Caleres Misses Street In Q2, Expects Strong Back-To-School

Caleres Misses Street In Q2, Expects
A Famous Footwear storefront.
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Caleres Inc. is the latest shoe company to feel the pressure from a tough first half for retail and sluggish shopping.

The St. Louis-based firm reported second quarter earnings Tuesday after the market. Net income was $19.8 million, or 46 cents earnings per diluted share. It was an 18 percent rise from the year-ago period when earnings were $16.8 million, or 38 cents per share but missed analysts’ expectations for diluted EPS of 50 cents..Sales also suffered under slower traffic and a tough environment for the company’s Healthy Living footwear brands, such as Dr. Scholl’s and Naturalizer. Sales reached $623 million, a decrease of 2.3 percent compared to second quarter 2015, when sales were $638 million.

“Our second quarter results show the benefit of good execution during a challenging environment, as we improved gross margin, maintained SG&A spend, and continued to invest for long-term growth” said Diane Sullivan, CEO, president and chairman of Caleres.

The company’s careful inventory management and lower promotional activity has seemingly paid off, though, in one bright spot for Caleres: Gross margin rose 47 basis points, to 41.7 percent.

While the company’s Famous Footwear comp store sales were down just over 1 percent in the soft retail environment in the second quarter, Caleres executives were confident in their stores, which maintained a solid gross margin thanks to less promotions, and opened 11 new locations in the period. Sales at Famous were $390.1 million, down 1.5 percent compared to the year ago quarter.

During an earnings call with investors, Sullivan alluded to 2.5 percent comp growth for back-to-school in the first weeks of August, as well as growth each week after. Executives said the company was aiming to meet more shoppers where they were and fill the buy-now, wear-now customer needs.

Sam Edelman and Franco Sarto were called out in the fashion category for strength during the period, and Bzees did well in the Healthy Living category.

The firm maintain its guidance for 2016. It expects net income to range $2 to $2.10 per diluted share and net sales of $2.57 billion to $2.6 billion.