30 Nov Caleres Sees Q3 Profit Gain Excluding Charge
Caleres, the parent of Famous Footwear as well as several footwear brands, reported that excluding a debt charge, net earnings were $35.2 million, or 80 cents per share, in its third quarter, up 6.2 percent versus third quarter 2014.
Third quarter 2015 net earnings were $34.0 million, or $0.78 per diluted share, and included $1.2 million of after-tax expense related to the company’s debt extinguishment in the second quarter.
Net sales of $728.6 million versus third quarter 2014 net sales of $729.3 million. Excluding sales from Shoes.com, which was sold in December of 2014, sales were up 1.8 percent.
“With solid inventory planning and careful expense management, we delivered good performance in the third quarter, despite a challenging retail environment,” said Diane Sullivan, CEO, president and chairman of Caleres. “Famous Footwear delivered same-store-sales growth of 4.4 percent, capping another successful back-to-school season, as athletic footwear continued to resonate with consumers.”
Third Quarter and Year-to-Date Highlights
Famous Footwear third quarter 2015 sales of $456.2 million were up 4.8 percent year-over-year, excluding Shoes.com, which was sold in December of 2014. For the quarter, same-store-sales were up 4.4 percent, with strong performance in athletic product, continued solid improvement in e-commerce sales, and good growth in women’s footwear. During the quarter, 13 new stores were opened and 13 stores were closed.
For the first nine months of 2015, Famous Footwear sales were up 2.4 percent, excluding Shoes.com, while same-store-sales were up 2.6 percent. Year-to-date, the company has opened 38 new stores, including one in Canada, and closed 32 stores.
Brand Portfolio sales of $272.5 million were down 2.8 percent and reflect the unseasonably warm weather in the third quarter, which led to slower tall-shaft boot sales. The company’s Contemporary Fashion sales were down 2.5 percent, while Healthy Living sales declined 2.8 percent.
Brand Portfolio sales were up 2.7 percent for the first nine months of 2015. Contemporary Fashion sales were up 4.5 percent, with good growth from Sam Edelman and Vince. Healthy Living sales were up 1.4 percent, year-to-date, with contribution from Naturalizer wholesale, Dr. Scholl’s and LifeStride.
Consolidated gross profit of $288.4 million was down 0.8 percent in the third quarter, while gross margin of 39.6 percent was down approximately 30 basis points year-over-year. SG&A for the third quarter was $236.2 million, representing 32.4 percent of net sales – down approximately 20 basis points versus the prior year. For the quarter, operating margins declined by approximately 10 basis points year-over-year to 7.2 percent.
Year-to-date, consolidated gross profit of $799.8 million was up 0.9 percent, with gross margin of 40.6 percent up 10 basis points. SG&A of $681.5 million represented 34.6 percent of sales – down 10 basis points for the first nine months of the year. For the same timeframe, operating margin of 6.0 percent was up 20 basis points.
Inventory at the end of the third quarter was $544.3 million, down 4.1 percent from $567.8 million in the prior year. Famous Footwear inventory was down 5.6 percent, while Brand Portfolio inventory was down 0.6 percent. At quarter-end, Caleres had $86.3 million of cash and equivalents and no borrowings against its revolving credit facility.
Financial Review and 2015 Outlook
“Our performance at both Famous Footwear and our Brand Portfolio is a reflection of the work we’ve done to manage inventory and expenses – while investing to grow our businesses – during a challenging third quarter,” said Ken Hannah, chief financial officer of Caleres. “While we expect the retail environment will be promotional during the fourth quarter, we remain focused on delivering consistent, profitable and sustainable growth.”