Caleres Reports Mixed Finish to Q3
Caleres Inc. today reported a mixed finish to its third-quarter as sales topped expectations but profits fell short.
The parent of Famous Footwear and shoe brands such as Sam Edelman and Dr. Scholls also lowered its earnings expectations for the year, citing its decision to pull out of an expensive third-party distribution center and its Vionic acquisition, announced last month.
Overall, Caleres said its sales during the period were flat year over year $776 million, topping analysts’ bets of $765 million.
Famous Footwear’s same-store-sales were up 2.8 percent although its revenues fell 5 percent to $448.8 million as one week of back-to-school sales shifted into the second quarter of this year versus the third quarter of last year, according to the company.
Revenues at the brand portfolio were up 8.5 percent to $327.1 million, including contributions from Vionic.
Caleres’ total profits declined 15 percent to $29.2 million, or 67 cents per diluted share. On adjusted basis, however, earnings improved 1.6 percent year over year to $34.9 million, or 81 cents per share. Still, it fell short of the 88 cents per share market watchers were expecting.
“Famous Footwear delivered its seventh consecutive year of positive back-to-school same-store-sales, while Brand Portfolio showed sales improvement as our top brands continued to take consumer share in the market,” said Caleres president, chairman and CEO Diane Sullivan. “In addition, we announced the acquisition of Vionic, a strong consumer demand brand, which has demonstrated solid growth over the past six years and is expected to be accretive to adjusted EPS in 2019.”
Still, Sullivan said the firm’s fiscal year earnings will take a hit as it continues to accelerate its transition away from using a third-party distributor for its Brand Portfolio to moving completely in-house.
“While our in-house facility is up and running efficiently, the third-party facility expense has been far greater than expected,” Sullivan said. “In an effort to eliminate the potential for incremental expense going forward, we have committed to exiting this third-party facility immediately following fiscal 2018 shipping. “
Due to these expenses, and Caleres’ recent Vionic acquisition, the company lowered its EPS forecast for the year. It now expects adjusted earnings in the range of $2.25 and $2.35, compared with its previous guidance of $2.40 to $2.50. (EPS guidance excludes 36 cents of costs related to the acquisition and integration of Allen Edmonds, Blowfish Malibu and Vionic.) The firm expects full-year consolidated sales of $2.85 billion, compared with a prior outlook of $2.8 billion.
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