• Fourth Quarter Revenue: $639.2 million, down 8.3% year-over-year.
• Full Year Revenue: $2.72 billion, down 3.4% year-over-year.
• Fourth Quarter Adjusted Earnings Per Share (EPS): $0.33.
• Full Year Adjusted Earnings Per Share (EPS): $3.30.
• Fourth Quarter Gross Margin: 43%, a decrease of 80 basis points year-over-year.
• Full Year Gross Margin: 44.9%, an increase of 10 basis points year-over-year.
• Fourth Quarter Operating Earnings: $13.4 million, 2.1% of sales.
• Full Year Operating Earnings: $157 million, 5.8% of sales.
• Fourth Quarter SG&A Expenses: $261.7 million, 40.9% of sales.
• Full Year SG&A Expenses: $1.07 billion, 39.1% of sales.
• Fourth Quarter Net Interest Expense: $3.9 million.
• Full Year Net Interest Expense: $14 million.
• Inventory at Year-End: $565 million, up 4.5% year-over-year.
• Debt-to-EBITDA Ratio: 1 times.
• Cash Flow from Operations: $105 million.
• 2025 Revenue Guidance: Consolidated sales expected to be down 1% to up 1%.
• 2025 Earnings Per Share Guidance: $2.80 to $3.20.
• 2025 Capital Expenditures Guidance: $50 million to $55 million.

• Warning! GuruFocus has detected 5 Warning Signs with KNOP.

Release Date: March 20, 2025

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

Positive Points

• Caleres Inc (NYSE:CAL) was honored with the Nordstrom Vendor Partner and Excellence Award for Footwear in 2024, highlighting the strength of its brands and products.
• Fourth quarter earnings were at the high end of guidance, with market share gains in women's fashion footwear.
• The company successfully reduced its reliance on China for direct product sourcing, expecting 75% of sourcing to be outside China by mid-2025.
• Lead Brands such as Sam Edelman, Allen Edmonds, Naturalizer, and Vionic outperformed, reinforcing their strategic importance.
• Caleres Inc (NYSE:CAL) returned approximately $75 million to shareholders through buybacks and dividends in 2024.

Negative Points

• Fourth quarter sales were down approximately 4% year-over-year, excluding the impact of the 53rd week, due to weak boot sales and softer wholesale demand.
• Brand Portfolio sales declined 7.2% in the fourth quarter, with weakness in boots and value-oriented brands.
• Famous Footwear's comp-store sales were down 2.9%, with brick-and-mortar sales declining 4.1%.
• The company faces challenges from persistent inflation and new tariffs, impacting its 2025 outlook.
• Caleres Inc (NYSE:CAL) anticipates continued headwinds with value-based consumers and cautious retail partner inventory management.

Q & A Highlights

Q: Could you elaborate on the assumptions within the EPS guidance for the balance of the year, and how do you plan to return to the $4 EPS threshold? A: Jack Calandra, CFO, explained that they expect sequential quarterly improvement throughout the year. For Famous Footwear, improvement is expected from new product introductions and new leadership. For the Brand Portfolio, improvement is anticipated from anniversarying the SAP upgrade challenges, international growth, the launch of Favorite Daughter, and wholesale door growth for Allen Edmonds. These initiatives provide confidence in achieving the guidance.

Q: Can you discuss the trends within the contemporary segment and why it has been resilient despite being a higher price point? A: Jay Schmidt, CEO, noted that as designer brands weaken, key contemporary brands like Vince and Veronica Beard are trending. Consumers are prioritizing spending on these brands, which offer a mix of fashion, seasonal items, and fashion sneakers. The contemporary segment's focus on newness and fashion has driven its resilience.

Q: Can you hit your full-year guidance without seeing an improvement in the same-store sales equivalent in the Brand Portfolio group? A: Jack Calandra, CFO, stated that the initiatives, such as the SAP upgrade and international growth, are significant enough to accommodate a decline in the base business and still meet guidance. They are confident in the quarterly cadence and growth.

Q: How do you expect markdowns to progress through the year, given the tough base in Q1? A: Jay Schmidt, CEO, mentioned that they have addressed much of the markdown pressure in Q1. Inventory in the Brand Portfolio is more current, and Famous Footwear has more core products, positioning them for a better future. Jack Calandra, CFO, added that gross margin decline is expected in Q1, with SG&A deleverage due to lower sales.

Q: How are you planning for gross margin levers like freight or discounts throughout the year? A: Jack Calandra, CFO, explained that they expect some gross margin pressure from tariffs but are utilizing AI pricing tools for promotions and benefiting from a mix shift towards direct-to-consumer and contemporary brands, which offer better margins. These factors are expected to offset some of the gross margin pressure.

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