31 Aug Famous Footwear’s Q2 Comps Climb 2.8 Percent
Caleres, the parent of Famous Footwear, reported adjusted net earnings improved 4.4 percent. Famous Footwear same-store sales were up 2.8 percent while Brand Portfolio sales up 16.8 percent due to the acquisition of Allen Edmonds.
“In the second quarter, we delivered solid sales improvement across both sides of our business, with Famous Footwear same-store-sales up 2.8 percent and Brand Portfolio sales up 16.8 percent,” 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 million were up 8.7 percent, including Allen Edmonds.
- Famous Footwear total sales of $404.9 million were up 3.8 percent, while same-store sales were up 2.8 percent.
Brand Portfolio sales of $272 million were up 16.8 percent 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 percent and gross margin of 42.5 percent was up 80 basis points.
- SG&A expense of $253.5 million was up 11.5 percent, including Allen Edmonds.
- Operating earnings were $31.1 million and operating margin was 4.6 percent, while adjusted operating earnings were $35.9 million and adjusted operating margin of 5.3 percent was up 12 basis points.
- Net earnings were $17.6 million, while diluted earnings per share were 41 cents and included 7 cents 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 percent, while adjusted diluted earnings per share of 48 cents were up 4.3 percent.
Wall Street’s consensus estimate on an adjusted basis had been 45 cents on sales of $663.5 million.
First Half 2017 Results Versus 2016
- Consolidated sales of $1,308.5 million were up 8.3 percent, 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 percent and gross margin of 42.7 percent was up 66 basis points.
- SG&A expense of $497.6 million was up 11.5 percent, including Allen Edmonds.
- Operating earnings were $56.8 million and operating margin was 4.3 percent, while adjusted operating earnings were $65.7 million and adjusted operating margin was 5 percent.
- Net earnings were $32.5 million, while diluted earnings per share were 75 cents and included 13 cents 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 percent, while adjusted diluted earnings per share of 88 cents were up 2.3 percent.
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 million was up 11.3 percent year over year, including Allen Edmonds.
- Year-to-date cash from operations of $114.3 million was up 5.3 percent year over year.
- Year-to-date capital expenditures of $27.4 million were down 12.2 percent year over year.
Shareholder Distributions
Declared 378th consecutive quarterly dividend, with 7 cents 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 $2.7 billion to $2.8 billion
- 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 percent to 33 percent
- Adjusted earnings per diluted share $2.10 to $2.20, which excludes approx. 13 cents of costs related to the acquisition, integration and reorganization of the company’s men’s brands.
The company’s 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 its Healthy Living brands.