Famous Footwear’s Q3 Revenues Inch Up 0.9 Percent

Famous Footwear’s Q3 Revenues Inch Up 0.9 Percent

Caleres Inc. reported consolidated sales of $774.7 million in the third quarter were up 5.8 percent, including Allen Edmonds. Famous Footwear total sales of $473.1 million were up 1.1 percent, while back-to-school same-store-sales were up 2.6 percent and third quarter same-store-sales were up 0.9 percent.

Brand Portfolio sales of $301.5 million were up 14 percent 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 percent was up 79 basis points.SG&A expense of $264 million was up 10.8 percent, including Allen Edmonds.

Operating earnings were $52.9 million, while operating margin was 6.8 percent. Operating income was slightly down from $55.5 million a year ago.

Net earnings were $34.4 million, while diluted earnings per share were 80 cent a share, about even with $34.7 million, or 81 cents, a year ago.

“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.”

First Nine Months of 2017 Results Versus 2016

  • Consolidated sales of $2,083.1 million were up 7.4 percent, 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 percent, while gross margin of 42 percent was up 72 basis points.
  • SG&A expense of $761.6 million was up 11.2 percent, including Allen Edmonds.
  • Operating earnings were $109.7 million and operating margin was 5.3 percent, while adjusted operating earnings were $118.6 million and adjusted operating margin was 5.7 percent.
  • Net earnings were $66.9 million, while diluted earnings per share were $1.55 and included 13 cents 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 percent.

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 percent year-over-year, including Allen Edmonds.
  • Year-to-date capital expenditures of $38.9 million were down 20.1 percent 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-teensGross margin Up 70 to 80 bps
  • SG&A as a percent of revenue Up 70 to 80 bps
  • Effective tax rate 30 percent to 32 percent
  • Adjusted earnings per diluted share* $2.10 to $2.20

* Excludes 13 cents of costs related to the acquisition, integration and reorganization of the company’s men’s brands