Company maintaining FY’17 adjusted EPS
guidance
Caleres (NYSE: CAL) (caleres.com), a diverse portfolio of global
footwear brands which fit people’s lives, today reported third
quarter 2017 financial results.
“Our strong start to the third quarter in August was interrupted
by hurricanes in September and an unseasonably warm start to fall
in October. Even though the quarter became progressively more
challenging, we delivered improvement in gross margin and generated
strong cash flow, while paying down our revolver borrowings,” said
Diane Sullivan, CEO, president and chairman of Caleres. “While
weather-related events had a negative impact to topline sales of
approximately $35 million, sales have improved in November, as more
seasonal weather arrived. As a result, we are maintaining our
fiscal 2017 adjusted EPS guidance.”
Third Quarter 2017 Results Versus 2016
- Consolidated sales of $774.7 million
were up 5.8%, including Allen Edmonds.
- Famous Footwear total sales of $473.1
million were up 1.1%, while back-to-school same-store-sales were up
2.6% and third quarter same-store-sales were up 0.9%.
- Brand Portfolio sales of $301.5 million
were up 14.0% including contribution from Allen Edmonds, which was
acquired in December of 2016.
- In total, third quarter sales were
negatively impacted by approximately $35 million, due to the
hurricanes in Texas and Florida and the delayed start to the fall
boot season.
- Gross profit was $316.9 million, while
gross margin of 40.9% was up 79 basis points.
- SG&A expense of $264.0 million was
up 10.8%, including Allen Edmonds.
- Operating earnings were $52.9 million,
while operating margin was 6.8%.
- Net earnings were $34.4 million, while
diluted earnings per share were $0.80.
First Nine Months of 2017 Results Versus 2016
- Consolidated sales of $2,083.1 million
were up 7.4%, including Allen Edmonds.
- Gross profit of $875.3 million –
including $4.9 million of expected fair value inventory adjustment
amortization related to the Allen Edmonds acquisition – was up
9.3%, while gross margin of 42.0% was up 72 basis points.
- SG&A expense of $761.6 million was
up 11.2%, including Allen Edmonds.
- Operating earnings were $109.7 million
and operating margin was 5.3%, while adjusted operating earnings
were $118.6 million and adjusted operating margin was 5.7%.
- Net earnings were $66.9 million, while
diluted earnings per share were $1.55 and included $0.13 of charges
related to the acquisition, integration and reorganization of men’s
brands.
- Adjusted net earnings of $72.5 million
were up $0.2 million, while adjusted diluted earnings per share of
$1.68 were up 0.6%.
Balance Sheet and Cash Flow
- Cash and equivalents were $31.4
million.
- Outstanding borrowings under the
revolving credit facility of $20 million – associated with the
December 2016 acquisition of Allen Edmonds – were down from $110
million at the end of 2016.
- Inventory of $598.4 million was up
14.0% year-over-year, including Allen Edmonds.
- Year-to-date capital expenditures of
$38.9 million were down 20.1% year-over-year.
Outlook for 2017 all including
Allen Edmonds
Consolidated net sales $2.7B to
$2.8B Famous Footwear same-store-sales Up low-single digits Brand
Portfolio sales Up high-teens Gross margin Up 70 to 80 bps SG&A
as a percent of revenue Up 70 to 80 bps Effective tax rate 30% to
32% Adjusted earnings per diluted share*
$2.10 to $2.20
* Excludes $0.13 of costs related
to the acquisition, integration and reorganization of the company’s
men's brands
Investor Conference Call
Caleres will host an investor conference call at 4:30 p.m. ET
today, Tuesday, November 21. 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 8686459. 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 8686459 through Tuesday, December 5.
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) transitional
challenges with acquisitions; (viii) customer concentration and
increased consolidation in the retail industry; (ix) a disruption
in the Company’s distribution centers; (x) the ability to recruit
and retain senior management and other key associates; (xi) foreign
currency fluctuations; (xii) compliance with applicable laws and
standards with respect to labor, trade and product safety
issues; (xiii) the ability to secure/exit leases on favorable
terms; (xiv) the ability to maintain relationships with current
suppliers; (xv) the ability to attract, retain and maintain good
relationships with licensors and protect intellectual property
rights; and (xvi) changes to tax laws, policies and treaties. 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, 2017, 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. 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 e-commerce 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, Allen Edmonds,
Franco Sarto, Vince, Via Spiga, George Brown Bilt, Diane von
Furstenberg, Fergie Footwear and Carlos Santana. Naturalizer, Dr.
Scholl's Shoes, 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.
