Continued improvement in gross margin and net earnings, with reported earnings per share up 14.3% and adjusted earnings per share up 7.5%
Caleres CAL caleres.com))), a diverse portfolio of global footwear brands which fit people's lives, today reported first quarter 2018 financial results.
"In the first quarter, we once again delivered improvement in gross margin, net earnings and earnings per share. Not surprisingly, the late start to spring delayed sales but – as expected – spring arrived and trends improved appreciably, with this momentum continuing into the second quarter," said Diane Sullivan, CEO, president and chairman of Caleres. "In the first quarter, Brand Portfolio sales were up 1.4%, and both Brand Portfolio and Famous Footwear experienced continued growth in ecommerce-related sales. We remain on track for 2018 and are maintaining our guidance for the year."
First Quarter 2018 Results Versus 2017
-
Consolidated sales of $632.1 million
- Famous Footwear total sales of $363.4 million were down 0.8%, as were same-store-sales, and we operated 39 fewer doors year-over-year.
- Brand Portfolio sales of $268.7 million were up 1.4%.
- Gross profit was $274.9 million, while gross margin of 43.5% was up 59 basis points.
- SG&A expense of $250.2 million was up 1.5%.
- Operating earnings were $22.9 million and operating margin was 3.6%, while adjusted operating earnings were $24.7 million and adjusted operating margin was 3.9%, reflecting the new accounting standard related to the presentation of retirement benefits.
- Net earnings were $17.2 million, while diluted earnings per share were $0.40 and included a $0.03 charge for the previously announced transition of Allen Edmonds' consumer-facing activities to St. Louis.
- Adjusted net earnings of $18.5 million were up 6.3%, while adjusted diluted net earnings per share of $0.43 were up 7.5%.
Balance Sheet and Cash Flow
- Cash and equivalents were $96.5 million and up $24.7 million year-over-year.
- There were no outstanding borrowings under the revolving credit facility.
- Inventory of $579.9 million was up 2.6% year-over-year.
- Capital expenditures of $9.4 million were down 24.3% year-over-year.
Shareholder Distributions
During the first quarter, Caleres repurchased 100,000 shares of CAL common stock for a total of $3.3 million. The company also declared a quarterly dividend of $0.07 per share, payable July 2, 2018, to shareholders of record as of June 18, 2018. This dividend will be the 381st consecutive quarterly dividend paid by the company.
2018 Outlook Maintained |
|||||
Consolidated net sales | ~$2.8B | ||||
Famous Footwear same-store-sales | Up low-single digits | ||||
Brand Portfolio sales | Up low-single digits | ||||
Gross margin | Up ~5 to 10 bps | ||||
SG&A as a percent of revenue | Down ~5 to 10 bps | ||||
Interest expense | ~$16M | ||||
Effective tax rate | 25% to 26% | ||||
Adjusted earnings per diluted share | $2.40 to $2.50 | ||||
Pension Presentation
First quarter results reflect the new
accounting standard related to the presentation of retirement benefits,
which impacted reported and adjusted 2017 operating income and margin.
The effect of this new standard resulted in a shift of $2.4 million of
retirement plan income from first quarter 2017 SG&A expense to other
income, net. There was no impact to first quarter 2017 net earnings or
earnings per share, due to the adoption of this standard.
Investor Conference Call
Caleres will host an investor
conference call at 4:30 p.m. ET today, Thursday, May 31. The webcast and
slides will be available at investor.caleres.com/news/events. A live
conference call will be available at (877) 217-9089 for analysts in
North America or (706) 679-1723 for international analysts by using the
conference ID 5283379. A replay will be available at
investor.caleres.com/news/events/archive for a limited period. Investors
may also access the replay by dialing (855) 859-2056 in North America or
(404) 537-3406 internationally and using the conference ID 5283379
through Thursday, June 7.
Definitions
All references in this press release, outside of
the condensed consolidated financial statements that follow, unless
otherwise noted, related to net earnings attributable to Caleres, Inc.
and diluted earnings per common share attributable to Caleres, Inc.
shareholders, are presented as net earnings and earnings per diluted
share, respectively.
Non-GAAP Financial Measures
In this press release, the
company's financial results are provided both in accordance with
generally accepted accounting principles (GAAP) and using certain
non-GAAP financial measures. In particular, the company provides
historic and estimated future gross profit, operating earnings, net
earnings and earnings per diluted share adjusted to exclude certain
gains, charges and recoveries, which are non-GAAP financial measures.
