Caleres Inc. reported a 20.5 percent second-quarter sales decline in the Famous Footwear segment although comparable stores sales were up 14.7 percent during the quarter.
Overall net sales were $501.4 million, down 33.4 percent from the second quarter of fiscal 2019. A 48.9 percent sales decline in the Brand Portfolio segment. The Brand Portfolio wholesale segment includes Sam Edelman, Naturalizer, Allen Edmonds, Vionic, Vince, Franco Sarto, Dr. Scholl’s Shoes, LifeStride, Blowfish Malibu, Bzees, Circus by Sam Edelman and Ryka.
Total company e-commerce related sales increased more than 30 percent, with total company e-commerce penetration rising to nearly 34 percent of net sales.
The net loss in the quarter of $30.7 million, or a loss of 83 cents per diluted share, compared to net income of $25.3 million, or 61 cents per diluted share, in the second quarter of fiscal 2019. The loss of 83 cents per share includes 13 cents of adjustments for COVID-19 related expenses and 13 cents related to the fair value adjustment to the Blowfish purchase obligation.
The adjusted net loss was $21.1 million, or an adjusted loss of 57 cents per diluted share compared to adjusted net income of $25.8 million, or adjusted earnings of 62 cents per diluted share, in the second quarter of fiscal 2019.
Gross profit was $182.6 million, while gross margin was 36.4 percent reflecting an aggressive liquidation of spring inventory and higher penetration of eCommerce sales. SG&A expense of $201.3 million, down $66.2 million compared to the second quarter of 2019.
Caleres said despite ongoing pressures from the global pandemic, it delivered sequential improvement in several key financial metrics, spurred by the efficient restart of its retail store fleet, ongoing strength in e-commerce sales and prudent management of expenses and working capital.
“The global Caleres team continued to navigate this choppy market environment, executing on our plan and delivering better than expected results in the quarter just ended,” said Diane Sullivan, chief executive officer, president and chairman. “Even with the ongoing market impacts of the virus, Caleres took significant steps during the quarter to strengthen the business, improve the balance sheet, leverage our capabilities and lay the foundation for a continuing recovery of our business in the year’s second half.”
Balance Sheet Highlights
- Ended the second quarter with $148.5 million of cash on hand;
- Generated $66.8 million in cash from operations;
- Reduced inventory levels approximately 27 percent year-over-year, reflecting actions taken to liquidate seasonal orders;
- Reduced credit facility borrowings by $88.5 million, or approximately 20 percent, to $350 million;
- Returned $13.1 million to shareholders during the quarter through its long-standing quarterly dividend and share repurchases; and
- Continue to benefit from the absence of any significant debt maturities until 2023.
“Looking ahead, while we expect the second half of 2020 to continue to be unpredictable, we are managing our business for the long term while at the same time remaining nimble to adapt to unanticipated challenges that may arise during this unusual year,” said Sullivan. “We believe our diverse portfolio of brands that are well-aligned with consumer trends, advanced capabilities and improving capital structure will lead us through the recovery and position Caleres to embrace rapidly changing consumer behaviors and capitalize on the increasingly dynamic marketplace.”
Photo courtesy Famous Footwear