Sales up 8.7%, gross margin up 80 basis
points
Company reiterates fiscal 2017
guidance
Caleres (NYSE: CAL)(caleres.com), a diverse portfolio of global
footwear brands which fit people’s lives, today reported second
quarter 2017 financial results.
“In the second quarter, we delivered solid sales improvement
across both sides of our business, with Famous Footwear
same-store-sales up 2.8% and Brand Portfolio sales up 16.8%,” said
Diane Sullivan, CEO, president and chairman of Caleres. “At Famous
Footwear, sales were ahead of expectations, including a stronger
start to the key back-to-school selling season and – as a result –
we delivered second quarter earnings ahead of expectations.”
“Additionally, we saw consistent margin expansion, generated
steady cash flow, and continued to pay down our revolving credit
facility, following the Allen Edmonds acquisition,” continued
Sullivan. “We have confidence in the execution of our strategic
plan and are maintaining our guidance for fiscal 2017.”
Second Quarter 2017 Results Versus
2016
- Consolidated sales of $677.0 million
were up 8.7%, including Allen Edmonds.
- Famous Footwear total sales of $404.9
million were up 3.8%, while same-store-sales were up 2.8%.
- Brand Portfolio sales of $272.0 million
were up 16.8% including contribution from Allen Edmonds, which was
acquired in December of 2016.
- Gross profit of $287.5 million –
including $1.9 million of expected fair value inventory adjustment
amortization related to the Allen Edmonds acquisition – was up
10.8% and gross margin of 42.5% was up 80 basis points.
- SG&A expense of $253.5 million was
up 11.5%, including Allen Edmonds.
- Operating earnings were $31.1 million
and operating margin was 4.6%, while adjusted operating earnings
were $35.9 million and adjusted operating margin of 5.3% was up 12
basis points.
- Net earnings were $17.6 million, while
diluted earnings per share were $0.41 and included $0.07 of
expected charges related to the acquisition, integration and
reorganization of men’s brands.
- Adjusted net earnings of $20.6 million
were up 4.4%, while adjusted diluted earnings per share of $0.48
were up 4.3%.
First Half 2017 Results Versus
2016
- Consolidated sales of $1,308.5 million
were up 8.3%, including Allen Edmonds.
- Gross profit of $558.4 million –
including $4.9 million of expected fair value inventory adjustment
amortization related to the Allen Edmonds acquisition – was up
10.1% and gross margin of 42.7% was up 66 basis points.
- SG&A expense of $497.6 million was
up 11.5%, including Allen Edmonds.
- Operating earnings were $56.8 million
and operating margin was 4.3%, while adjusted operating earnings
were $65.7 million and adjusted operating margin was 5.0%.
- Net earnings were $32.5 million, while
diluted earnings per share were $0.75 and included $0.13 of
expected charges related to the acquisition, integration and
reorganization of men’s brands.
- Adjusted net earnings of $38.1 million
were up 1.4%, while adjusted diluted earnings per share of $0.88
were up 2.3%.
Balance Sheet and Cash
Flow
- Cash and equivalents were $52.9
million.
- Outstanding borrowings under the
revolving credit facility of $35 million – associated with the
December 2016 acquisition of Allen Edmonds – were down from $110
million at the end of 2016.
- Inventory of $722.0 million was up
11.3% year-over-year, including Allen Edmonds.
- Year-to-date cash from operations of
$114.3 million was up 5.3% year-over-year.
- Year-to-date capital expenditures of
$27.4 million were down 12.2% year-over-year.
Shareholder
Distributions
- Declared 378th consecutive quarterly
dividend, with $0.07 per share payable on October 2, 2017, to
shareholders of record as of September 18, 2017.
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 45 to 55
bps SG&A as a percent of revenue Up 30 to 40 bps Effective tax
rate 31% to 33% Adjusted earnings per diluted share
$2.10 to $2.20
* Excludes approx. $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, August 29. 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
69201252. 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 69201252 through Tuesday, September 12.
