On Denies Tiger Woods Deal Rumors, Crocs Nears $4B, New Launches Coming at Merrell and Saucony + More Shoe News From the 2024 ICR Conference
Major footwear brands are announcing updated sales and earnings expectations ahead of and during their presentations at the 2024 ICR conference, which begins today and runs through Wednesday.
Boot Barn, Crocs, Genesco, On and Wolverine Worldwide are among the many companies participating in the conference and have released updated guidance or have pre-announced recent sales results and expectations for the fourth quarter. While some have reported results in-line with guidance, some companies dive into the strategies they’re implementing to improve their business.
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Here is a closer look at each company’s presentation at the 2024 ICR conference.
Boot Barn
Boot Barn said on Monday that its preliminary net sales in the third quarter of fiscal 2024 are expected to be $520.4 million, up 1.1 percent over the same time last year. Net income per diluted share is expected to be at or above the high end of its previously announced guidance range of $1.79.
Jim Conroy, president and CEO of Boot Barn, said that the third quarter played out “largely as we expected” with new store sales offsetting a decline in same store sales as the company cycled outsized comp growth in prior years.
“We opened 11 new stores in the quarter, contributing to a 1.1 percent growth in total net sales,” Conroy noted. “This modest sales growth combined with discipline around promotions and strong expense control drove an increase in earnings per share compared to last year.”
New stores were a major part of Conroy’s presentation on Monday. The executive noted that the company plans to end fiscal 2024 with approximately 397 stores, with the potential to add an additional 500 locations in the coming years. Conroy noted that by fiscal 2030, Boot Barn plans to have 900 stores that are expected to contribute approximately $1.5 billion in sales.
Conroy also doubled down that the company’s ladies’ business can recover, after seeing several quarters of declines in the category.
“The performance in the quarter demonstrates the power of the Boot Barn model where multiple levers can work in tandem to drive earnings growth,” Conroy added. “Additionally, our average store revenue continues to far exceed pre-pandemic sales levels despite the reduction in comparable store sales. I am proud of the Boot Barn team for excellent execution and look forward to the new calendar year and our fourth fiscal quarter.”
Caleres
Ahead of its presentation on Tuesday, Caleres reiterated its financial outlook for consolidated sales, earnings per share and adjusted earnings per share for full year 2023.
Jay Schmidt, president and CEO of Caleres, said in a statement on Monday evening that the company continues to expect full year 2023 adjusted earnings of $4.10 to $4.20 per share, which would mark the third consecutive year with earnings per share in excess of its $4.00 baseline.
What’s more, Caleres still expects consolidated net sales for fiscal 2023 to be down 4.5 percent to 5.5 percent compared to fiscal 2022.
“Our ability to deliver results ahead of expectations throughout the year and to maintain our earnings outlook, despite a challenging demand environment, underscores yet again the powerful transformation we’ve achieved in the earnings profile of the organization,” Schmidt said.
During Tuesday’s fireside chat, Schmidt noted that addressing consumer needs quickly are helping the company drive sales.
“Consumers are continuing to prioritize newness,” the CEO noted. “So obviously speed is really important as a differentiator in our business. We launched this ‘speed program’ in 2017, so we’ve really been developing this capability over time. We’re trying to deliver product early, get that early read and then come back into our key styles and key SKUs within a 90-day period. This has been an accelerant to our business.”
Schmidt credited his factory partners for allowing Caleres to operate this speed model, which accounted for 28 percent of the company’s production in the third quarter, up from just 12 percent a year ago.
“This program allowed us to move through the fourth quarter and to avoid some of the headwinds that were out there,” Schmidt said. “We were able to pivot into fashion sneakers, ballet flats and all of the key items that the consumer was looking for.”
The CEO added: “As we look ahead to 2024, we are focused on executing on our strategic plan to drive long-term value for our shareholders, creating exceptional products and experiences for our consumers, and managing our costs rigorously.”
Crocs
On Monday, Crocs said it expects record 2023 revenues of approximately $3.95 billion, which would represent over 11 percent growth compared to 2022. This is slightly above the company’s guidance of 10 percent to 11 percent growth, with Crocs brand growing over 13 percent surpassing the $3 billion mark and Hey Dude revenues of approximately $949 million.
Andrew Rees, CEO of Crocs, Inc., said in a statement that 2023 was a strong year for the company that culminated in a successful holiday season with market share gains for both brands.
Looking towards the final fourth quarter results, the company expects revenues to grow in the period over 1 percent to approximately $732 million compared to 2022, above its guidance for a decline of 1 percent to 4 percent, with the Crocs brand growing almost 10 percent and Hey Dude down 19 percent and ahead of guidance.
“Fourth-quarter revenue is now expected to exceed our former guidance and we are raising our operating margin target for the year,” Rees said. “Our strong free-cash flow generation enabled us to pay down $277 million in net debt in the quarter, bringing our full-year debt pay down to $665 million.”
During the company’s presentation, Rees noted that near-term catalysts for the business include strong franchise management for the Crocs brand with new product introductions in 2024 including a new sandal franchise. Global growth, especially in Asia, is also expected to grow as well an expansion of Hey Dude’s omnichannel strategy through a development of its outlet business.
Looking further into 2024, the company expects revenue growth of 3 percent to 5 percent compared to 2023 comprised of 4 percent to 6 percent growth for the Crocs brand and flat to slightly up for Hey Dude brand.
“We are coming into 2024 from a position of strength and are making the decision to reinvest our best-in-class margins into focused strategic investments as we continue to set ourselves up for long-term, durable growth,” Rees added.