These results are included as a complement to results provided in
accordance with GAAP because management believes these non-GAAP
financial measures help identify underlying trends in the company's
business and provide useful information to both management and investors
by excluding certain items that may not be indicative of the company's
core operating results. These measures should not be considered a
substitute for or superior to GAAP results.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995
This press release contains certain forward-looking
statements and expectations regarding the company's future performance
and the performance of its brands. Such statements are subject to
various risks and uncertainties that could cause actual results to
differ materially. These risks include (i) changing consumer demands,
which may be influenced by consumers' disposable income, which in turn
can be influenced by general economic conditions and other factors; (ii)
rapidly changing fashion trends and consumer preferences and purchasing
patterns; (iii) intense competition within the footwear industry; (iv)
political and economic conditions or other threats to the continued and
uninterrupted flow of inventory from China and other countries, where
the Company relies heavily on third-party manufacturing facilities for a
significant amount of its inventory; (v) foreign currency fluctuations;
(vi) the ability to accurately forecast sales and manage inventory
levels; (vii) cybersecurity threats or other major disruption to the
Company's information technology systems; (viii) customer concentration
and increased consolidation in the retail industry; (ix) transitional
challenges with acquisitions; (x) a disruption in the Company's
distribution centers; (xi) changes to tax laws, policies and treaties;
(xii) the ability to recruit and retain senior management and other key
associates; (xiii) compliance with applicable laws and standards with
respect to labor, trade and product safety issues; (xiv) the ability to
secure/exit leases on favorable terms; (xv) the ability to maintain
relationships with current suppliers; and (xvi) the ability to attract,
retain, and maintain good relationships with licensors and protect our
intellectual property rights. The company's reports to the Securities
and Exchange Commission contain detailed information relating to such
factors, including, without limitation, the information under the
caption Risk Factors in Item 1A of the company's Annual Report on Form
10-K for the year ended February 3, 2018, which information is
incorporated by reference herein and updated by the company's Quarterly
Reports on Form 10-Q. The company does not undertake any obligation or
plan to update these forward-looking statements, even though its
situation may change.
About Caleres
Caleres is a diverse portfolio of global
footwear brands. Our products are available virtually everywhere - in
the over 1,200 retail stores we operate, in hundreds of major department
and specialty stores, on our branded e-commerce sites, and on many
additional third-party retail websites. Famous Footwear, Famous.com and
Famous.ca serve as our Family brands. Our Contemporary Fashion brands
include Sam Edelman, Allen Edmonds, Franco Sarto, Vince, Via Spiga,
George Brown Bilt, Diane von Furstenberg, Fergie Footwear and Carlos
Santana. Naturalizer, Dr. Scholl's Shoes, LifeStride, Bzees and Ryka
represent our Healthy Living brands. Combined, these brands help make
Caleres a company with both a legacy and a mission. Our legacy is our
more than 130-years of craftsmanship, our passion for fit and our
business savvy, while our mission is to continue to inspire people to
feel good…feet first. Visit caleres.com to
learn more about us.
SCHEDULE 1 | ||||||||||||
CALERES, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||
(Unaudited) | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
(Thousands, except per share data) | May 5, 2018 | April 29, 2017 | ||||||||||
