Caleres, Inc. President and CEO John Schmidt reported on a conference call with analysts that the company’s Famous Footwear retail segment delivered total sales of $418.8 million for the fiscal third quarter ended November 1, representing a 2.2 percent decline versus the year-ago Q3 period. Comp sales dipped 1.2 percent for the quarter, which was said to be in line with expectations, but cycled against a 2.5 percent increase in the year-ago Q3 period.
Famous Footwear comparable sales increased 1 percent in August, the largest month of the quarter, and declined about 3 percent in September and October “as expected.” Schultz added that holiday sales at Famous Footwear have been strong so far and comp store sales are flat quarter-to-date.
Schmidt added that retail conversion and average unit retails increased in low-single digits while traffic declined in mid-single digits.
“We continue to see the Famous consumer respond strongly during peak shopping periods with positive comps in August, followed by September, October declines similar to our first half trend,” Schmidt offered. “Our e-commerce sales were up double digits for the second straight quarter.”
The CEO said the launch of Jordan last quarter contributed steady momentum throughout the back-to-school season, remaining a Top 10 brand and reinforcing Famous’ ability to launch leading brands and deliver powerful results.
“In addition to Jordan, we are seeing a trend of outperformance from premium brands at Famous, which we plan to capitalize on by bringing in more of these highly demanded brands,” Schmidt suggested. “At the same time, we see a need to edit some underperforming labels, particularly in the Fashion category. This will free up open-to-buy to invest in demanded brands, including some of our own Caleres brands.”
By category, Athletic was slightly positive on a comp basis while Fashion declined. Jordan, Adidas, Birkenstock, New Balance, Brooks, DC Shoes and Timberland were top growth brands, while the Caleres owned brands outperformed at Famous Footwear with sales up in mid-single digits. Schmidt added that within the strategically important Kids’ category, penetration was 25 percent in the quarter.
Men’s and Kids’ reportedly performed best during the quarter while Women’s underperformed.
“We are growing our Caleres brands at Famous because they are performing. As we do this, it is accretive to our consolidated gross margin,” offered Schmidt.
Profitability
Famous Footwear gross margin was 41.6 percent, down 130 basis points versus Q3 last year, reportedly due to more clearance days, additional LIFO and other inventory reserves and an unfavorable channel mix with stronger e-commerce sales.
Operating profit amounted to $20.7 million in the third quarter, compared to $29.6 million in the year-ago Q3 period. Operating margin was 4.9 percent in Q3, compared to 6.9 percent in the year-ago Q3 period.
Adjusted operating profit amounted to $20.9 million in the third quarter, compared to $29.8 million in the year-ago Q3 period. Adjusted operating margin at Famous Footwear was 5 percent in the third quarter, compared to 6.9 percent in the year-ago period.
Outlook
Caleres management expects Famous Footwear comp store sales for the fourth quarter to be “about flat” and total sales down in low-single digits – in line with the quarter-to-date trend.
Caleres also expects to see year-over-year improvement in Famous Footwear’s gross margin when assessed sequentially against the third quarter results.
Stores
Famous Footwear ended the quarter with 823 stores, compared to 851 stores at the end of the 2024 Q3 period.
“Famous continues to enhance its consumer experience through the Flair format,” Schmidt noted. “We ended third quarter with 56 Flair locations, which generated a 3-point sales lift overall and a 6-point sales lift for stores converted in the last year. We plan to add one additional location by year-end as the success of our Flair concept continues to underscore Famous’ ability to amplify elevated brands and products.”
Image courtesy Famous Footwear/Caleres, Inc.