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 Twenty-six Weeks Ended (Thousands, except per
share data) July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016
Net sales $ 676,954 $ 622,937 $ 1,308,463 $ 1,207,670 Cost of goods
sold 389,493 363,382 750,094 700,322
Gross profit 287,461 259,555 558,369
507,348 Selling and administrative expenses 253,500 227,297
497,575 446,347 Restructuring and other special charges, net 2,865
— 3,973 — Operating earnings 31,096
32,258 56,821 61,001 Interest
expense (4,637 ) (3,479 ) (9,681 ) (7,089 ) Interest income 262
310 497 557 Earnings before income
taxes 26,721 29,089 47,637 54,469
Income tax provision (9,047 ) (9,410 ) (15,079 ) (16,912 )
Net earnings 17,674 19,679 32,558 37,557
Net earnings (loss) attributable to noncontrolling interests
79 (89 ) 61 6 Net earnings attributable to
Caleres, Inc. $ 17,595 $ 19,768 $ 32,497 $
37,551 Basic earnings per common share attributable
to Caleres, Inc. shareholders $ 0.41 $ 0.46 $ 0.76
$ 0.87 Diluted earnings per common share
attributable to Caleres, Inc. shareholders $ 0.41 $ 0.46
$ 0.75 $ 0.86
SCHEDULE 2
CALERES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) July 29, 2017 July 30, 2016
January 28, 2017 (Thousands)
ASSETS Cash and cash
equivalents $ 52,942 $ 165,729 $ 55,332 Receivables, net 143,616
144,309 153,121 Inventories, net 722,005 648,881 585,764 Prepaid
expenses and other current assets 36,972 30,190 49,528 Total
current assets 955,535 989,109 843,745 Property and
equipment, net 217,838 186,776 219,196 Goodwill and intangible
assets, net 341,195 129,060 343,758 Other assets 69,589 115,448
68,574 Total assets $ 1,584,157 $ 1,420,393 $ 1,475,273
LIABILITIES AND EQUITY Borrowings under revolving credit
agreement $ 35,000 $ — $ 110,000 Trade accounts payable 402,812
358,751 266,370 Other accrued expenses 170,499 142,085 151,225
Total current liabilities 608,311 500,836 527,595 Long-term
debt 197,233 196,774 197,003 Deferred rent 52,227 47,452 51,124
Other liabilities 85,212 60,566 85,065 Total other liabilities
334,672 304,792 333,192 Total Caleres, Inc. shareholders’
equity 639,729 613,787 613,117 Noncontrolling interests 1,445 978
1,369 Total equity 641,174 614,765 614,486 Total liabilities and
equity $ 1,584,157 $ 1,420,393 $ 1,475,273
SCHEDULE 3
CALERES, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) Twenty-six Weeks Ended (Thousands) July
29, 2017 July 30, 2016 OPERATING ACTIVITIES: Net cash
provided by operating activities $ 114,280 $ 108,564
INVESTING ACTIVITIES: Purchases of property and equipment
(24,251 ) (27,443 ) Capitalized software (3,152 ) (3,778 ) Net cash
used for investing activities (27,403 ) (31,221 ) FINANCING
ACTIVITIES: Borrowings under revolving credit agreement 400,000
103,000 Repayments under revolving credit agreement (475,000 )
(103,000 ) Dividends paid (6,030 ) (6,089 ) Acquisition of treasury
stock (5,993 ) (23,139 ) Issuance of common stock under share-based
plans, net (2,490 ) (4,086 ) Excess tax benefit related to
share-based plans — 3,248 Net cash used for financing
activities (89,513 ) (30,066 ) Effect of exchange rate changes on
cash and cash equivalents 246 301 (Decrease) increase
in cash and cash equivalents (2,390 ) 47,578 Cash and cash
equivalents at beginning of period 55,332 118,151
Cash and cash equivalents at end of period $ 52,942 $
165,729
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 July 29, 2017 July 30, 2016 (Thousands, except per share
data)
Pre-Tax
Impact of
Charges/
Other Items
Net Earnings
Attributable
to
Caleres, Inc.
Diluted
Earnings
Per Share
Pre-Tax
Impact of
Charges/
Other Items
Net Earnings
Attributable
to
Caleres, Inc.
Diluted
Earnings
Per Share
GAAP earnings $ 17,595 $ 0.41 $ 19,768 $ 0.46
Charges/other
items:
Acquisition, integration and reorganization of men's brands $ 4,775
3,041 0.07 $ — —
— Total charges/other items $ 4,775 $ 3,041
$ 0.07 $ — $ — $ —
Adjusted earnings $ 20,636 $ 0.48 $ 19,768
$ 0.46 (Unaudited) Twenty-six Weeks Ended July
29, 2017 July 30, 2016 (Thousands, except per share data)
Pre-Tax
Impact of
Charges/
Other Items
Net Earnings
Attributable
to
Caleres, Inc.
Diluted
Earnings
Per Share
Pre-Tax
Impact of
Charges/
Other Items
Net Earnings
Attributable
to
Caleres, Inc.
