Caleres Reports First Quarter 2023 Results
-
Delivers
$0.97 - Generates record quarterly operating earnings and operating margin in the Brand Portfolio segment
- Reiterates full year fiscal 2023 adjusted earnings per share guidance
-
Reduces revolving credit facility borrowings by
$16 million - Announces strategic expense reduction initiatives
“The Caleres team delivered a solid financial performance at the upper end of our earnings per share guidance driven by record quarterly profit from the Brand Portfolio and despite a challenging operating environment at Famous Footwear,” said Jay Schmidt, president and chief executive officer. “These first quarter results underscore the value of our diversified structure, the strength of our omnichannel capabilities and the power of our portfolio.”
First Quarter 2023 Results
(13-weeks ended April 29, 2023, compared to 13-weeks ended April 30, 2022)
-
Net sales were
$662.7 million - Famous Footwear segment sales declined 9.2 percent, with comparable sales down 8.5 percent, due to soft consumer demand in shoe chains.
- Brand Portfolio segment sales decreased 11.0 percent, in-line with expectations and primarily due to the timing of wholesale shipments in the Brand Portfolio in first quarter of 2022 to satisfy customer restocking efforts.
- Direct-to-consumer sales represented approximately 68 percent of total net sales.
-
Gross profit was
$302.7 million - Famous Footwear segment gross margin of 45.6 percent
- Brand Portfolio segment gross margin of 44.2 percent
- SG&A as a percentage of net sales was 38.2 percent;
-
Net earnings of
$34.7 million $0.97 $50.5 million $1.32 -
Earnings before interest, taxes, depreciation, and amortization (EBITDA) of
$63.7 million - Inventory was down 13.1 percent compared to first quarter of 2022, reflecting the company’s disciplined approach to inventory management and lower in-transit inventory; and
-
Borrowings under the asset-based revolving credit facility were
$291.5 million
Capital Allocation Update
In line with its capital allocation priorities, Caleres continued to reduce the borrowings under its asset-based revolving credit facility, paying down
Fiscal 2023 Outlook:
“Looking ahead, we are encouraged by the increased financial contribution from the Brand Portfolio and the strong momentum in our lead brands – Sam Edelman, Vionic, Naturalizer and Allen Edmonds,” said Schmidt. “While we expect near-term pressure to persist at Famous Footwear, we are highly confident in our ability to remain the leader in footwear for the family, which we believe plays an essential role in the footwear sector overall.”
As a result of the more challenging operating environment, Caleres has taken several steps to reduce expenses across its business. These actions include eliminating open corporate positions, reducing non-merchandise procurement costs, realizing additional Brand Portfolio synergies, and lowering depreciation expense, and are expected to result in
For fiscal 2023, the company is expecting full year diluted earnings per share of
In addition, Caleres now expects:
- Consolidated operating margin of 7.3 percent to 7.5 percent, versus previous guidance of 7.1 percent to 7.3 percent;
-
Interest expense of
$17 million $19 million $18 million $20 million -
Capital expenditures of
$55 million $65 million $60 million $70 million
The company still expects an effective tax rate of about 25 percent and weighted average shares outstanding of 34.3 million.
