Caleres Q1: EPS Beat, Expense Reduction, Near-Term Pressure At Famous Footwear & More

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  • Caleres Inc CAL reported a Q1 2023 sales decline of 9.8% Y/Y to $662.7 million, missing the consensus of $699.9 million.
  • Net sales in the Famous Footwear segment declined 9.2% Y/Y, and the Brand Portfolio segment fell 11.0% Y/Y.
  • The gross profit declined to $302.7 million from $327.0 million, with margins expanding to 45.7% from 44.5%.
  • The operating margin was 7.5%, and operating income for the quarter was $49.6 million versus $66.2 million last year.
  • Caleres held $36.2 million in cash and equivalents as of April 30, 2023. Operating cash flow for the quarter totaled $37.5 million.
  • Inventory declined 13.1% Y/Y, reflecting planned inventory management and lower in-transit inventory.
  • EPS of $0.97 beat the analyst consensus of $0.93.
  • Caleres has taken several steps to reduce expenses across its business, expected to result in $20 million in-year savings. The company expects near-term pressure to persist at Famous Footwear.
  • Dividend: CAL paid a quarterly dividend of $2.5 million. The board of directors recently approved its next quarterly dividend, to be paid on June 28, 2023, to shareholders of record as of June 9, 2023.
  • Outlook: For 2023, the company reiterated the adjusted EPS outlook at $4.10-$4.30 versus the consensus of $4.17
  • The company revised the outlook for net sales growth to be down 3%-5% (vs. flat to up 2% expected earlier) and operating margin of 7.3%-7.5% (vs. previous guidance of 7.1%-7.3%).
  • For Q2 2023, CAL projects a net sales decrease of 4%-5% and adjusted EPS of $0.87-$0.92 (vs. the consensus of $1.18).
  • "As we progress through 2023, we are focused on tightly managing our expenses, investing in value-enhancing opportunities, and maximizing our capabilities to position the organization for growth. We believe we have the right foundation and strategic initiatives in place to consistently deliver annual earnings per share of more than $4.00 as we generate strong levels of free cash flow and create value for our shareholders," stated Jay Schmidt, president and CEO.
  • Price Action: CAL shares are trading higher by 2.95% at $17.77 on the last check Thursday.
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