Net sales | $ | 632,142 | $ | 631,509 | ||||||||
Cost of goods sold | 357,221 | 360,601 | ||||||||||
Gross profit | 274,921 | 270,908 | ||||||||||
Selling and administrative expenses | 250,197 | 246,511 | ||||||||||
Restructuring and other special charges, net | 1,778 | 1,108 | ||||||||||
Operating earnings | 22,946 | 23,289 | ||||||||||
Interest expense, net | (3,683 | ) | (4,809 | ) | ||||||||
Other income, net | 3,091 | 2,436 | ||||||||||
Earnings before income taxes | 22,354 | 20,916 | ||||||||||
Income tax provision | (5,174 | ) | (6,032 | ) | ||||||||
Net earnings | 17,180 | 14,884 | ||||||||||
Net loss attributable to noncontrolling interests | (32 | ) | (18 | ) | ||||||||
Net earnings attributable to Caleres, Inc. | $ | 17,212 | $ | 14,902 | ||||||||
Basic earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.40 | $ | 0.35 | ||||||||
Diluted earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.40 | $ | 0.35 |
SCHEDULE 2 | ||||||||||||||
CALERES, INC. | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
(Unaudited) | ||||||||||||||
May 5, 2018 | April 29, 2017 | February 3, 2018 | ||||||||||||
(Thousands) | ||||||||||||||
ASSETS | ||||||||||||||
Cash and cash equivalents | $ | 96,481 | $ | 71,816 | $ | 64,047 | ||||||||
Receivables, net | 125,559 | 107,021 | 152,613 | |||||||||||
Inventories, net | 579,902 | 565,051 | 569,379 | |||||||||||
Prepaid expenses and other current assets | 62,385 | 38,318 | 60,750 | |||||||||||
Total current assets | 864,327 | 782,206 | 846,789 | |||||||||||
Property and equipment, net | 208,898 | 217,854 | 212,799 | |||||||||||
Goodwill and intangible assets, net | 339,900 | 342,208 | 339,168 | |||||||||||
Other assets | 88,941 | 67,289 | 90,659 | |||||||||||
Total assets | $ | 1,502,066 | $ | 1,409,557 | $ | 1,489,415 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Borrowings under revolving credit agreement | $ | — | $ | 85,000 | $ | — | ||||||||
Trade accounts payable | 268,917 | 225,032 | 272,962 | |||||||||||
Other accrued expenses | 168,746 | 146,315 | 157,197 | |||||||||||
Total current liabilities | 437,663 | 456,347 | 430,159 | |||||||||||
Long-term debt | 197,587 | 197,118 | 197,472 | |||||||||||
Deferred rent | 53,027 | 50,881 | 53,071 | |||||||||||
Other liabilities | 99,651 | 83,478 | 89,751 | |||||||||||
Total other liabilities | 350,265 | 331,477 | 340,294 | |||||||||||
Total Caleres, Inc. shareholders' equity | 712,705 | 620,387 | 717,489 | |||||||||||
Noncontrolling interests | 1,433 | 1,346 | 1,473 | |||||||||||
Total equity | 714,138 | 621,733 | 718,962 | |||||||||||
Total liabilities and equity | $ | 1,502,066 | $ | 1,409,557 | $ | 1,489,415 |
SCHEDULE 3 | ||||||||||||
CALERES, INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Unaudited) | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
(Thousands) | May 5, 2018 | April 29, 2017 | ||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net cash provided by operating activities | $ | 51,347 | $ | 65,384 | ||||||||
INVESTING ACTIVITIES: | ||||||||||||
Purchases of property and equipment | (7,929 | ) | (10,978 | ) | ||||||||
Capitalized software | (1,434 | ) | (1,390 | ) | ||||||||
Net cash used for investing activities | (9,363 | ) | (12,368 | ) | ||||||||
FINANCING ACTIVITIES: | ||||||||||||
Borrowings under revolving credit agreement | — | 195,000 | ||||||||||
Repayments under revolving credit agreement | — | (220,000 | ) | |||||||||
Dividends paid | (3,023 | ) | (3,025 | ) | ||||||||
Acquisition of treasury stock | (3,288 | ) | (5,993 | ) | ||||||||
Issuance of common stock under share-based plans, net | (3,122 | ) | (2,422 | ) | ||||||||
Net cash used for financing activities | (9,433 | ) | (36,440 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (117 | ) | (92 | ) | ||||||||
Increase in cash and cash equivalents | 32,434 | 16,484 | ||||||||||
Cash and cash equivalents at beginning of period | 64,047 | 55,332 | ||||||||||
Cash and cash equivalents at end of period | $ | 96,481 | $ | 71,816 |
