Caleres reported revenues at its Famous Footwear segment fell 12.3 percent in the third quarter ended October 31, to $391.7 million from $446,6 million a year ago.
Same-store sales were down 9.1 percent compared to a gain of 2.5 percent a year ago.
Operating income at the segment improved to $7.1 million, up from $6.2 million a year ago. Gross margin improved slightly to 40.9 percent from 41.0 percent a year ago.
Companywide, net sales were $647.5 million, down 18.3 percent from the third quarter of fiscal 2019.
The Brand Portfolio segment showed a decline of 25.6 percent to $267.6 million. The 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.
Gross profit was $257.0 million, while gross margin was 39.7 percent while SG&A expense of $236.9 million, down $38.4 million compared to the third quarter of 2019.
Net income of $14.4 million, or earnings of $0.38 per diluted share, compared to net income of $28.0 million, or 69 cents per diluted share, in the third quarter of fiscal 2019. Earnings of 38 cents per share include $0.10 of adjustments related to the fair value adjustment to the Blowfish purchase obligation. Adjusted net income was $18.2 million, or adjusted earnings of 48 cents per diluted share compared to adjusted net income of $31.6 million, or adjusted earnings of 78 cents per diluted share, in the third quarter of fiscal 2019.
Other Highlights Of The Quarter Included:
- Generated $34.2 million in cash from operations and ended the third quarter with $124.3 million of cash on hand;
- Reduced inventory levels approximately 21 percent year-over-year, reflecting ongoing actions taken to liquidate seasonal orders;
- Reduced credit facility borrowings by $50 million from the second quarter of 2020 to end the third quarter at $300 million; and
- Returned $2.7 million to shareholders during the quarter through its long-standing quarterly dividend.
Caleres said in a statement it continued its steady progress – recording sequential top-line growth, a return to profitability, stronger gross margins and a further improved working capital position – despite the still uncertain economic environment. For the second straight quarter, the company used free cash to markedly reduce its overall debt levels, paying down $50 million during the period and bringing total debt reduction since the end of the first quarter of 2020 to approximately $139 million.
“Caleres furthered its recovery during the third quarter delivering results significantly better than anticipated in nearly all major financial metrics,” said Diane Sullivan, chairman, president and chief executive officer. “At the same time, the team has continued to overcome the ongoing COVID-related pressures in an impressive manner, further advancing the company’s key strategic objectives. During the quarter, we:
- Maintained rigorous cost discipline leading to an approximately $38 million decline in expenses year-over-year – attributable to improved store productivity and prior actions to align our resources with the current market environment;
- Adjusted effectively to and capitalized on the extended back-to-school season achieving a strong sequential increase in sales at Famous Footwear;
- Gained momentum in the Brand Portfolio with an approximately 45 percent sequential increase in sales – led by positive consumer reaction to our casual, sport and athletic-inspired assortment across the portfolio; and
- Used free cash to further strengthen the balance sheet and reduce overall indebtedness, which is now approaching pre-COVID-19 levels.”
Photo courtesy Famous Footwear