Current:Federal

$
(3,007,729
)

$
(1,250,116
)

$
(1,595,111
)State and local


(840,435
)


(311,435
)


(565,290
)Total current


(3,848,164
)


(1,561,551
)


(2,160,401
)Deferred:Federal


(1,491,342
)


(1,612,653
)


(1,392,386
)State and local


(285,264
)


(293,210
)


(253,161
)Total deferred


(1,776,606
)


(1,905,863
)


(1,645,547
)Valuation allowance


5,709,617



3,467,414



3,618,486Total provision (benefit) for income taxes

$
84,847


$



$
(187,462
)     Year Ended


Year Ended


Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Federal income tax at statutory rate

$
(5,218,763
)

$
(3,178,734
)

$
(3,317,720
)Impact of federal alternative minimum tax


214,907







Impact of NOL carryback refunds


(137,651
)






(187,462
)Impact of graduated Federal rates


149,107



90,821



94,792State and local income taxes, net of Federal income taxes


(651,802
)


(401,655
)


(419,218
)Change in valuation allowance


5,709,617



3,467,414



3,618,486Permanent differences


19,432



22,154



23,660Total provision (benefit) for income taxes

$
84,847


$



$
(187,462
)    F-17




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    January 30,


January 29,2010


2011Deferred tax assets:Net operating loss carryforward

$
8,894,200


$
10,775,110Vacation accrual


396,524



405,473Inventory


989,396



1,191,540Stock-based compensation


1,116,518



1,258,512Accrued rent


3,581,665



3,372,826Property and equipment


1,496,584



2,842,665Total deferred tax assets


16,474,887



19,846,126Deferred tax liabilities:Prepaid expenses


(111,467
)


(103,629
)Valuation allowance


(16,363,420
)


(19,742,497
)Net deferred tax assets

$



$
   14.
    Stock-Based
    Compensation    2003
    Stock Option Plan
     F-18




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended

Year Ended

Year EndedJanuary 31,

January 30,

January 29,2009

2010

2011Options granted

310,500

72,000

227,000Weighted-average fair value of options granted

$0.86

$0.18

$1.96Assumptions:Dividends

0%

0%

0%Risk-free interest rate

2.83% - 3.69%

2.2%

2.8%Expected volatility

46%

54%

97%Expected option life

6 years

6 years

6 years     Vested


Non Vested


TotalNumber of


Weighted Average


Number of


Weighted Average


Number of


Weighted AverageOptions


Exercise Price


Options


Exercise Price


Options


Exercise PriceBalance at February 2, 2008


175,778


$
9.90



512,448


$
9.45



688,226


$
9.56Granted










310,500



1.79



310,500



1.79Vested


156,498



9.67



(156,498
)


9.67







Exercised






















Forfeited


(12,154
)


10.62



(24,999
)


6.98



(37,153
)


8.17Balance at January 31, 2009


320,122



9.76



641,451



5.78



961,573



7.11Granted










72,000



0.33



72,000



0.33Vested


211,063



7.41



(211,063
)


7.41







Exercised






















Forfeited


(258,156
)


10.49



(70,662
)


10.52



(328,818
)


10.50Balance at January 30, 2010


273,029


$
7.26



431,726


$
3.31



704,755


$
4.84Granted










227,000



2.50



227,000



2.50Vested


125,909



4.55



(125,909
)


4.55







Exercised


(1,200
)


0.32











(1,200
)


0.32Forfeited


(8,000
)


9.08



(5,100
)


4.72



(13,100
)


7.38Balance at January 29, 2011


389,738


$
6.37



527,717


$
2.65



917,455


$
4.23    F-19




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Weighted-Average


Weighted-AverageNumber of


Contractual Life


Exercise


AggregateRange of Exercise Prices

Options


(Years)


Price


Intrinsic Value$0.01  $0.77


17,719



6.8


$
1.10


$
11,560$1.43  $4.52


191,792



7.0



7.90



$7.75


72,720



3.0



7.75



$9.30  $13.80


87,254



5.0



11.00



$20.06


20,253



5.1



20.06



Total ($0.01  $20.06)