SCHEDULE 1 CALERES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) Thirteen Weeks Ended Thirty-nine Weeks Ended
(Thousands, except per share data) October 28, 2017 October 29,
2016 October 28, 2017 October 29, 2016 Net sales $ 774,656 $
732,230 $ 2,083,119 $ 1,939,900 Cost of goods sold 457,771
438,459 1,207,865 1,138,781 Gross profit
316,885 293,771 875,254 801,119
Selling and administrative expenses 264,015 238,319 761,590 684,666
Restructuring and other special charges, net — —
3,973 — Operating earnings 52,870
55,452 109,691 116,453 Interest expense (4,141
) (3,475 ) (13,822 ) (10,564 ) Interest income 95 350
592 907 Earnings before income taxes 48,824
52,327 96,461 106,796 Income tax
provision (14,451 ) (17,601 ) (29,530 ) (34,514 ) Net earnings
34,373 34,726 66,931 72,282 Net (loss)
earnings attributable to noncontrolling interests (14 ) (4 ) 47
2 Net earnings attributable to Caleres, Inc. $ 34,387
$ 34,730 $ 66,884 $ 72,280 Basic
earnings per common share attributable to Caleres, Inc.
shareholders $ 0.80 $ 0.81 $ 1.56 $ 1.67
Diluted earnings per common share attributable to
Caleres, Inc. shareholders $ 0.80 $ 0.81 $ 1.55
$ 1.67
SCHEDULE 2
CALERES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) October 28, 2017 October 29, 2016
January 28, 2017 (Thousands)
ASSETS Cash and cash
equivalents $ 31,379 $ 173,435 $ 55,332 Receivables, net 132,942
139,475 153,121 Inventories, net 598,365 524,823 585,764 Prepaid
expenses and other current assets 40,982 31,716
49,528 Total current assets 803,668 869,449 843,745
Property and equipment, net 214,982 191,754 219,196 Goodwill
and intangible assets, net 340,182 128,141 343,758 Other assets
68,316 114,851 68,574 Total assets $ 1,427,148
$ 1,304,195 $ 1,475,273
LIABILITIES AND EQUITY
Borrowings under revolving credit agreement $ 20,000 $ — $ 110,000
Trade accounts payable 223,832 212,088 266,370 Other accrued
expenses 173,487 141,886 151,225 Total current
liabilities 417,319 353,974 527,595 Long-term
debt 197,348 196,888 197,003 Deferred rent 50,814 48,696 51,124
Other liabilities 86,580 57,574 85,065 Total other
liabilities 334,742 303,158 333,192 Total
Caleres, Inc. shareholders’ equity 673,645 646,110 613,117
Noncontrolling interests 1,442 953 1,369 Total equity
675,087 647,063 614,486 Total liabilities and equity
$ 1,427,148 $ 1,304,195 $ 1,475,273
SCHEDULE 3 CALERES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Thirty-nine
Weeks Ended (Thousands) October 28, 2017 October 29, 2016 OPERATING
ACTIVITIES: Net cash provided by operating activities
$ 122,261 $ 137,003 INVESTING ACTIVITIES:
Purchases of property and equipment (34,364 ) (43,019 ) Capitalized
software (4,531 ) (5,672 ) Net cash used for investing activities
(38,895 ) (48,691 ) FINANCING ACTIVITIES: Borrowings under
revolving credit agreement 450,000 103,000 Repayments under
revolving credit agreement (540,000 ) (103,000 ) Dividends paid
(9,033 ) (9,094 ) Acquisition of treasury stock (5,993 ) (23,139 )
Issuance of common stock under share-based plans, net (2,477 )
(4,205 ) Excess tax benefit related to share-based plans —
3,264 Net cash used for financing activities (107,503 )
(33,174 ) Effect of exchange rate changes on cash and cash
equivalents 184 146 (Decrease) increase in cash and
cash equivalents (23,953 ) 55,284 Cash and cash equivalents at
beginning of period 55,332 118,151 Cash and cash
equivalents at end of period $ 31,379 $ 173,435
SCHEDULE 4
CALERES, INC. RECONCILIATION OF NET EARNINGS AND
DILUTED EARNINGS PER SHARE (GAAP BASIS) TO ADJUSTED NET EARNINGS
AND ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP BASIS)
(Unaudited) Thirteen Weeks Ended October 29, 2017 October 28, 2016
(Thousands, except per share data)
Pre-TaxImpact ofCharges/Other Items
NetEarningsAttributable toCaleres,
Inc.
DilutedEarningsPer Share
Pre-TaxImpact ofCharges/Other Items
NetEarningsAttributable toCaleres,
Inc.