For second quarter of 2023 the company expects:
- Consolidated net sales down 4 percent to 5 percent;
-
Diluted earnings per share of
$0.79 $0.84 -
Adjusted diluted earnings per share of
$0.87 $0.92
“As we progress through 2023, we are focused on tightly managing our expenses, investing in value-enhancing opportunities, and maximizing our capabilities to position the organization for growth,” said Schmidt. “We believe we have the right foundation and strategic initiatives in place to consistently deliver annual earnings per share of more than
Investor Conference Call
Caleres will host a conference call at 10:00 a.m. ET today, Thursday, June 1. The webcast and associated slides will be available at investor.caleres.com/news/events. A live conference call will be available at (877) 704-4453 for
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 earnings before interest, taxes, depreciation and amortization, and estimated future 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) inflationary pressures; (ii) supply chain disruptions (iii) changing consumer demands, which may be influenced by general economic conditions and other factors; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from
SCHEDULE 1 |
|
CALERES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
|
|
|
|
|
|
|
||
|
|
(Unaudited) |
||||||
|
|
Thirteen Weeks Ended |
||||||
($ thousands, except per share data) |
|
April 29, 2023 |
|
April 30, 2022 |
||||
Net sales |
|
$ |
662,734 |
|
|
$ |
735,116 |
|
Cost of goods sold |
|
|
360,052 |
|
|
|
408,122 |
|
Gross profit |
|
|
302,682 |
|
|
|
326,994 |
|
Selling and administrative expenses |
|
|
253,095 |
|
|
|
260,799 |
|
Operating earnings |
|
|
49,587 |
|
|
|
66,195 |
|
Interest expense, net |
|
|
(5,623 |
) |
|
|
(2,299 |
) |
Other income, net |
|
|
1,492 |
|
|
|
3,422 |
|
Earnings before income taxes |
|
|
45,456 |
|
|
|
67,318 |
|
Income tax provision |
|
|
(10,664 |
) |
|
|
(17,333 |
) |
Net earnings |
|
|
34,792 |
|
|
|
49,985 |
|
Net earnings (loss) attributable to noncontrolling interests |
|
|
65 |
|
|
|
(524 |
) |
Net earnings attributable to Caleres, Inc. |
|
$ |
34,727 |
|
|
$ |
50,509 |
|
|
|
|
|
|
|
|
||
Basic earnings per common share attributable to Caleres, Inc. shareholders |
|
$ |
0.97 |
|
|
$ |
1.34 |
|
|
|
|
|
|
|
|
||
Diluted earnings per common share attributable to Caleres, Inc. shareholders |
|
$ |
0.97 |
|
|
$ |
1.32 |
|
SCHEDULE 2 |
|
CALERES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
(Unaudited) |
||||
($ thousands) |
|
April 29, 2023 |
|
April 30, 2022 |
||
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
36,151 |
|
$ |
33,717 |
Receivables, net |
|
|
148,068 |
|
|
181,551 |
Inventories, net |
|
|
559,467 |
|
|
643,527 |
Property and equipment, held for sale |
|
|
16,777 |
|
|
16,777 |
Prepaid expenses and other current assets |
|
|
60,417 |
|
|
58,069 |
Total current assets |
|
|
820,880 |
|
|
933,641 |
|
|
|
|
|
|
|
Lease right-of-use assets |
|
|
513,817 |
|
|
503,393 |
Property and equipment, net |
|
|
157,730 |
|
|
137,600 |
Goodwill and intangible assets, net |
|
|
212,353 |
|
|
224,475 |
Other assets |
|
|
113,303 |
|
|
129,189 |
Total assets |
|
$ |
1,818,083 |
|
$ |
1,928,298 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Borrowings under revolving credit agreement |
