Caleres, the parent of Famous Footwear, reported earnings slid 16.7 percent in the first quarter, to $14.9 million, or 35 cents a share.

“Our first quarter results – including 8.0 sales growth and more than 50 basis points of gross margin improvement – provided a solid start to the year, despite the continued tough retail environment,” said Diane Sullivan, CEO, president and chairman of Caleres. “We are pleased with the performance of our Allen Edmonds acquisition, the success of our integration to date, and with our continued shift toward more balanced earnings contribution from both Famous Footwear and Brand Portfolio. And although retail continues to rapidly and significantly evolve, we remain on track for 2017.”

First Quarter 2017 Results Versus 2016

Consolidated sales of $631.5 million were up 8.0 percent, including $42.5 million of Allen Edmonds sales.

  • Famous Footwear total sales of $366.5 million, up 0.5 percent;
  • Same-store-sales down 0.6 percent;
  • Famous.com sales increased 25.7 percent to 5.7 percent of sales;
    Brand Portfolio sales of $265.0 million were up 20.4 percent including contribution from Allen Edmonds, which was acquired in December of 2016;
  • Organic growth of 1.1 percent;
  • E-commerce was up 56.3 percent and represented 25.8 percent of sales.

Gross profit of $270.9 million was up 9.3 percent. Gross margin of 42.9 percent was up 52 basis points, while adjusted gross margin of 43.4 percent was up 100 basis points, excluding $3.0 million of expected fair value inventory adjustment amortization related to the Allen Edmonds acquisition. Famous Footwear gross margin of 45.8 percent was down 51 basis points, primarily reflecting increased shipping expense related to continued sales growth at famous.com.

Brand Portfolio gross margin of 38.9 percent was up 301 basis points, while adjusted gross margin of 40.1 percent was up 415 basis points with contributions from both Healthy Living and Contemporary Fashion, including Allen Edmonds.

SG&A expense of $244.1 million was up 11.4 percent. Famous Footwear SG&A expense was up 3.1 percent, primarily due to increased rent and facilities expenses related to higher door count and increased depreciation related to the ramp up of the Lebanon, Tennessee distribution center expansion. Brand Portfolio SG&A expense was flat, excluding Allen Edmonds.

Diluted earnings per share of $0.35 included $0.05 of expected charges related to the acquisition, integration and reorganization of men’s brands, while adjusted diluted earnings per share were 40 cents share.

“We’re pleased with our performance in the first quarter, as we reported sales growth of 8.0 percent and adjusted gross margin improvement of 100 basis points, while delivering $0.40 of adjusted earnings per share,” said Ken Hannah, chief financial officer of Caleres. “We also ended the quarter with cash and equivalents up 29.8 percent from the end of 2016, even as we paid down another $25 million of our revolver borrowings related to our Allen Edmonds acquisition. We expect to pay off the remainder of this amount by the end of the year.”

For 2017, Caleres expects consolidated net sales in the range of $2.7 billion to $2.8 billion. Famous Footwear same-store-sales are expected to up low-single digits; Brand Portfolio sales up high-teens, gross margin up 45 to 55 basis points, SG&A as a percent of revenue up 30 to 40 basis points, effective tax rate coming in between 31 percent to 33 percent and adjusted earnings per diluted share $2.10 to $2.20.

Photo courtesy Famous Footwear