389,738



5.7



6.38


$
11,560     Weighted-Average


Weighted-AverageNumber of


Contractual Life


Exercise


AggregateRange of Exercise Prices

Options


(Years)


Price


Intrinsic Value$0.01  $0.77


69,719



7.8


$
0.31


$
41,000$1.43  $4.52


603,600



7.8



10.40



$7.75


73,820



3.0



7.75



$9.30  $13.80


108,983



5.2



10.81



$20.06


28,233



5.1



20.06



Total ($0.01  $20.06)


884,355



7.6



4.42


$
41,000     2005
    Incentive Compensation Plan
    Restricted
    Shares
   F-20




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  15.
    Earnings
    per Share    Year Ended


Year Ended


Year EndedJanuary 31,


January 30,


January 29,2009


2010


2011Numerator:Net income (loss)

$
(14,995,601
)

$
(9,082,096
)

$
(9,291,737
)Numerator for basic earnings (loss) per share


(14,995,601
)


(9,082,096
)


(9,291,737
)Interest expense related to convertible debentures










Numerator for diluted earnings (loss) per share

$
(14,995,601
)

$
(9,082,096
)

$
(9,291,737
)Denominator:Denominator for basic earnings (loss) per share 
    weighted average shares


7,040,609



7,328,087



8,174,465Effect of dilutive securities:Stock options










Stock purchase warrants










Convertible debentures










Denominator for diluted earnings (loss) per share 
    adjusted weighted average shares and assumed conversions


7,040,609



7,328,087



8,174,465     Earnings per Share
 F-21




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  16.
    Fair
    Value Measurement    January 30, 2010


January 29, 2011Carrying





CarryingAmount


Fair Value


Amount


Fair ValueCash and cash equivalents

$
154,685


$
154,685


$
154,685


$
154,685Revolving credit facility


10,531,687



10,531,687



10,531,687



10,531,687Subordinated debenture










4,123,327



4,039,445Subordinated secured term loan


2,785,112



2,811,386







Subordinated convertible debentures


4,000,000



2,578,638



4,000,000



3,052,837     17.
    Related
    Party Transactions      18.
    Quarterly
    Financial Data  
    Unaudited    Thirteen Weeks


Thirteen Weeks


Thirteen Weeks


Thirteen WeeksEnded


Ended


Ended


EndedMay 2,


August 1,


October 31,


January 30,2009


2009


2009


2010Fiscal year 2009:Net sales

$
44,976,621


$
43,720,271


$
39,042,191


$
57,629,613Gross profit


12,696,440



12,922,107



6,766,363



20,983,690Net income (loss)(1)


(2,768,668
)


(1,736,643
)


(10,166,980
)


5,590,195Basic earnings (loss) per share


(0.39
)


(0.24
)


(1.38
)


0.76Diluted earnings (loss) per share


(0.39
)


(0.24
)


(1.38
)


0.72   F-22




---



##### Table of Contents



BAKERS
    FOOTWEAR GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Thirteen Weeks


Thirteen Weeks


Thirteen WeeksThirteen Weeks


Ended


Ended


EndedEnded May 1,


July 31,


October 30,


January 29,2010


2010


2010


2011Fiscal year 2010:Net sales

$
43,524,036


$
43,293,127


$
40,575,879


$
58,232,802Gross profit


10,736,296



11,932,912



6,350,181



20,552,518Net income (loss)(1)


(3,450,817
)


(2,075,142
)


(8,934,981
)


5,169,203Basic earnings (loss) per share


(0.47
)


(0.28
)


(1.03
)


0.56Diluted earnings (loss) per share


(0.47
)


(0.28
)


(1.03
)


0.54     (1)
    
    During the third quarter of fiscal year 2009 and 2010, the
    Company recognized $2,762,273, and $1,415,979 respectively in
    noncash charges related to the impairment of long-lived assets
    of underperforming stores. F-23