|
$ |
291,500 |
|
$ |
305,000 |
Trade accounts payable |
|
|
261,753 |
|
|
386,821 |
Lease obligations |
|
|
136,297 |
|
|
118,692 |
Other accrued expenses |
|
|
189,727 |
|
|
259,374 |
Total current liabilities |
|
|
879,277 |
|
|
1,069,887 |
|
|
|
|
|
|
|
Noncurrent lease obligations |
|
|
437,171 |
|
|
452,742 |
Other liabilities |
|
|
49,754 |
|
|
47,641 |
Total other liabilities |
|
|
486,925 |
|
|
500,383 |
|
|
|
|
|
|
|
Total Caleres, Inc. shareholders’ equity |
|
|
446,317 |
|
|
352,236 |
Noncontrolling interests |
|
|
5,564 |
|
|
5,792 |
Total equity |
|
|
451,881 |
|
|
358,028 |
Total liabilities and equity |
|
$ |
1,818,083 |
|
$ |
1,928,298 |
SCHEDULE 3 |
|
CALERES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
|
|
||
|
|
(Unaudited) |
||||||
|
|
Thirteen Weeks Ended |
||||||
($ thousands) |
|
April 29, 2023 |
|
April 30, 2022 |
||||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
$ |
37,497 |
|
|
$ |
19,686 |
|
|
|
|
|
|
|
|
||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(5,750 |
) |
|
|
(9,305 |
) |
Capitalized software |
|
|
(798 |
) |
|
|
(2,345 |
) |
Net cash used for investing activities |
|
|
(6,548 |
) |
|
|
(11,650 |
) |
|
|
|
|
|
|
|
||
FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Borrowings under revolving credit agreement |
|
|
126,000 |
|
|
|
205,000 |
|
Repayments under revolving credit agreement |
|
|
(142,000 |
) |
|
|
(190,000 |
) |
Dividends paid |
|
|
(2,482 |
) |
|
|
(2,648 |
) |
Acquisition of treasury stock |
|
|
— |
|
|
|
(14,673 |
) |
Issuance of common stock under share-based plans, net |
|
|
(10,006 |
) |
|
|
(3,599 |
) |
Contributions by noncontrolling interests |
|
|
— |
|
|
|
1,500 |
|
Net cash used for financing activities |
|
|
(28,488 |
) |
|
|
(4,420 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(10 |
) |
|
|
(14 |
) |
Increase in cash and cash equivalents |
|
|
2,451 |
|
|
|
3,602 |
|
Cash and cash equivalents at beginning of period |
|
|
33,700 |
|
|
|
30,115 |
|
Cash and cash equivalents at end of period |
|
$ |
36,151 |
|
|
$ |
33,717 |
|
SCHEDULE 4 |
||||||||
|
|
|
|
|
|
|
|
|
CALERES, INC. |
||||||||
SUMMARY FINANCIAL RESULTS BY SEGMENT |
||||||||
|
|
|
|
|
|
|
|
|
SUMMARY FINANCIAL RESULTS |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
(Unaudited) |
|||||||||||||||||||||||
|
|
Thirteen Weeks Ended |
|||||||||||||||||||||||
|
|
Famous Footwear |
Brand Portfolio |
Eliminations and Other |
Consolidated |
||||||||||||||||||||
|
|
April 29, |
April 30, |
April 29, |
April 30, |
April 29, |
April 30, |
April 29, |
April 30, |
||||||||||||||||
($ thousands) |
|
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
||||||||||||||||
Net sales |
|
$ |
349,158 |
|
$ |
384,502 |
|
$ |
325,516 |
|
$ |
365,740 |
|
$ |
(11,940 |
) |
$ |
(15,126 |
) |
$ |
662,734 |
|
$ |
735,116 |
|
Gross profit |
|
|
159,133 |
|
|
189,234 |
|
|
143,858 |
|
|
139,299 |
|
|
(309 |
) |
|
(1,539 |
) |
|
302,682 |
|
|
326,994 |
|
Gross margin |
|
|
45.6 |
% |
|
49.2 |
% |
|
44.2 |
% |
|
38.1 |
% |
|
2.6 |
% |
|
10.2 |
% |
|
45.7 |
% |
|
44.5 |
% |
Operating earnings (loss) |
|
|
17,056 |
|
|
49,688 |
|
|
42,669 |
|
|
41,349 |
|
|
(10,138 |
) |
|
(24,842 |
) |
|
49,587 |
|
|
66,195 |
|
Operating margin |