DilutedEarningsPer Share
GAAP earnings $ 34,387 $ 0.80 $ 34,730 $ 0.81
Charges/other
items:
Acquisition, integration and reorganization of men's brands $ —
— — $ — —
— Total charges/other items $ — $ —
$ — $ — $ — $ — Adjusted
earnings $ 34,387 $ 0.80 $ 34,730
$ 0.81 (Unaudited) Thirty-nine Weeks Ended October
29, 2017 October 28, 2016 (Thousands, except per share data)
Pre-TaxImpact ofCharges/Other Items
NetEarningsAttributable toCaleres,
Inc.
DilutedEarningsPer Share
Pre-TaxImpact ofCharges/Other Items
NetEarningsAttributable toCaleres,
Inc.
DilutedEarningsPer Share
GAAP earnings $ 66,884 $ 1.55 $ 72,280 $ 1.67
Charges/other
items:
Acquisition, integration and reorganization of men's brands $ 8,912
$ 5,569 0.13 — —
— Total charges/other items $ 8,912 $
5,569 $ 0.13 $ — $ —
$ — Adjusted earnings $ 72,453 $ 1.68 $
72,280 $ 1.67
SCHEDULE 5
CALERES,
INC. SUMMARY FINANCIAL RESULTS BY SEGMENT
SUMMARY FINANCIAL RESULTS
(Unaudited) Thirteen Weeks Ended Famous Footwear
Brand Portfolio Other Consolidated (Thousands)
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
Net sales $ 473,118 $ 467,816 $ 301,538 $ 264,414 $ — $ — $ 774,656
$ 732,230 Gross profit $ 198,073 $ 194,659 $ 118,812 $ 99,112 $ — $
— $ 316,885 $ 293,771 Adjusted gross profit $ 198,073 $ 194,659 $
118,812 $ 99,112 $ — $ — $ 316,885 $ 293,771 Gross profit rate 41.9
% 41.6 % 39.4 % 37.5 % — % — % 40.9 % 40.1 % Adjusted gross profit
rate 41.9 % 41.6 % 39.4 % 37.5 % — % — % 40.9 % 40.1 % Operating
earnings (loss) $ 33,747 $ 32,709 $ 24,281 $ 30,454 $ (5,158 ) $
(7,711 ) $ 52,870 $ 55,452 Adjusted operating earnings (loss) $
33,747 $ 32,709 $ 24,281 $ 30,454 $ (5,158 ) $ (7,711 ) $ 52,870 $
55,452 Operating earnings % 7.1 % 7.0 % 8.1 % 11.5 % — % — % 6.8 %
7.6 % Adjusted operating earnings % 7.1 % 7.0 % 8.1 % 11.5 % — % —
% 6.8 % 7.6 % Same-store sales % (on a 13-week basis) (1) 0.9 % 2.1
% 2.4 % (5.4 )% — % — % — % — % Number of stores 1,042
1,051 235 167
— — 1,277 1,218
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
(Unaudited) Thirteen Weeks Ended Famous Footwear Brand
Portfolio Other Consolidated (Thousands)
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
Gross profit $ 198,073 $ 194,659 $ 118,812 $ 99,112 $ — $ — $
316,885 $ 293,771
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— — — —
— — — Total
charges/other items — — —
— — — — —
Adjusted gross profit $ 198,073 $ 194,659
$ 118,812 $ 99,112 $ —
$ — $ 316,885 $ 293,771
Operating earnings (loss) $ 33,747 $ 32,709 $ 24,281 $
30,454 $ (5,158 ) $ (7,711 ) $ 52,870 $ 55,452
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— — — —
— — — Total
charges/other items — — —
— — — — —
Adjusted operating earnings (loss) $ 33,747
$ 32,709 $ 24,281 $ 30,454
$ (5,158 ) $ (7,711 ) $ 52,870
$ 55,452
(1) Excludes sales from Allen Edmonds
SCHEDULE 5
CALERES, INC. SUMMARY FINANCIAL
RESULTS BY SEGMENT
SUMMARY FINANCIAL RESULTS (Unaudited)
Thirty-nine Weeks Ended Famous Footwear Brand Portfolio
Other Consolidated (Thousands)
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
Net sales $ 1,244,542 $ 1,222,535 $ 838,577 $ 717,365 $ — $ — $
2,083,119 $ 1,939,900 Gross profit $ 549,072 $ 540,774 $ 326,182 $
260,345 $ — $ — $ 875,254 $ 801,119 Adjusted gross profit $ 549,072
$ 540,774 $ 331,121 $ 260,345 $ — $ — $ 880,193 $ 801,119 Gross
profit rate 44.1 % 44.2 % 38.9 % 36.3 % — % — % 42.0 % 41.3 %
Adjusted gross profit rate 44.1 % 44.2 % 39.5 % 36.3 % — % — % 42.3
% 41.3 % Operating earnings (loss) $ 79,137 $ 81,067 $ 53,511 $
57,539 $ (22,957 ) $ (22,153 ) $ 109,691 $ 116,453 Adjusted
operating earnings (loss) $ 79,137 $ 81,067 $ 59,932 $ 57,539 $
(20,466 ) $ (22,153 ) $ 118,603 $ 116,453 Operating earnings % 6.4
