News Details

ST. LOUIS--(BUSINESS WIRE)--Caleres (NYSE: CAL)(caleres.com), a diverse portfolio of global footwear brands which fit people’s lives, today reported second quarter 2016 financial results.

Consolidated Results

Second Quarter

• Net sales of $622.9 million, down 2.3% due to a challenging retail environment
• Gross margin up 47 basis points to 41.7%, driven by both Famous Footwear and Brand Portfolio
• SG&A spend flat year-over-year, reflecting continued operational investments offset by reductions in expense
• Diluted EPS of $0.46, including continued investments for long-term growth
• Tax rate of 32.3% versus 26.5% in the prior year
• Cash and equivalents of $165.7 million, up $36.4 million year-over-year
• Inventory up approximately 1%, ahead of the key back-to-school selling season

First Half

• Net sales of $1,207.7 million, down 2.6% due in part to planned reductions in Healthy Living sales
• Gross margin up 78 basis points to 42.0%, partially benefitting from the exit of some lower margin categories
• SG&A spend up approximately $1 million year-over-year, including operational investments
• Diluted EPS of $0.86
• Cash from operations of $108.6 million

“Our second quarter results show the benefit of good execution during a challenging environment, as we improved gross margin, maintained SG&A spend, and continued to invest for long-term growth” said Diane Sullivan, CEO, president and chairman of Caleres. “At 41.7%, gross margin was up nearly 50 basis points, with both Famous Footwear and Brand Portfolio contributing to this improvement.”

Second Quarter Segment Results

Famous Footwear

• Same-store-sales down 1.1%, with positive conversion in-store and on-line unable to offset the decline in retail traffic
• Gross margin up 14 basis points to 45.5%, with improvement for seasonal styles in a less promotional environment
• Inventory up 3.4% on an average store basis, with increases in key back-to-school styles
• Opened 11 new stores

Brand Portfolio

• Sales down 3.8%, with strength at Contemporary Fashion unable to offset weakness at Healthy Living
• Gross margin up 85 basis points to 35.3%, benefitting from improved channel mix
• Inventory down approximately 4%, with continued focus on inventory management

First Half Segment Results

Famous Footwear

• Same-store-sales down 0.1%
• Gross margin down 14 basis points to 45.9%, reflecting higher shipping costs related to increased sales at famous.com
• Opened 21 new stores

Brand Portfolio

• Sales down 6.5%, with strength in Contemporary Fashion unable to offset expected declines in Healthy Living
• Gross margin up ~180 basis points to 35.6%, partially benefitting from the exit of some lower margin categories

“While realistic about the retail environment for the second half of the year, we are maintaining our fiscal 2016 EPS guidance,” said Ken Hannah, chief financial officer of Caleres. “As we did in the second quarter, we will continue to expand our gross margin and to manage the areas within our control – such as our inventory and our SG&A – to deliver bottom-line results.”

Shareholder Distributions

During the second quarter, Caleres repurchased 450,000 shares of CAL common stock for a total of ~$11 million. On August 24, 2016, the company declared a quarterly dividend of $0.07 per share, payable October 3, 2016, to shareholders of record as of September 19, 2016. This dividend will be the 374^th consecutive quarterly dividend paid by the company.

Investor Conference Call

Caleres will host an investor conference call at 4:45 p.m. ET today, Tuesday, August 30, 2016. The webcast and slides will be available at investor.caleres.com/news/events. A live conference call will be available at (877) 217-9089 for analysts in North America or (706) 679-1723 for international analysts by using the conference ID 64114190. A replay will be available at investor.caleres.com/news/events/archive for a limited period. Investors may also access the replay by dialing (855) 859-2056 in North America or (404) 537-3406 internationally and using the conference ID 64114190 through Tuesday, September 13, 2016.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to Caleres, Inc. and diluted earnings per common share attributable to Caleres, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.

Non-GAAP Financial Measures

In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic and estimated future gross profit, operating earnings, net earnings and earnings per diluted share adjusted to exclude certain gains, charges and recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions; (ii) rapidly changing fashion trends and purchasing patterns; (iii) intense competition within the footwear industry; (iv) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the Company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (v) the ability to accurately forecast sales and manage inventory levels; (vi) cybersecurity threats or other major disruption to the Company’s information technology systems; (vii) customer concentration and increased consolidation in the retail industry; (viii) a disruption in the Company’s distribution centers; (ix) the ability to recruit and retain senior management and other key associates; (x) foreign currency fluctuations; (xi) compliance with applicable laws and standards with respect to labor, trade and product safety issues; (xii) the ability to secure/exit leases on favorable terms; (xiii) the ability to maintain relationships with current suppliers; (xiv) the ability to attract, retain, and maintain good relationships with licensors and protect intellectual property rights; and (xv) changes to federal overtime regulations could increase the Company’s payroll costs. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended January 30, 2016, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

About Caleres

Caleres is a diverse portfolio of global footwear brands, which fit people’s lives: Family, Healthy Living and Contemporary Fashion. Our products are available virtually everywhere - in the over 1,200 retail stores we operate, in hundreds of major department and specialty stores, on our branded ecommerce sites, and on many additional third-party retail websites. Famous Footwear and Famous.com serve as our Family brands. Our Contemporary Fashion brands include Sam Edelman, Franco Sarto, Vince, Via Spiga, Diane von Furstenberg, Fergie Footwear and Carlos Santana. Naturalizer, Dr. Scholl's, LifeStride, Bzees and Ryka represent our Healthy Living brands. Combined, these brands help make Caleres a company with both a legacy and a mission. Our legacy is our more than 130 years of craftsmanship, our passion for fit and our business savvy, while our mission is to continue to inspire people to feel good feet first. Visit caleres.com to learn more about us.