25 Aug Caleres Sees Second-Quarter Sales Climb 9.3 Percent
Caleres saw sales expand 9.3 percent in the second quarter that ended July 30 as a 35.6 percent increase in its Brand Portfolio segment offset a 3.8 percent decline at Famous Footwear. Caleres reiterated its guidance for the year.
The Brand Portfolio segment includes Diane von Furstenberg (DVF), Rykä, Allen Edmonds, Dr. Scholl’s, LifeStride, Naturalizer, Bzees, Franco Sarto, Sam Edelman, Via Spiga, Vince, George Brown Bilt, Carlos by Carlos Santana, and Fergie Footwear.
The company achieved net earnings of $51.2 million and generated a 45.6 percent consolidated gross profit margin. Caleres also strategically distributed cash to augment inventory levels ahead of the fall buying and back-to-school seasons, prioritized investment in value-enhancing growth opportunities and repurchased $27.0 million, or 1.1 million shares, of Caleres common stock.
“During the second quarter, Caleres delivered another exceptional financial and operational performance with record second-quarter sales and earnings and strong gross profit margins marking yet another period of outstanding results,” said Diane Sullivan, chairman and CEO. “In particular, Caleres utilized its growing and dynamic portfolio to capitalize on robust consumer demand in trending footwear categories, to support strong consolidated margin levels and to drive another excellent quarter of return on sales. In short, we demonstrated again that our versatile structure provides a significant and differentiating strength that, over the long term, enables Caleres to drive exceptional results in strong market environments while still generating attractive levels of profitability in difficult macro environments.”
Second Quarter 2022 Highlights
(13 weeks ended July 30, 2022, compared to 13 weeks ended July 31, 2021)
- Net sales were $738.3 million, up 9.3 percent from the second quarter of fiscal 2021;
- A 3.8 percent sales decline in the Famous Footwear segment;
- A 35.6 percent sales increase in the Brand Portfolio segment; and
- Direct-to-consumer sales represented approximately 72 percent of total net sales.
- Gross profit was $336.8 million, while gross margin was 45.6 percent.
- A 48.9 percent gross margin in the Famous Footwear segment; and
- A 38.3 percent gross margin in the Brand Portfolio segment.
- SG&A, as percentage of sales, was 36.4 percent, 206 basis points lower than the second quarter of fiscal 2021;
- Net earnings of $51.2 million, or earnings of $1.38 per diluted share, compared to net earnings of $37.4 million, or earnings of $0.97 per diluted share in the second quarter of fiscal 2021;
- Trailing twelve-month adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $324.2 million, or 11.0 percent of sales;
- Inventory levels were up approximately 36 percent, year-over-year, reflecting efforts to increase inventory levels ahead of the fall buying and back-to-school seasons. Inventory was down 2.7 percent when compared to the second quarter of 2019, a more comparable period;
- Generated $7.6 million in cash from operations; and
- Returned $29.6 million to shareholders through dividends and share repurchases.
Capital Return Progress
During the second quarter, Caleres opportunistically repurchased 1.1 million shares of common stock, representing approximately 3 percent of shares outstanding, at a total cost of $27.0 million. At quarter-end, approximately 7.2 million shares remained available in the current share repurchase authorization. The company views its substantial and ongoing buyback program as a highly effective mechanism for enhancing shareholder value.
In addition to buybacks, Caleres returned $2.6 million to shareholders through its recurring quarterly cash dividend during the second quarter.
Future dividend declarations and share repurchases will be based on several factors, including business and market conditions, the company’s future financial performance and other capital priorities.
“With $2.70 of diluted earnings per share delivered in the first half, 2022 is shaping up to be another outstanding year for Caleres,” said Sullivan. “Even with ongoing inflationary pressures and uncertainties around the direction of consumer spending, Caleres is exceptionally well-positioned to maintain its significant momentum due to its diversified portfolio that can capitalize on opportunities across a broad spectrum of consumer segments and throughout a wide range of market environments. Furthermore, the Caleres team is committed to utilizing our core competencies in brand building, merchandising, marketing and logistics, to further our strategic priorities while mobilizing quickly to unlock enterprise-wide growth opportunities. With the work, we’ve done to structurally strengthen the long-term cash-generating potential of the enterprise, we are enthusiastic about the long-term prospects for profitability and remain sharply focused on creating value for our shareholders through our capital return program.”
Fiscal Year 2022 Outlook
Caleres is reiterating its fiscal year 2022 financial outlook. Specifically, the company is raising and tightening its consolidated sales levels from up between 2 percent and 5 percent to up between 4 percent to 6 percent when compared to fiscal year 2021 and still expects earnings per diluted share to be between $4.20 and $4.40, which would represent another year of record or near-record earnings for the organization.