- Delivers $0.97 in earnings per share, the upper end of previous
guidance
- 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
from fiscal year-end 2022
- Announces strategic expense reduction initiatives
Caleres (NYSE: CAL), a diverse portfolio of consumer-driven
footwear brands, today reported financial results for the first
quarter of 2023, and reiterated its full year fiscal 2023 earnings
per share outlook.
“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, down 9.8 percent from the first
quarter of 2022;
- 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, while gross margin was 45.7
percent;
- 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, or earnings per diluted share of
$0.97, compared to net earnings of $50.5 million, or earnings per
diluted share of $1.32 in the first quarter of 2022;
- Earnings before interest, taxes, depreciation, and amortization
(EBITDA) of $63.7 million, or 9.6 percent of sales;
- 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 at the end of the quarter.
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 $16 million during the first quarter
of 2023. The company also invested $6.5 million in capital
expenditures and returned $2.5 million to shareholders through its
quarterly dividend. The Caleres board of directors recently
approved its next quarterly dividend, which will be paid on June
28, 2023, to shareholders of record as of June 9, 2023.
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 $20 million of in-year
savings. The company also anticipates better-than-expected freight
costs, which is expected to be an additional $10 million in
savings. These cost savings are versus prior guidance assumptions,
some of which were realized in the first quarter. Caleres
anticipates a one-time cash charge of approximately $4 million in
the second quarter of 2023 associated with these actions.
Additionally, the company anticipates gross margin strength in the
Brand Portfolio segment for the balance of the year.
For fiscal 2023, the company is expecting full year diluted
earnings per share of $4.02 to $4.22, inclusive of the $4 million
one-time charge associated with expense reduction actions in the
second quarter. The company is reiterating its full year diluted
adjusted earnings per share range of $4.10 to $4.30 and updating
its consolidated net sales range to be down 3 percent to down 5
percent. This topline adjustment reflects the company’s revised
sales expectations at Famous Footwear.
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 to $19 million, versus previous
guidance of $18 million to $20 million; and
- Capital expenditures of $55 million to $65 million, versus
previous guidance of $60 million to $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 to $0.84; and
- Adjusted diluted earnings per share of $0.87 to $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 $4.00 as we generate strong levels
of free cash flow and create value for our shareholders.”
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 North America
participants or (201) 389-0920 for international participants, no
passcode necessary. A replay will be also available at
investor.caleres.com/news/events/archive for a limited period.
Investors may also access the replay by dialing (844) 512-2921 in
North America or (412) 317-6671 internationally and using the
conference pin 13738707.
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 China and other
countries, where the company relies heavily on third-party
manufacturing facilities for a significant amount of its inventory;
(ix) cybersecurity threats or other major disruption to the
company’s information technology systems; (x) the ability to
accurately forecast sales and manage inventory levels; (xi) a
disruption in the company’s distribution centers; (xii) the ability
to recruit and retain senior management and other key associates;
(xiii) the ability to secure/exit leases on favorable terms; (xiv)
the ability to maintain relationships with current suppliers; (xv)
transitional challenges with acquisitions and divestitures; (xvi)
changes to tax laws, policies and treaties; (xvii) our commitments
and shareholder expectations related to environmental, social and
governance considerations; (xviii) compliance with applicable laws
and standards with respect to labor, trade and product safety
issues; and (xix) the ability to attract, retain, and maintain good
relationships with licensors and protect our intellectual property
rights. 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 28, 2023, 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.
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
Caleres (NYSE:CAL)
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