|
|
4.9 |
% |
|
12.9 |
% |
|
13.1 |
% |
|
11.3 |
% |
|
n/m |
% |
|
n/m |
% |
|
7.5 |
% |
|
9.0 |
% |
Comparable sales % (on a 13-week basis) |
|
|
(8.5 |
)% |
|
(4.0 |
)% |
|
9.4 |
% |
|
66.0 |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Number of stores |
|
|
866 |
|
|
887 |
|
|
93 |
|
|
83 |
|
|
— |
|
|
— |
|
|
959 |
|
|
970 |
|
n/m – Not meaningful |
|||||||||||||||||||||||||
SCHEDULE 5 |
|
CALERES, INC. |
BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION |
|
|
|
|
|
|
|
||
|
|
(Unaudited) |
||||||
|
|
Thirteen Weeks Ended |
||||||
|
|
April 29, |
|
April 30, |
||||
|
|
2023 |
|
2022 |
||||
($ thousands, except per share data) |
|
|
|
|
|
|
||
Net earnings attributable to Caleres, Inc.: |
|
|
|
|
|
|
||
Net earnings |
|
$ |
34,792 |
|
|
$ |
49,985 |
|
Net (earnings) loss attributable to noncontrolling interests |
|
|
(65 |
) |
|
|
524 |
|
Net earnings attributable to Caleres, Inc. |
|
|
34,727 |
|
|
|
50,509 |
|
Net earnings allocated to participating securities |
|
|
(1,478 |
) |
|
|
(2,017 |
) |
Net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities |
|
$ |
33,249 |
|
|
$ |
48,492 |
|
|
|
|
|
|
|
|
||
Basic and diluted common shares attributable to Caleres, Inc.: |
|
|
|
|
|
|
||
Basic common shares |
|
|
34,407 |
|
|
|
36,209 |
|
Dilutive effect of share-based awards |
|
|
— |
|
|
|
467 |
|
Diluted common shares attributable to Caleres, Inc. |
|
|
34,407 |
|
|
|
36,676 |
|
|
|
|
|
|
|
|
||
Basic earnings per common share attributable to Caleres, Inc. shareholders |
|
$ |
0.97 |
|
|
$ |
1.34 |
|
|
|
|
|
|
|
|
||
Diluted earnings per common share attributable to Caleres, Inc. shareholders |
|
$ |
0.97 |
|
|
$ |
1.32 |
|
SCHEDULE 6 |
|
CALERES, INC. |
CALCULATION OF EBITDA (NON-GAAP METRIC) |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
||||||
|
|
Thirteen Weeks Ended |
||||||
($ thousands) |
|
April 29, 2023 |
|
April 30, 2022 |
||||
EBITDA: |
|
|
|
|
|
|
|
|
Net earnings attributable to Caleres, Inc. |
|
$ |
34,727 |
|
|
$ |
50,509 |
|
Income tax provision |
|
|
10,664 |
|
|
|
17,333 |
|
Interest expense, net |
|
|
5,623 |
|
|
|
2,299 |
|
Depreciation and amortization (1) |
|
|
12,714 |
|
|
|
12,357 |
|
EBITDA |
|
$ |
63,728 |
|
|
$ |
82,498 |
|
|
|
|
|
|
|
|
|
|
EBITDA margin |
|
|
9.6 |
% |
|
|
11.2 |
% |
| __________________________ | |
(1) |
Includes depreciation and amortization of capitalized software and intangible assets. |
SCHEDULE 7 |
|
CALERES, INC. |
RECONCILIATION OF DILUTED EARNINGS PER SHARE (GAAP BASIS) TO ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP BASIS) – SECOND QUARTER AND FISCAL 2023 GUIDANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
||||||||||
|
|
Second Quarter 2023 Guidance |
|
Fiscal 2023 Guidance |
||||||||
|
|
Low |
|
High |
|
Low |
|
High |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings per share |
|
$ |
0.79 |
|
$ |
0.84 |
|
$ |
4.02 |
|
$ |
4.22 |
Charges/other items: |
|
|
|
|
|
|
|
|
|
|
|
|
Expense reduction initiatives |
|
|
0.08 |
|
|
0.08 |
|
|
0.08 |
|
|
0.08 |
Adjusted diluted earnings per share |
|
$ |
0.87 |
|
$ |
0.92 |
|
$ |
4.10 |
|
$ |
4.30 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230601005391/en/
Investor Contact:
Logan Bonacorsi
lbonacorsi@caleres.com
Source: Caleres