Diluted
Earnings
Per Share
GAAP earnings $ 32,497 $ 0.75 $ 37,551 $ 0.86
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 $ 38,066 $ 0.88 $ 37,551
$ 0.86
SCHEDULE
5
CALERES, INC. SUMMARY FINANCIAL RESULTS BY SEGMENT
SUMMARY FINANCIAL RESULTS
(Unaudited) Thirteen Weeks Ended Famous
Footwear Brand Portfolio Other
Consolidated (Thousands)
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
Net sales $ 404,930 $ 390,123 $ 272,024 $ 232,814 $ — $ — $ 676,954
$ 622,937 Gross profit $ 183,309 $ 177,437 $ 104,152 $ 82,118 $ — $
— $ 287,461 $ 259,555 Adjusted gross profit $ 183,309 $ 177,437 $
106,062 $ 82,118 $ — $ — $ 289,371 $ 259,555 Gross profit rate 45.3
% 45.5 % 38.3 % 35.3 % — % — % 42.5 % 41.7 % Adjusted gross profit
rate 45.3 % 45.5 % 39.0 % 35.3 % — % — % 42.7 % 41.7 % Operating
earnings (loss) $ 25,112 $ 22,604 $ 15,916 $ 17,463 $ (9,932 ) $
(7,809 ) $ 31,096 $ 32,258 Adjusted operating earnings (loss) $
25,112 $ 22,604 $ 18,462 $ 17,463 $ (7,703 ) $ (7,809 ) $ 35,871 $
32,258 Operating earnings % 6.2 % 5.8 % 5.9 % 7.5 % — % — % 4.6 %
5.2 % Adjusted operating earnings % 6.2 % 5.8 % 6.8 % 7.5 % — % — %
5.3 % 5.2 % Same-store sales % (on a 13-week basis) (1) 2.8 % (1.1
)% 15.8 % (8.2 )% — % — % — % — % Number of stores
1,055 1,044 238
167 —
— 1,293 1,211
RECONCILIATION OF ADJUSTED RESULTS
(NON-GAAP)
(Unaudited) Thirteen Weeks Ended Famous Footwear
Brand Portfolio Other Consolidated
(Thousands)
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
Gross profit $ 183,309 $ 177,437 $ 104,152 $ 82,118 $ — $ — $
287,461 $ 259,555
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— 1,910
— — —
1,910 — Total
charges/other items — —
1,910 — —
— 1,910 —
Adjusted gross profit $ 183,309 $ 177,437
$ 106,062 $ 82,118
$ — $ — $
289,371 $ 259,555 Operating earnings
(loss) $ 25,112 $ 22,604 $ 15,916 $ 17,463 $ (9,932 ) $ (7,809 ) $
31,096 $ 32,258
Charges/Other
Items:
Acquisition, integration and reorganization of men's brands —
— 2,546
— 2,229 —
4,775 — Total
charges/other items — —
2,546 — 2,229
— 4,775 —
Adjusted operating earnings (loss) $
25,112 $ 22,604 $ 18,462
$ 17,463 $ (7,703 )
$ (7,809 ) $ 35,871
$ 32,258
(1) Excludes sales from Allen Edmonds
SCHEDULE 5
CALERES,
INC. SUMMARY FINANCIAL RESULTS BY SEGMENT
SUMMARY FINANCIAL RESULTS
(Unaudited) Twenty-six Weeks Ended Famous Footwear
Brand Portfolio Other
Consolidated (Thousands)
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
Net sales $ 771,424 $ 754,719 $ 537,039 $ 452,951 $ — $ — $
1,308,463 $ 1,207,670 Gross profit $ 350,999 $ 346,115 $ 207,370 $
161,233 $ — $ — $ 558,369 $ 507,348 Adjusted gross profit $ 350,999
$ 346,115 $ 212,309 $ 161,233 $ — $ — $ 563,308 $ 507,348 Gross
profit rate 45.5 % 45.9 % 38.6 % 35.6 % — % — % 42.7 % 42.0 %
Adjusted gross profit rate 45.5 % 45.9 % 39.5 % 35.6 % — % — % 43.1
% 42.0 % Operating earnings (loss) $ 45,391 $ 48,358 $ 29,230 $
27,085 $ (17,800 ) $ (14,442 ) $ 56,821 $ 61,001 Adjusted operating
earnings (loss) $ 45,391 $ 48,358 $ 35,651 $ 27,085 $ (15,309 ) $
(14,442 ) $ 65,733 $ 61,001 Operating earnings % 5.9 % 6.4 % 5.4 %
6.0 % — % — % 4.3 % 5.1 % Adjusted operating earnings % 5.9 % 6.4 %
6.6 % 6.0 % — % — % 5.0 % 5.1 % Same-store sales % (on a 26-week
basis) (1) 1.1 % (0.1 )% 9.2 % (5.1 )% — % — % — % — % Number of
stores 1,055 1,044