Genesco
Ahead of its formal quarterly release, Genesco Inc. announced at ICR that its comparable sales, including both stores and direct sales, decreased by 4 percent for the quarter-to-date period ended Dec. 30. Same store sales decreased 6 percent and sales for the company’s e-commerce businesses increased 3 percent on a comparable basis for that period.
Per business unit, Genesco’s Journey’s Group saw comp sales in the fourth quarter decline 6 percent, while Schuh fell 5 percent in the period. Johnston & Murphy, however, saw comp sales grow 11 percent in the quarter.
During her presentation at the ICR conference, Genesco board chair, president and CEO Mimi E. Vaughn, noted that following a positive start to the holiday season, sales decelerated in the weeks approaching Christmas, as consumer shopping trends remained choppy and peak shopping days were not enough to offset the lulls in between.
“What we observed is that the consumer is very focused on items,” Vaughn said during her presentation. “For us, it was a very item-driven holiday, where the consumer wanted what they wanted. And we planned to be more promotional, and we were, but it didn’t move the needle in terms of driving volume. And interestingly, our returns were higher.”
Vaughn also called out the consumer’s disinterest in boots this holiday. “Boots make up about 50 percent of our business this time of year, and our overall boot sales were down 20 percent in the period. So that’s really the thing that affected the Journeys business the most,” the CEO said.
With fourth quarter sales trending below expectations, Genesco now expects total year adjusted EPS to be in the range of $0.65 to $0.85 compared with our prior view for a range of $1.50-$2.00.
“Looking forward, we are on course to enter fiscal 2025 with clean inventories and we will continue our efforts to better align our merchandise assortments with current consumer demand, while also reshaping our cost base,” Vaughn said. “These actions, combined with our other strategic initiatives to elevate and evolve the Journeys business, are aimed at driving improved long-term value.”
On Holding
On co-CEO Marc Maurer started out his presentation at ICR addressing the rumors that Tiger Woods left Nike for On. “We have heard the rumors and we hope Tiger finds a great new partner, but it’s not going to be us,” Maurer said.
While the company did not release a formal guidance update like many others on Monday, Maurer noted that this holiday season was “strong” as demand remained high without having to discount product.
The executive also doubled down on the company’s earnings goals that were unveiled in October. “We want to double our sales over the next three years,” said Maurer. “Meaning, reaching $3.55 billion Swiss Francs ($4.2 billion) in sales by 2026, combined with increased profitability with an 18 percent increase in adjusted EBITDA. And all of this is driven based on a very strong cross profit margin of 60 percent.”
To achieve these numbers, product innovation remains a key element. Going into 2024, the company is heavily focused on its apparel, which On executives noted will be getting a “major overhaul” this year.
Looking at footwear, the company plans to release the Cloud Monster 2, the latest iteration of one of On’s most successful franchises, this spring along with the Cloud Monster Hyper, which caters to runners. Speaking of runners, the Cloud Runner 2 will also see its debut this spring. The Cloud Surfer Trail will also be released along with the Cloud Tilt, which was previewed in the brand’s latest collab with Loewe late last year. Lastly, a new franchise called the Cloud Pulse will also be launched this spring.
Looking ahead to this summer, On is very excited about the upcoming Olympic Games in Paris. “During the Olympics, we will very much focus our ‘fast’ performance products like the Cloud Boom Echo 3, the product that Hellen Obiri won the New York City marathon in,” Maurer said. “This style will now be available to a wider audience. So, a lot is coming.”
Wolverine Worldwide
At Wolverine, the company announced on Monday that its unaudited full year and fourth quarter reported revenue is approximately $2.24 billion and $527 million, respectively – in line with November guidance. Plus, full year and fourth quarter revenue for its ongoing business is expected to be approximately $2.20 billion and $521 million, respectively – in line with November guidance.
The company, which has spent months laying out its transformation strategy, dived further in its cost-cutting moves. On Dec. 28, the company said it finalized the sale of its Kentucky distribution center, generating $23 million of cash in the fourth quarter of 2023. Saucony and Sperry brands will continue to operate out of this facility under a lease agreement, Wolverine noted.
Other previously announced asset monetization transactions in 2023 generated approximately $227 million in proceeds, including Keds, Hush Puppies intellectual property in China, Wolverine Leathers, and the new operating model for Merrell and Saucony in Greater China.
“We’re executing the stabilization phase of our strategic transformation with tremendous pace, while redesigning Wolverine Worldwide for the future,” Chris Hufnagel, president and CEO, said in a statement. “For the fourth quarter and full year, we expect to deliver financial results in line with our guidance – while achieving better-than-anticipated year-end debt and inventory levels. Importantly, the performance of our direct-to-consumer business met our expectations for the critical holiday period as well – led by Merrell, Saucony, Sweaty Betty and Wolverine.”
During his presentation on Monday, Hufnagel called out how new products – mainly at Merrell and Saucony – are one of the ways the company expects to drive the business in 2024. These innovations include the launch of the Moab Speed 2 in Merrell’s Hike category. Hufnagel said the shoe will release five collaborations throughout the year around this model. For Trail, Merrell will also release the Agility Peak5 and for Lifestyle, Merrell is focused on the Wrapt sneaker, which is focused on its female consumers.
As for Saucony, Hufnagel began by calling 2024 the “year of the super shoe,” which led to the announcement of the brand’s upcoming Endorphin Pro 4 “super shoe.” The brand is also expected to heavily rely on its fashion lifestyle roots as seen with its recent Jae Tips collab, and combining both run and lifestyle through the new Hurricane 24 sneaker.
“We enter the new year on increasingly firmer footing, and with a focus on furthering our efforts to transform the company into a great builder of global brands, investing in product design and storytelling to fuel future growth, and ultimately, creating greater value for our shareholders,” Hufnagel added.
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