• Revenue: $741 million, down 2.8% year-over-year.
• Adjusted Earnings Per Share (EPS): $1.23.
• Brand Portfolio Sales: Increased by 0.7%.
• Famous Footwear Sales: Declined by 4.8%; Comparable sales increased by 2.5%.
• Gross Margin: 44.1%, a decrease of 55 basis points.
• SG&A Expense: $269 million, or 36.3% of sales, up 30 basis points.
• Operating Earnings: $58 million; Operating margin of 7.9%.
• Net Interest Expense: $2.9 million, down $1.6 million.
• EBITDA: $73 million, 9.9% of sales.
• Inventory: $586 million, up 5.4% year-over-year.
• Debt: $239 million in borrowings, up $17 million year-over-year.
• Share Buybacks: $50 million, repurchasing over 1.5 million shares at an average price of $32.82 per share.
• Revised Full Year Guidance: Sales expected to be down 2.5% to 3%; Adjusted EPS of $3.45 to $3.55.

• Warning! GuruFocus has detected 5 Warning Sign with EQGPF.

Release Date: December 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Caleres Inc (NYSE:CAL) reported growth in its Brand Portfolio segment, with sales increasing approximately 1% year-over-year.
• Famous Footwear delivered positive comparable store sales, increasing by 2.5% during the third quarter.
• The company gained market share in both its Brand Portfolio and Famous Footwear segments.
• Caleres Inc (NYSE:CAL) saw strong demand for fashion sneakers, which represented over 30% of retail selling for the quarter.
• The company's own brands, such as Sam Edelman and Naturalizer, showed strong performance, contributing significantly to sales and operating earnings.

Negative Points

• Overall sales for Caleres Inc (NYSE:CAL) declined by 2.8% year-over-year in the third quarter.
• Boot sales were weak across both segments, with wholesale boot shipments declining by 5% and retail short boots down 18%.
• The company faced challenges with late receipts of trending athletic products at Famous Footwear.
• Caleres Inc (NYSE:CAL) experienced a credit issue with a customer in the Brand Portfolio, resulting in lower shipments.
• The company's business in China softened, impacting overall performance and leading to a more cautious outlook for the region.

Q & A Highlights

Q: Can you provide more thoughts on the confidence levels regarding your long-term plan and any shifts in top-line growth expectations? Also, what is driving the adjustment in EPS expectations? A: Jack Calandra, CFO: We believe we have the brands, strategies, and capabilities to return to our previous earnings power. This year has been a setback due to several factors, including softer-than-anticipated fashion footwear demand and seasonal business challenges. We are making strategic investments for future growth, particularly internationally and in marketing. It will take longer to achieve our EPS goals, but we are confident in our long-term potential.

Q: What is contributing to the softness in China, and how confident are you in the region as you invest in opening more stores there? A: John Schmidt, CEO: We see significant long-term growth opportunities in China, despite near-term caution. We are adopting a balanced approach, expanding into other markets like the Middle East and EU, and our JV partner is expanding into Southeast Asia. Our initial China plan was too aggressive, but we remain optimistic about the region's potential.

Q: How much of the guidance shift is due to markdowns to clear inventory in Q4, and how impactful is the customer credit issue mentioned in your press release? A: Jack Calandra, CFO: We expect a gross margin decline in Q4 due to addressing slow-moving inventory. The credit issue involves suspending shipments to a customer with aged receivables and a low credit rating. This has been factored into our guidance, and the receivable balance is appropriately reserved. The credit issue is relatively small compared to other factors like boot sales and late athletic product deliveries.

Q: Can you provide details on the sales impact of the 53rd week last year and expectations for Brand Portfolio and Famous Footwear in Q4? A: Jack Calandra, CFO: The 53rd week last year added $25 million in sales, mostly to Famous Footwear. For Q4, we expect both segments to be down mid-single-digits on a reported basis. Adjusting for the 53rd week, Famous Footwear is expected to be down slightly, and Brand Portfolio down mid-single-digits due to inventory management plans.

Q: What are the promotional plans for Famous Footwear and Brand Portfolio during the holiday season? A: Jack Calandra, CFO: Famous Footwear's promotional calendar will be similar to last year, focusing on BOGO promotions. Brand Portfolio will see more markdown activity to exit 2024 with a clean inventory position, leading to some gross margin dilution in Q4.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.