For every CEO, strong and effective leadership is critical during the coronavirus crisis.
“As expected in these times of uncertainty, we are leaning in and taking actions to ensure we are protecting the business overall,” the executive said in the call. “We are actively monitoring the leading indicators across the markets we serve, assessing every day and reacting in real time by managing our expenses accordingly, reducing our open to buy, evaluating our promotional cadence and being disciplined in our management of inventory.”
Sullivan said the first priority is the health and safety of the company’s global workforce. Like many companies, Caleres has instituted travel bans and work-from-home policies. Ongoing and timely communication is critical, the CEO noted.
Turning to the company’s production outlook, Sullivan said Caleres’ factory partners in China are now up and running. “Worker return rates are in excess of 70%, capacity utilization is increasing, and product delay times are subsiding,” she told investors.
While the situation in China has showed solid improvement, Caleres and many companies are now shifting focus to consumer demand in the U.S. market — but it’s hard to predict what will happen next. “Our direct to consumer businesses thus far has been performing well, making it difficult to anticipate the broader impact a prolonged health crisis could have on the retail sector and consumer demand overall,” Sullivan noted.
As coronavirus continues to spread across the country, the company is using real-time data to address both opportunities and challenges across its 1,175 stores.
Kenneth Hannah, SVP and CFO, noted in the call that momentum at Famous Footwear continued through February, and there was no noticeable impact until early March. “It’s changing on a daily basis. At this point, we haven’t seen anything material,” Hannah said.
For its fourth quarter, the St. Louis-based firm reported adjusted earnings per share of 34 cents, compared with analysts’ forecasts of 40 cents per share. (Caleres said those results included a $0.07 dilution related to Vionic interest and amortization expense.) Overall, revenues decreased 3% to $698.9 million, missing Wall Street’s forecast for sales of $711.1 million. Sales across the company’s brand portfolio, which includes Sam Edelman, Via Spiga and Dr. Scholl’s, dropped nearly 10%.
Meanwhile, Famous Footwear posted sales of $369.5 million, a modest gain of 1.2%. Same-store sales for the chain were up 5.1%.
Sullivan said the company did experience bright spots, including robust digital growth (23% year over year), the relaunch of the Zodiac brand and a new partnership with Veronica Beard.