What To Expect When Caleres Reports Q1

Now that most publicly traded shoe firms have reported Q1 earnings for 2016, analysts say they have a solid handle on some of the recurring trends that may have also impacted Caleres Inc. during the quarter.

After a slew of lackluster reports from department stores, such as Macy’s Inc. and Nordstrom Inc., Sterne Agee CRT analyst Sam Poser said he believes that Caleres’ wholesale business may have taken a hit in Q1.

The wholesale business is likely to be quite challenged due to the poor performance at numerous department stores,” Poser wrote on Monday. “We expect wholesale to be down 2.7 percent in 1Q16.”

Additionally, CL King & Associates analyst Steve Marotta noted he “heard rumblings that industrywide weakness” in April and quarter-to-date that will likely challenge Caleres wholesale channel into the second half.

Given the rough start to the quarter, we have also trimmed our Q2 comp expectation to 1 percent from 2 percent,” Marotta said.

Meanwhile, Susquehanna Financial Group LLLP analyst Christopher Svezia said he thinks the company — which owns brands such as Sam Edelman, DVF and Dr. Scholl’s as well as family retailer Famous Footwear — is actually snapping up wholesale market share.

Within wholesale, Caleres is taking share, investing in growth brands, reducing sourcing costs and improving its speed to market,” Svezia wrote last week. “Caleres’ business model allows it to reach many consumer demographics from the mass channel [Walmart] all the way to the high-end boutiques and specialty stores [Vince and DVF]. As such, the company is not highly dependent on one category or channel to disproportionately grow its business.”

Shifty weather was another recurring theme in Q1 earnings reports — from companies such as Shoe Carnival, DSW Inc. and others — and market watchers expect to hear similar feedback from Caleres when it reports on Thursday.

“Cool weather in the middle of 1Q16 is likely to hurt Famous Footwear’s results, and we are reducing our same-store sales expectation from 3.5 percent to flat,” Poser wrote.

Similarly, Svezia said a recent cold weather snap likely pressured Caleres’ sales in Q1 and in the current quarter.

But [we] anticipate this to be offset, as the [current] quarter progresses, by the following: Weather has recently become more seasonal and is expected to remain seasonal for the balance of the quarter; athletic footwear continues to comp at Famous Footwear (50 percent of sales); sell through remains positive for nearly all brands; and Caleres inventory on hand and in the channel remains clean,” Svezia said.

Consensus estimates peg Caleres’ Q1 earnings per share at 43 cents, a 2 percent decline from the previous year’s Q1. Revenues are expected to gain a modest 1.4 percent year-over-year, to $610.6 million.

Poser reduced his Q1 EPS estimate from 43 cents to 35 cents but “remains confident that the business will improve as FY16 progresses.”

Svezia expects 1 to 2 percent comp growth at Famous Footwear, a 1 percent gain in wholesale, and EPS of 44 cents (or flat year-over-year).

Caleres’ stock slipped to a 52-week low of $21.27 on Wednesday.

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