SCHEDULE 4 | |||||||||||||||||||||||||
CALERES, INC. | |||||||||||||||||||||||||
RECONCILIATION OF NET EARNINGS AND DILUTED EARNINGS PER SHARE (GAAP BASIS) TO ADJUSTED NET EARNINGS AND ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP BASIS) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Thirteen Weeks Ended | |||||||||||||||||||||||||
May 5, 2018 | April 29, 2017 | ||||||||||||||||||||||||
(Thousands, except per share data) |
Pre-Tax Impact of Charges/
Other Items |
Net Earnings Attributable to Caleres, Inc. | Diluted Earnings Per Share |
Pre-Tax Impact of Charges/
Other Items |
Net Earnings Attributable to Caleres, Inc. | Diluted Earnings Per Share | |||||||||||||||||||
GAAP earnings | $ | 17,212 | $ | 0.40 | $ | 14,902 | $ | 0.35 | |||||||||||||||||
Charges/other items: | |||||||||||||||||||||||||
Acquisition, integration and reorganization of men's brands | 1,778 | 1,315 | 0.03 | 4,137 | 2,528 | 0.05 | |||||||||||||||||||
Total charges/other items | $ | 1,778 | $ | 1,315 | $ | 0.03 | $ | 4,137 | $ | 2,528 | $ | 0.05 | |||||||||||||
Adjusted earnings | $ | 18,527 | $ | 0.43 | $ | 17,430 | $ | 0.40 |
SCHEDULE 5 | ||||||||||||||||||||||||||||||||||
CALERES, INC. | ||||||||||||||||||||||||||||||||||
SUMMARY FINANCIAL RESULTS BY SEGMENT | ||||||||||||||||||||||||||||||||||
SUMMARY FINANCIAL RESULTS | ||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | ||||||||||||||||||||||||||||||||||
Famous Footwear | Brand Portfolio | Other | Consolidated | |||||||||||||||||||||||||||||||
(Thousands) |
May 5,
2018 |
April 29, 2017 |
May 5,
2018 |
April 29, 2017 |
May 5,
2018 |
April 29, 2017 |
May 5,
2018 |
April 29, 2017 | ||||||||||||||||||||||||||
Net sales | $ | 363,411 | $ | 366,494 | $ | 268,731 | $ | 265,015 | $ | — | $ | — | $ | 632,142 | $ | 631,509 | ||||||||||||||||||
Gross profit | $ | 165,201 | $ | 167,690 | $ | 109,720 | $ | 103,218 | $ | — | $ | — | $ | 274,921 | $ | 270,908 | ||||||||||||||||||
Adjusted gross profit | $ | 165,201 | $ | 167,690 | $ | 109,720 | $ | 106,247 | $ | — | $ | — | $ | 274,921 | $ | 273,937 | ||||||||||||||||||
Gross profit rate | 45.5% | 45.8% | 40.8% | 38.9% | —% | —% | 43.5% | 42.9% | ||||||||||||||||||||||||||
Adjusted gross profit rate | 45.5% | 45.8% | 40.8% | 40.1% | —% | —% | 43.5% | 43.4% | ||||||||||||||||||||||||||
Operating earnings (loss) | $ | 21,857 | $ | 20,279 | $ | 12,486 | $ | 13,314 | $ | (11,397) | $ | (10,304) | $ | 22,946 | $ | 23,289 | ||||||||||||||||||
Adjusted operating earnings (loss) | $ | 21,857 | $ | 20,279 | $ | 14,070 | $ | 17,189 | $ | (11,203) | $ | (10,042) | $ | 24,724 | $ | 27,426 | ||||||||||||||||||
Operating earnings % | 6.0% | 5.5% | 4.6% | 5.0% | —% | —% | 3.6% | 3.7% | ||||||||||||||||||||||||||
Adjusted operating earnings % | 6.0% | 5.5% | 5.2% | 6.5% | —% | —% | 3.9% | 4.3% | ||||||||||||||||||||||||||
Same-store sales % (on a 13-week basis) (1) | (0.8)% | (0.6)% | (1.0)% | 2.3% | —% | —% | —% | —% | ||||||||||||||||||||||||||
Number of stores | 1,013 | 1,052 | 235 | 233 | — | — | 1,248 | 1,285 | ||||||||||||||||||||||||||
RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP) | ||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | ||||||||||||||||||||||||||||||||||
Famous Footwear | Brand Portfolio | Other | Consolidated | |||||||||||||||||||||||||||||||
(Thousands) | May 5, 2018 | April 29, 2017 |
May 5,
2018 |
April 29, 2017 |
May 5,
2018 |
April 29, 2017 |
May 5,
2018 |
April 29, 2017 | ||||||||||||||||||||||||||
Gross profit | $ | 165,201 | $ | 167,690 | $ | 109,720 | $ | 103,218 | $ | — | $ | — | $ | 274,921 | $ | 270,908 | ||||||||||||||||||
Charges/Other Items: |
||||||||||||||||||||||||||||||||||
Acquisition, integration and reorganization of men's brands | — | — | — | 3,029 | — | — | — | 3,029 | ||||||||||||||||||||||||||
Total charges/other items | — | — | — | 3,029 | — | — | — | 3,029 | ||||||||||||||||||||||||||
