Caleres reports strong results in third quarter 2022
St. louis--(business wire)--caleres (nyse: cal), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the third quarter ended october 29, 2022. during the quarter, caleres continued its strong performance, achieving record quarterly sales and delivering another period of solid earnings. net sales rose 1.8 percent year-over-year driven by positive momentum in the brand portfolio segment reflecting robust consumer demand for its fashion brands and products. the company achieved net income of $39.2 million, or earnings per diluted share of $1.08. adjusted net income was $42.0 million, or adjusted earnings per diluted share of $1.15. notably, caleres improved its inventory position sequentially with total inventory levels declining 15.8 percent from the second quarter 2022. “caleres executed another strong operational and financial performance in the third quarter and closed the first nine months of the year with record earnings,” said diane sullivan, chairman and chief executive officer. “these results underscore the strength and versatility of our brands, highlight our compelling product and product creation power, and demonstrate the portfolio’s significantly enhanced agility and resilience during periods of macroeconomic uncertainty. we are particularly pleased that our brand portfolio segment achieved near-record third quarter earnings and that famous footwear delivered a strong operating margin of 12.3 percent.” “we are encouraged by the recent market share gains from our brands and expect to build on this progress as we drive forward by enhancing the digital experience and elevating our product design and offerings,” said jay schmidt, president. “as we move through the remaining months of 2022, and in light of the more challenging macroeconomic environment, we will be even more focused on controlling our spending, prioritizing inventory management and leaning into our competitive advantages in order to drive long-term shareholder value.” third quarter 2022 highlights (13-weeks ended october 29, 2022, compared to 13-weeks ended october 30, 2021) net sales were $798.3 million, up 1.8 percent from the third quarter of fiscal 2021; a 2.6 percent sales decline in the famous footwear segment, with comparable store sales down 0.8 percent a 7.6 percent sales increase in the brand portfolio segment direct-to-consumer sales represented approximately 74 percent of total net sales a 2.6 percent sales decline in the famous footwear segment, with comparable store sales down 0.8 percent a 7.6 percent sales increase in the brand portfolio segment direct-to-consumer sales represented approximately 74 percent of total net sales gross profit was $339.9 million, while gross margin was 42.6 percent; a 44.7 percent gross margin in the famous footwear segment a 37.9 percent gross margin in the brand portfolio segment a 44.7 percent gross margin in the famous footwear segment a 37.9 percent gross margin in the brand portfolio segment sg&a as percentage of sales was 35.5 percent, 307 basis points higher than third quarter of fiscal 2021; net earnings of $39.2 million, or earnings per diluted share of $1.08, compared to net earnings of $59.6 million, or earnings per diluted share of $1.54 in the third quarter of fiscal 2021; adjusted net earnings of $42.0 million, or adjusted earnings per diluted share of $1.15, compared to adjusted net earnings of $61.5 million, or adjusted earnings per diluted share of $1.59 in the third quarter of fiscal 2021; trailing twelve-month adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) of $298.6 million; or 10.1 percent of sales; inventory was up approximately 19.5 percent, in-line with expectations, and 15.8 percent below the second quarter of 2022 – representing significant sequential progress; returned $24.1 million to shareholders through dividends and share repurchases. capital allocation update during the third quarter, caleres continued to strategically invest in value-driving growth opportunities while at the same time returning $24.1 million to shareholders through share repurchases and dividend payments. specifically, caleres repurchased 838,025 shares of common stock, at a total cost of $21.6 million and an average share price of $25.72. year-to-date, the company has repurchased 2.6 million shares, representing approximately 7 percent of shares outstanding, at an average share price of $24.11. in addition to buybacks, caleres returned $2.5 million to shareholders through its recurring quarterly cash dividend during the third quarter. fiscal year 2022 outlook: “looking ahead, we are confident that caleres is well-positioned to close 2022 with record-setting earnings,” said sullivan. “we believe our curated family of brands, powerful platform and robust capabilities in the areas of brand building, production creation, marketing, and logistics will enable us to navigate any market environment. in short, the caleres team is enthusiastic about its prospects for long-term profitability and confident in our ability to generate strong levels of cash and unlock further value for our shareholders.” given the strong execution to date and expectations for the fourth quarter, caleres is tightening its fiscal year 2022 earnings outlook at the upper end of its previous guidance range. specifically, the company expects adjusted