Famous Footwear Delivers Record Earnings And Sales

Famous Footwear Delivers Record Earnings And Sales

Caleres reported earnings and sales that exceeded Wall Street estimates as Famous Footwear achieved record quarterly earnings and delivered record first-quarter sales levels. The company’s brand Portflio segment also showed improvement with strong performances from Vionic, Sam Edelman, Blowfish Malibu, and Ryka brands.

Caleres said it continued its strong recovery in the quarter just ended, recording sequential top-line and earnings growth, stronger gross margins and an improved working capital and expense position. For the fourth straight period, the company used its free cash flow to strengthen its balance sheet and reduce further its overall debt, paying down an additional $50 million during the quarter. In total, the company has reduced its total debt levels by approximately $240 million since March of 2020.

“Caleres had a strong start to the year, maintaining its solid upward momentum in the first quarter of 2021 driven in large part by an outstanding performance in our Famous Footwear business where we achieved record quarterly earnings and delivered record first-quarter sales levels,” said Diane Sullivan, chairman and CEO. “Notably, Famous Footwear’s quarterly sales increased 13 percent over the first quarter of 2019 benefitting from strong demand for the category, increased consumer confidence and improving in-store traffic trends. Famous continues to leverage its enhanced omnichannel capabilities and capitalize on its direct-to-consumer model as evidenced by a 13.2 percent increase in new rewards members, compared to first quarter 2019, and still-strong eCommerce sales levels.

“We remain positive about our outlook and expect continued strength at Famous Footwear to be combined with improving performance in our Brand Portfolio as we progress through the year. We are particularly enthusiastic about the recent strong performances from our Vionic, Sam Edelman, Blowfish Malibu, and Ryka brands and are increasingly optimistic about our ability to drive margin growth and return to 2019 earnings levels for the segment in the year’s second half.

“Looking ahead, we plan to lean into the robust momentum at Famous Footwear and our enhanced direct-to-consumer capabilities, ensure alignment of supply and demand and, as always, maintain our balanced approach to capital allocation. In short, we are excited about our strategy for continued value creation and believe we are exceptionally well-positioned to capitalize on the accelerated recovery in the marketplace and to chase and capture market share opportunities as they develop throughout the year.”

First Quarter 2021 Highlights
(13-weeks ended May 1, 2021, compared to 13-weeks ended May 2, 2020)

  • Net sales were $638.6 million, up 60.8 percent from the first quarter of fiscal 2020;
  • Direct-to-consumer sales represented 74.5 percent of total net sales;
  • A 108.2 percent sales increase in its Famous Footwear segment;
  • A 15.2 percent sales increase in its Brand Portfolio segment;
  • Total company-owned eCommerce website sales increased 21.4 percent, with eCommerce penetration of 25.6 percent of net sales;
  • Gross profit was $274.9 million, while gross margin was 43.0 percent;
  • SG&A expense of $243.5 million, up $18.3 million compared to the first quarter of 2020;
  • Net income of $6.1 million, or earnings of $0.16 per diluted share, compared to a net loss of $345.8 million, or a loss of $8.95 per diluted share, in the first quarter of fiscal 2020. Earnings of $0.16 per share include $0.44 for the below items:
    • Brand Portfolio expense of $0.31 related to the Naturalizer brand retail exits; and
    • Fair value adjustment of $0.13 associated with the mandatory purchase obligation for Blowfish Malibu;
  • Adjusted net income was $22.8 million, or adjusted earnings of 60 cents per diluted share, compared to an adjusted net loss of $50.4 million, or adjusted loss of $1.30 per diluted share, in the first quarter of fiscal 2020;
  • Generated $70.4 million in cash from operations and ended the first quarter with $98.2 million of cash-on-hand;
  • Reduced inventory levels approximately 24 percent year-over-year reflecting the final liquidation of Naturalizer store inventory and global/industry-wide supply chain disruptions;
  • Reduced credit facility borrowings by $50 million from the fourth quarter of 2020 to end the first quarter at $200 million; and
  • Returned $2.7 million to shareholders during the quarter through its quarterly dividend.

Caleres’ EPS of 60 cents came in well ahead of Wall Street’s consensus estimate of 3 cents. Revenue for the quarter at $638.6 million topped the consensus estimate of $573.1 million.

Quarterly Cash Dividend
The company’s Board of Directors declared a regular quarterly cash dividend of $0.07 per share to be paid on June 30, 2021 to shareholders of record as of June 11, 2021. This dividend will be the 393rd consecutive quarterly dividend paid by the company.

Fiscal Second Quarter 2021 Outlook
For the second quarter of 2021, Caleres expects sales levels to be between $625 million and $650 million, effectively flat to the first quarter of 2021, and adjusted earnings per share of between $0.50 and $0.55, which excludes $0.06 related to the fair value adjustment to Blowfish purchase obligation.