Adjusted gross profit | $ | 165,201 | $ | 167,690 | $ | 109,720 | $ | 106,247 | $ | — | $ | — | $ | 274,921 | $ | 273,937 | ||||||||||||||||||
Operating earnings (loss) | $ | 21,857 | $ | 20,279 | $ | 12,486 | $ | 13,314 | $ | (11,397) | $ | (10,304) | $ | 22,946 | $ | 23,289 | ||||||||||||||||||
Charges/Other Items: |
||||||||||||||||||||||||||||||||||
Acquisition, integration and reorganization of men's brands | — | — | 1,584 | 3,875 | 194 | 262 | 1,778 | 4,137 | ||||||||||||||||||||||||||
Total charges/other items | — | — | 1,584 | 3,875 | 194 | 262 | 1,778 | 4,137 | ||||||||||||||||||||||||||
Adjusted operating earnings (loss) | $ | 21,857 | $ | 20,279 | $ | 14,070 | $ | 17,189 | $ | (11,203) | $ | (10,042) | $ | 24,724 | $ | 27,426 | ||||||||||||||||||
(1) The thirteen-week period ended April 29, 2017 excludes sales from Allen Edmonds. |
SCHEDULE 6 | ||||||||||||
CALERES, INC. | ||||||||||||
BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION | ||||||||||||
(Unaudited) | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
(Thousands, except per share data) | May 5, 2018 | April 29, 2017 | ||||||||||
Net earnings attributable to Caleres, Inc.: | ||||||||||||
Net earnings | $ | 17,180 | $ | 14,884 | ||||||||
Net loss attributable to noncontrolling interests | 32 | 18 | ||||||||||
Net earnings attributable to Caleres, Inc. | 17,212 | 14,902 | ||||||||||
Net earnings allocated to participating securities | (479 | ) | (408 | ) | ||||||||
Net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities | 16,733 | 14,494 | ||||||||||
Basic and diluted common shares attributable to Caleres, Inc.: | ||||||||||||
Basic common shares | 41,910 | 41,832 | ||||||||||
Dilutive effect of share-based awards | 124 | 169 | ||||||||||
Diluted common shares attributable to Caleres, Inc. | 42,034 | 42,001 | ||||||||||
Basic earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.40 | $ | 0.35 | ||||||||
Diluted earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.40 | $ | 0.35 |
SCHEDULE 7 | ||||||||||||
CALERES, INC. | ||||||||||||
BASIC AND DILUTED ADJUSTED EARNINGS PER SHARE RECONCILIATION | ||||||||||||
(Unaudited) | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
(Thousands, except per share data) | May 5, 2018 | April 29, 2017 | ||||||||||
Adjusted net earnings attributable to Caleres, Inc.: | ||||||||||||
Adjusted net earnings | $ | 18,495 | $ | 17,412 | ||||||||
Net loss attributable to noncontrolling interests | 32 | 18 | ||||||||||
Adjusted net earnings attributable to Caleres, Inc. | 18,527 | 17,430 | ||||||||||
Net earnings allocated to participating securities | (516 | ) | (477 | ) | ||||||||
Adjusted net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities | 18,011 | 16,953 | ||||||||||
Basic and diluted common shares attributable to Caleres, Inc.: | ||||||||||||
Basic common shares | 41,910 | 41,832 | ||||||||||
Dilutive effect of share-based awards | 124 | 169 | ||||||||||
Diluted common shares attributable to Caleres, Inc. | 42,034 | 42,001 | ||||||||||
Basic adjusted earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.43 | $ | 0.41 | ||||||||
Diluted adjusted earnings per common share attributable to Caleres, Inc. shareholders | $ | 0.43 | $ | 0.40 |
SCHEDULE 8 | ||||||||||||||
CALERES, INC. | ||||||||||||||
RECONCILIATION OF INCOME TAX PROVISION AND EFFECTIVE TAX RATE (GAAP BASIS) TO ADJUSTED INCOME TAX PROVISION AND ADJUSTED EFFECTIVE TAX RATE (NON-GAAP BASIS) | ||||||||||||||
(Unaudited) | ||||||||||||||
Thirteen Weeks Ended | ||||||||||||||
May 5, 2018 | ||||||||||||||
Earnings Before Income Taxes |
Income Tax Provision |
Effective Tax Rate |
||||||||||||
(Thousands) | ||||||||||||||
GAAP basis | $ | 22,354 | $ | (5,174 | ) | 23.1 | % | |||||||
Charges/other items: |
||||||||||||||
Acquisition, integration and reorganization of men's brands | 1,778 | (463 | ) | |||||||||||
Adjusted basis | $ | 24,132 | $ | (5,637 | ) | 23.4 | % | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180531006415/en/
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