Caleres Inc. said same-store sales at Famous Footwear were up 0.9 percent in the third quarter as double-digit gains in lifestyle athletic sales offset weakness in boots due to unseasonably warm weather. Back-to-school sales overall were up 2.6 percent at the chain.

“In the third quarter, we anniversaried another double-digit quarter of growth in lifestyle athletic sales with key brands driving the improvement,” said Diane Sullivan, CEO, president and chairman of Caleres. “The brands that made up a significant share of our back-to-school sales last year were once again big contributors this year.”

In particular, women’s and girl’s athletic sales maintained their lead and were up high single and mid double digits, respectively. Men’s was up low single and kids up high single digits.

Asked by an analyst whether a changing fashion trend toward denim and away from leggings would slow down athletic’s growth, Sullivan said, “We really think we’re still powering through extraordinarily well based on the great decisions that the merchant team is making in the assortment of that product.”

Rick Ausick, president of Famous, added, “I think there’s always things we’re looking at on the casual side of the footwear business that is nonathletic to see if there’s opportunities there. And there’s been a few things that look promising, but nothing that I would say are taking over from that athleisure sports-style trend that we’ve been seeing for the last 12, 18 months.”

On the seasonal side of Famous’ business, sandals were up 3 percent overall in the third quarter, in line with expectations. Women’s sandal sales were up low single digits and delivered significant margin improvement.

As noted in its second-quarter conference call, the boot category was expected to be challenging for Famous and had been planned down 5 percent year-over-year. Women’s boot sales were down approximately 20 percent in the third quarter, while its inventory position in the category was down mid single digits at quarter end as inventory flows were adjusted throughout the quarter.

“Obviously, as the weather has gotten colder, boots sales have begun to trend positively,” said Sullivan. “While the biggest days for 2017 boot sales still remain ahead of us, there is the potential for margin degradation in the category if the industry becomes increasingly promotional this holiday season.”

Overall, Caleres reported earnings that missed Wall Street’s target by five cents a share, but the company maintained its guidance for the year.

In its other major segment, Brand Portfolio sales of $301.5 million were up 14 percent including contribution from Allen Edmonds, which was acquired in December of 2016. The weather had a “more significant” impact on the Brand Portfolio as boot sales were down in the high teens versus a planned decrease of 10 percent.

Excluding Allen Edmonds, sales in the Brand Portfolio segment were down 2.6 percent due to those slower boot sales related to this warm start to fall. Said Sullivan, “In the third quarter, Sam Edelman, Naturalizer, Dr. Scholl’s and Vince all continued to show great progress”

Companywide, net earnings were $34.4 million, or 80 cents a share, about even with $34.7 million, or 81 cents, a year ago. Wall Street expected 85 cents on average. Operating earnings were down slightly to $52.9 million from $55.5 million a year ago.

Consolidated sales of $774.7 million in the quarter were up 5.8 percent, including Allen Edmonds. In total, third-quarter sales were negatively impacted by approximately $35 million, due to the hurricanes in Texas and Florida and the delayed start to the fall boot season.

Gross profit was $316.9 million, while gross margin of 40.9 percent was up 79 basis points. SG&A expense of $264 million was up 10.8 percent, including Allen Edmonds.

For the year, Caleres continues to expect adjusted EPS in the range of $2.10 to $2.20. The results exclude 13 cents of costs related to the acquisition of Allen Edmonds and the reorganization of the company’s men’s brands. Consolidated sales are expected in the range of $2.7 billion to $2.8 billion. Famous Footwear same-store sales are expected to advance low single digits while Brand Portfolio sales are projected to rise high teens.

Photo courtesy Famous Footwear