238 167 —
— 1,293
1,211
RECONCILIATION OF ADJUSTED
RESULTS (NON-GAAP)
(Unaudited) Twenty-six Weeks Ended Famous Footwear
Brand Portfolio Other
Consolidated (Thousands)
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
July 29,
2017
July 30,
2016
Gross profit $ 350,999 $ 346,115 $ 207,370 $ 161,233 $ — $ — $
558,369 $ 507,348
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 $ 350,999 $ 346,115
$ 212,309 $ 161,233
$ — $ —
$ 563,308 $ 507,348 Operating
earnings (loss) $ 45,391 $ 48,358 $ 29,230 $ 27,085 $ (17,800 ) $
(14,442 ) $ 56,821 $ 61,001
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) $
45,391 $ 48,358 $ 35,651
$ 27,085 $ (15,309 )
$ (14,442 ) $ 65,733
$ 61,001
(1) Excludes sales from Allen Edmonds
SCHEDULE 6
CALERES,
INC. BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION
(Unaudited) Thirteen Weeks Ended Twenty-six Weeks Ended
(Thousands, except per share data) July 29, 2017 July
30, 2016 July 29, 2017 July 30, 2016 Net
earnings attributable to Caleres, Inc.: Net earnings $ 17,674 $
19,679 $ 32,558 $ 37,557 Net (earnings) loss attributable to
noncontrolling interests (79 ) 89 (61 )
(6 ) Net earnings attributable to Caleres, Inc. 17,595
19,768 32,497 37,551 Net earnings allocated to participating
securities (490 ) (523 ) (895 ) (1,014
) Net earnings attributable to Caleres, Inc. after allocation of
earnings to participating securities $ 17,105
$ 19,245 $ 31,602 $ 36,537
Basic and diluted common shares attributable to Caleres,
Inc.: Basic common shares 41,783 42,043 41,807 42,238 Dilutive
effect of share-based awards 171 142
172 151 Diluted common shares
attributable to Caleres, Inc. 41,954 42,185
41,979 42,389 Basic
earnings per common share attributable to Caleres, Inc.
shareholders $ 0.41 $ 0.46 $ 0.76
$ 0.87 Diluted earnings per
common share attributable to Caleres, Inc. shareholders $ 0.41
$ 0.46 $ 0.75 $
0.86
SCHEDULE
7
CALERES, INC. BASIC AND DILUTED ADJUSTED EARNINGS
PER SHARE RECONCILIATION (Unaudited) Thirteen Weeks
Ended Twenty-six Weeks Ended (Thousands, except per share data)
July 29, 2017 July 30, 2016 July 29, 2017
July 30, 2016 Adjusted net earnings attributable to
Caleres, Inc.: Adjusted net earnings $ 20,715 $ 19,679 $ 38,127 $
37,557 Net (earnings) loss attributable to noncontrolling interests
(79 ) 89 (61 ) (6 ) Adjusted net
earnings attributable to Caleres, Inc. 20,636 19,768 38,066 37,551
Net earnings allocated to participating securities (575 )
(523 ) (1,048 ) (1,014 ) Adjusted net earnings
attributable to Caleres, Inc. after allocation of earnings to
participating securities $ 20,061 $ 19,245
$ 37,018 $ 36,537 Basic
and diluted common shares attributable to Caleres, Inc.: Basic
common shares 41,783 42,043 41,807 42,238 Dilutive effect of
share-based awards 171 142 172
151 Diluted common shares attributable to
Caleres, Inc. 41,954 42,185 41,979
42,389 Basic adjusted earnings
per common share attributable to Caleres, Inc. shareholders $ 0.48
$ 0.46 $ 0.89 $
0.87 Diluted adjusted earnings per common share
attributable to Caleres, Inc. shareholders $ 0.48
$ 0.46 $ 0.88 $ 0.86
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170829006057/en/
CaleresInvestor and Media Contact:Peggy Reilly
Tharp, 314-854-4134ptharp@caleres.com
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