earnings per share to be in the range of $4.30 and $4.40, representing another year of record earnings for the organization. in addition, the company is reiterating its full year sales outlook, with the range still expected to be between 4 percent and 6 percent as compared to fiscal year 2021. the company anticipates continued improvement in its inventory position and expects to end fiscal year 2022 with inventory up mid-single digit percent as compared to fiscal year 2021. investor conference call caleres will host a conference call at 10:00 a.m. et today, tuesday, november 22. the webcast and associated slides will be available at investor.caleres.com/news/events. a live conference call will be available at (877) 704-4453 for north america participants or (201) 389-0920 for international participants, no passcode necessary. a replay will be also available at investor.caleres.com/news/events/archive for a limited period. investors may also access the replay by dialing (844) 512-2921 in north america or (412) 317-6671 internationally and using the conference pin 13734096. definitions all references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to caleres, inc. and diluted earnings per common share attributable to caleres, inc. shareholders, are presented as net earnings and earnings per diluted share, respectively. non-gaap financial measures in this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (gaap) and using certain non-gaap financial measures. in particular, the company provides historic and estimated future gross profit, operating earnings, net earnings and earnings per diluted share, earnings before interest, taxes, depreciation and amortization adjusted to exclude certain gains, charges, and recoveries, which are non-gaap financial measures. these results are included as a complement to results provided in accordance with gaap because management believes these non-gaap financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. these measures should not be considered a substitute for or superior to gaap results. safe harbor statement under the private securities litigation reform act of 1995 this press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. such statements are subject to various risks and uncertainties that could cause actual results to differ materially. these risks include (i) supply chain disruptions and inflationary pressures; (ii) the coronavirus pandemic and its adverse impact on our business operations and financial condition (iii) changing consumer demands, which may be influenced by general economic conditions and other factors; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from china and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ix) cybersecurity threats or other major disruption to the company’s information technology systems; (x) the ability to accurately forecast sales and manage inventory levels; (xi) a disruption in the company’s distribution centers; (xii) the ability to recruit and retain senior management and other key associates; (xiii) the ability to secure/exit leases on favorable terms; (xiv) the ability to maintain relationships with current suppliers; (xv) transitional challenges with acquisitions and divestitures; (xvi) changes to tax laws, policies and treaties; (xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xviii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. the company's reports to the securities and exchange commission contain detailed information relating to such factors, including, without limitation, the information under the caption risk factors in item 1a of the company’s annual report on form 10-k for the year ended january 29, 2022, which information is incorporated by reference herein and updated by the company’s quarterly reports on form 10-q. the company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change. schedule 1 caleres, inc. condensed consolidated statements of earnings (unaudited) thirteen weeks ended thirty-nine weeks ended ($ thousands, except per share data) october 29, 2022 october 30, 2021 october 29, 2022 october 30, 2021 net sales $ 798,258 $ 784,156 $ 2,271,704 $ 2,098,323 cost of goods sold 458,382 448,805 1,268,019 1,165,792 gross profit 339,876 335,351 1,003,685 932,531 selling and administrative expenses 283,119 254,033 812,313 757,070 restructuring and other special charges, net 2,910 — 2,910 13,482 operating earnings 53,847 81,318 188,462 161,979 interest expense, net (4,003 ) (5,069 ) (8,886 ) (28,803 ) loss on early extinguishment of debt — (649 ) — (649 ) other income, net 2,997 3,844 9,636 11,533 earnings before income taxes 52,841 79,444 189,212 144,060 income tax provision (13,849 ) (19,759 ) (48,683 ) (39,838 ) net earnings 38,992 59,685 140,529 104,222 net (loss) earnings attributable to noncontrolling interests (254 ) 63 (404 ) 1,057 net earnings attributable to caleres, inc. $ 39,246 $ 59,622 $ 140,933 $ 103,165 basic earnings per common share attributable to caleres, inc. shareholders $ 1.09 $ 1.56 $ 3.83 $ 2.70 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.08 $ 1.54 $ 3.79 $ 2.68 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) ($ thousands) october 29, 2022 october 30, 2021 assets cash and cash equivalents $ 32,773 $ 74,772 receivables, net 161,367 161,892 inventories, net 649,257 543,218 property and equipment, held for sale 