% 6.6 % 6.4 % 8.0 % — % — % 5.3 % 6.0 % Adjusted operating earnings
% 6.4 % 6.6 % 7.1 % 8.0 % — % — % 5.7 % 6.0 % Same-store sales %
(on a 39-week basis) (1) 1.0 % 0.7 % 6.7 % (5.2 )% — % — % — % — %
Number of stores 1,042 1,051 235
167 — —
1,277 1,218
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP)
(Unaudited) Thirty-nine Weeks Ended Famous Footwear
Brand Portfolio Other Consolidated (Thousands)
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
October 28,2017
October 29,2016
Gross profit $ 549,072 $ 540,774 $ 326,182 $ 260,345 $ — $ — $
875,254 $ 801,119
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— 4,939 — —
— 4,939 — Total
charges/other items — — 4,939
— — — 4,939
— Adjusted gross profit $ 549,072 $
540,774 $ 331,121 $ 260,345
$ — $ — $ 880,193
$ 801,119 Operating earnings (loss) $ 79,137 $ 81,067 $
53,511 $ 57,539 $ (22,957 ) $ (22,153 ) $ 109,691 $ 116,453
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— 6,421 —
2,491 — 8,912 —
Total charges/other items — — 6,421
— 2,491 —
8,912 — Adjusted operating earnings (loss)
$ 79,137 $ 81,067 $ 59,932
$ 57,539 $ (20,466 ) $ (22,153 )
$ 118,603 $ 116,453
(1) Excludes sales from Allen Edmonds
SCHEDULE 6 CALERES,
INC. BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION
(Unaudited) Thirteen Weeks Ended
Thirty-nine Weeks Ended (Thousands, except per share data) October
28, 2017 October 29, 2016 October 28, 2017 October
29, 2016 Net earnings attributable to Caleres, Inc.: Net
earnings $ 34,373 $ 34,726 $ 66,931 $ 72,282 Net loss (earnings)
attributable to noncontrolling interests 14 4
(47 ) (2 ) Net earnings attributable to Caleres, Inc. 34,387
34,730 66,884 72,280 Net earnings allocated to participating
securities (949 ) (910 ) (1,841 ) (1,933 ) Net
earnings attributable to Caleres, Inc. after allocation of earnings
to participating securities $ 33,438 $ 33,820
$ 65,043 $ 70,347 Basic and diluted
common shares attributable to Caleres, Inc.: Basic common shares
41,788 41,802 41,801 42,093 Dilutive effect of share-based awards
182 137 173 144 Diluted
common shares attributable to Caleres, Inc. 41,970
41,939 41,974 42,237 Basic
earnings per common share attributable to Caleres, Inc.
shareholders $ 0.80 $ 0.81 $ 1.56
$ 1.67 Diluted earnings per common share
attributable to Caleres, Inc. shareholders $ 0.80 $
0.81 $ 1.55 $ 1.67
SCHEDULE 7 CALERES, INC.
BASIC AND DILUTED ADJUSTED EARNINGS PER SHARE RECONCILIATION
(Unaudited) Thirteen Weeks Ended Thirty-nine
Weeks Ended (Thousands, except per share data) October 28, 2017
October 29, 2016 October 28, 2017 October 29, 2016
Adjusted net earnings attributable to Caleres, Inc.:
Adjusted net earnings $ 34,373 $ 34,726 $ 72,500 $ 72,282 Net loss
(earnings) attributable to noncontrolling interests 14
4 (47 ) (2 ) Adjusted net earnings
attributable to Caleres, Inc. 34,387 34,730 72,453 72,280 Net
earnings allocated to participating securities (949 ) (910 )
(1,995 ) (1,933 ) Adjusted net earnings attributable to
Caleres, Inc. after allocation of earnings to participating
securities $ 33,438 $ 33,820 $ 70,458
$ 70,347 Basic and diluted common shares
attributable to Caleres, Inc.: Basic common shares 41,788 41,802
41,801 42,093 Dilutive effect of share-based awards 182
137 173 144 Diluted common
shares attributable to Caleres, Inc. 41,970 41,939
41,974 42,237 Basic adjusted
earnings per common share attributable to Caleres, Inc.
shareholders $ 0.80 $ 0.81 $ 1.69
$ 1.67 Diluted adjusted earnings per common
share attributable to Caleres, Inc. shareholders $ 0.80
$ 0.81 $ 1.68 $ 1.67
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171121006027/en/
CaleresPeggy Reilly Tharp, 314-854-4134ptharp@caleres.com
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