How Allen Edmonds and Vionic Could Deliver Future Growth for Caleres
Caleres is investing in its owned brands to deliver future growth.
Jay Schmidt, president and CEO of Caleres, told analysts on the company’s quarterly conference call on Thursday that its Lead Brands division, which consists of labels like Allen Edmonds and Vionic, has “significant growth potential” and Caleres expects to invest further in the business segment.
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“We expect these brands will represent a higher percent of our total Caleres revenue in 2023 with opportunities to increase that penetration further over the long term via a number of different growth vectors,” Schmidt said.
The St. Louis-based footwear company reported that overall sales in the second quarter fell 5.8 percent to $695.5 million compared to $738.3 million at the same time last year. Net earnings in Q2 were $33.9 million, or earnings per diluted share of $0.95, compared to net earnings of $51.2 million, or earnings per diluted share of $1.38 in the same period last year.
By business segment, Famous Footwear saw sales decline 5.1 percent in the period, with comp-store sales down 4.3 percent. Caleres’ brand portfolio reported a 7.2 percent decrease in net sales.
Despite these numbers, Schmidt told analysts that the brand portfolio has been “performing well” overall in the first half of 2023, providing a solid foundation on which to build. “As year-over-year comparisons ease, we expect sales trends will improve and, more importantly, the brand portfolio will make a larger and more meaningful contribution to the total company’s operating performance this year,” the CEO added.
By brand, Allen Edmonds delivered its 10th consecutive quarter of growth in Q2. According to Schmidt, improvement at the men’s brand was broad-based across all channels, with sales up mid-single digits compared to the second quarter last year.
“We saw strength in our direct channels, with brick-and-mortar up 5 percent and e-commerce up 13 percent, driven by increased traffic and conversion,” he said. “I am pleased to note that we’ve seen significant increases in the brand’s average unit retails compared to pre-pandemic levels. There’s a lot to be excited about at Allen Edmonds.”
At Vionic, Schmidt said the brand saw a “nice improvement” in its e-commerce business during the second quarter. Early catalog performance helped deliver a 7-plus percent year-over-year increase in e-commerce, with newness, particularly loafers and white sneakers, driving the uplift. Notably, the brand’s new Uptown moc sold out during its spring launch and will be a top 10 style for fall, the CEO added.
For Sam Edelman, the company saw strong consumer reaction to the brand’s new Layla sneaker, as well as an impressive performance at retail with its flats, while Naturalizer capitalized on the Caleres speed-to-market capabilities to accelerate delivery of the Morrison 2.0 sneaker, a new evolution of its best-selling Lace Up sports shoe.
“We also had sales growth and profitability improvements from our portfolio brands, especially LifeStride, Franco Sarto and Dr. Scholl’s,” Schmidt added. “As a reminder, these brands are growing assets within the portfolio that serve key consumer segments not currently served by our Lead Brands and benefit from our One Caleres capabilities.”
Overall, Schmidt told analysts that he is “extremely proud” of the company’s strong operational discipline and the financial performance it delivered in the second quarter.
“I believe the most recent quarter underscored yet again the advantages of our diversified structure and the ‘One Caleres’ model,” he said. “Our brands are strong and enduring. Our strategies are clear and actionable and our teams are dedicated to exceeding the expectations of our consumers in this dynamic marketplace.”
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