Caleres Inc. reported second-quarter earnings on adjusted basis grew 24.1 percent as Famous Footwear’s comps improved 4.4 percent and expense margins improved.

Second-Quarter Highlights 

  • Record second quarter sales for consolidated, Famous Footwear and Brand Portfolio
  • Record second quarter operating earnings for Famous Footwear
  • On-track to deliver seventh consecutive year of positive back-to-school same-store-sales
  • Continued to grow top brands in Brand Portfolio and to take consumer share in the market
  • Maintained strong balance sheet, cash flow and return on invested capital
  • Executed against company strategy and invested in the business

“Record second quarter consolidated sales were up 4.4 percent, while adjusted earnings per share were up 22.9 percent. Famous Footwear also delivered a record second quarter–for both sales and operating profit–with strength in women’s sandals and athletic-inspired styles driving improvement,” said Diane Sullivan, CEO, president and chairman of Caleres. “For Brand Portfolio, second quarter sales were up 1.9 percent, as Sam Edelman delivered the largest second quarter in its history, and Naturalizer reported its fourth consecutive quarter of wholesale growth in North America. During the quarter, we also announced the acquisition of Blowfish Malibu, which allows us to continue to expand and diversify our overall business.”

Second Quarter 2018 Results Versus 2017

  • Consolidated sales of $706.6 million, up 4.4 percent.
    Famous Footwear total sales of $429.5 million were up 6.1 percent, while same-store-sales were up 2.6 percent.
  • Brand Portfolio sales of $277.1 million were up 1.9 percent.
  • Gross profit was $293.1 million, while gross margin was 41.5 percent. The year-ago gross margin was
    42.5 percent.
  • SG&A expense of $258.8 million represented 36.6 percent of sales–a 121 basis point improvement.
  • Operating earnings were $32.1 million, and operating margin was 4.5 percent, while adjusted operating earnings were $34.8 million, and adjusted operating margin was 4.9 percent.
  • Net earnings were $23.6 million, while diluted earnings per share were $0.55 and included a $0.04 charge for the previously announced transition of Allen Edmonds’ consumer-facing activities to St. Louis and for the July acquisition of Blowfish Malibu.
  • Adjusted net earnings of $25.6 million were up 24.1 percent, while adjusted diluted net earnings per share of 59 cents were up 22.9 percent. Wall Street’s consensus estimates were 60 cents.

First Half 2018 Results Versus 2017

  • Consolidated sales of $1,338.8 million, up 2.3 percent.
  • Famous Footwear total sales of $792.9 million were up 2.8 percent, while same-store-sales were up 1.0 percent–in line with FY’18 guidance.
  • Brand Portfolio sales of $545.9 million were up 1.6 percent.
  • Gross profit was $568.0 million, while gross margin was 42.4 percent.
  • SG&A expense of $509.0 million represented 38.0 percent of sales–a 39-basis-point improvement.
  • Operating earnings were $55.1 million and operating margin was 4.1 percent, while adjusted operating earnings were $59.5 million and adjusted operating margin was 4.4 percent.
  • Net earnings were $40.9 million, while diluted earnings per share were $0.94 and included an $0.08 charge for the previously announced transition of Allen Edmonds’ consumer-facing activities to St. Louis and for the acquisition of Blowfish Malibu.
  • Adjusted net earnings of $44.1 million were up 16.0 percent, while adjusted diluted net earnings per share of $1.02 were up 15.9 percent.

Balance Sheet and Cash Flow

  • Cash and equivalents were $102.9 million and up $49.9 million year-over-year, including the acquisition of Blowfish Malibu.
  • There were no outstanding borrowings under the revolving credit facility.
  • Inventory of $715.7 million was down 0.9 percent year-over-year.
  • Capital expenditures of $12.1 million were down 19.2 percent year-over-year.

Caleres maintained its guidance for the year.

2018 Outlook

  • Consolidated net sales ~$2.8B
  • Famous Footwear same-store-sales up low-single digits
  • Brand Portfolio sales up low-single digits
  • Gross margin up ~5 to 10 bps
  • SG&A as a percent of revenue down ~5 to 10 bps
  • Interest expense ~$16M
  • Effective tax rate 25 percent to 26 percent
  • Adjusted earnings per diluted share $2.40 to $2.50

Photo courtesy Famous Footwear