16,777 — prepaid expenses and other current assets 60,910 82,816 total current assets 921,084 862,698 lease right-of-use assets 523,011 500,308 property and equipment, net 151,798 155,516 goodwill and intangible assets, net 218,420 230,625 other assets 134,000 125,411 total assets $ 1,948,313 $ 1,874,558 liabilities and equity borrowings under revolving credit agreement $ 364,500 $ 175,000 current portion of long-term debt — 99,598 mandatory purchase obligation - blowfish malibu — 54,558 trade accounts payable 279,704 352,084 lease obligations 133,227 128,151 other accrued expenses 261,483 260,669 total current liabilities 1,038,914 1,070,060 noncurrent lease obligations 453,718 452,786 other liabilities 50,270 45,967 total other liabilities 503,988 498,753 total caleres, inc. shareholders’ equity 398,444 301,098 noncontrolling interests 6,967 4,647 total equity 405,411 305,745 total liabilities and equity $ 1,948,313 $ 1,874,558 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) thirty-nine weeks ended ($ thousands) october 29, 2022 october 30, 2021 operating activities: net cash provided by operating activities $ 46,266 $ 189,728 investing activities: purchases of property and equipment (40,056 ) (10,437 ) capitalized software (5,350 ) (4,122 ) net cash used for investing activities (45,406 ) (14,559 ) financing activities: borrowings under revolving credit agreement 708,500 363,000 repayments under revolving credit agreement (634,000 ) (438,000 ) redemption of senior notes — (100,000 ) dividends paid (7,698 ) (8,011 ) debt issuance costs — (1,190 ) acquisition of treasury stock (63,225 ) — issuance of common stock under share-based plans, net (4,804 ) (3,779 ) contributions by noncontrolling interests, net 3,142 — other — (676 ) net cash provided by (used for) financing activities 1,915 (188,656 ) effect of exchange rate changes on cash and cash equivalents (117 ) (36 ) increase (decrease) in cash and cash equivalents 2,658 (13,523 ) cash and cash equivalents at beginning of period 30,115 88,295 cash and cash equivalents at end of period $ 32,773 $ 74,772 schedule 4 caleres, inc. reconciliation of net earnings and diluted earnings per share (gaap basis) to adjusted net earnings and adjusted diluted earnings per share (non-gaap basis) (unaudited) thirteen weeks ended october 29, 2022 october 30, 2021 pre-tax net earnings pre-tax net earnings impact of attributable diluted impact of attributable diluted charges/other to caleres, earnings charges/other to caleres, earnings ($ thousands, except per share data) items inc. per share items inc. per share gaap earnings $ 39,246 $ 1.08 $ 59,622 $ 1.54 charges/other items: organizational changes $ 2,910 2,723 0.07 $ — — — fair value adjustment to blowfish purchase obligation — — — 1,918 1,424 0.04 loss on early extinguishment of debt — — — 649 482 0.01 total charges/other items $ 2,910 $ 2,723 $ 0.07 $ 2,567 $ 1,906 $ 0.05 adjusted earnings $ 41,969 $ 1.15 $ 61,528 $ 1.59 (unaudited) thirty-nine weeks ended october 29, 2022 october 30, 2021 pre-tax net earnings pre-tax net earnings impact of attributable diluted impact of attributable diluted charges/other to caleres, earnings charges/other to caleres, earnings ($ thousands, except per share data) items inc. per share items inc. per share gaap earnings $ 140,933 $ 3.79 $ 103,165 $ 2.68 charges/other items: organizational changes $ 2,910 2,723 0.07 $ — — $ — fair value adjustment to blowfish purchase obligation — — — 15,423 11,454 0.30 brand portfolio - business exits — — — 13,482 11,927 0.31 loss on early extinguishment of debt — — — 649 482 0.01 deferred tax valuation allowances — — — — 3,294 0.08 total charges/other items $ 2,910 $ 2,723 $ 0.07 $ 29,554 $ 27,157 $ 0.70 adjusted earnings $ 143,656 $ 3.86 $ 130,322 $ 3.38 (unaudited) trailing twelve months october 29, 2022 october 30, 2021 pre-tax net earnings pre-tax net earnings impact of attributable impact of attributable charges/other to caleres, charges/other to caleres, ($ thousands) items inc. items inc. gaap earnings $ 174,787 $ 26,189 charges/other items: organizational changes $ 2,910 2,723 $ — — loss on early extinguishment of debt 362 268 649 482 deferred tax valuation allowances — 746 — 3,294 brand portfolio - business exits — — 28,256 25,607 fair value adjustment to blowfish purchase obligation — — 24,412 18,129 intangible asset impairment charges — — 23,805 17,854 covid-19-related expenses — — 15,245 37,486 vionic integration-related costs — — 3,436 2,552 total charges/other items $ 3,272 $ 3,737 $ 95,803 $ 105,404 adjusted earnings $ 178,524 $ 131,593 caleres, inc. summary financial results by segment summary financial results (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated october 29, october 30, october 29, october 30, october 29, october 30, october 29, october 30, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 net sales $ 481,951 $ 494,660 $ 323,242 $ 300,513 $ (6,935 ) $ (11,017 ) $ 798,258 $ 784,156 gross profit 215,603 235,487 122,359 98,898 1,914 966 339,876 335,351 adjusted gross profit 215,603 235,487 122,359 98,898 1,914 966 339,876 335,351 gross profit rate 44.7 % 47.6 % 37.9 % 32.9 % (27.6 ) % (8.8 ) % 42.6 % 42.8 % adjusted gross profit rate 44.7 % 47.6 % 37.9 % 32.9 % (27.6 ) % (8.8 ) % 42.6 % 42.8 % operating earnings (loss) 59,267 87,375 22,304 11,383 (27,724 ) (17,440 ) 53,847 81,318 adjusted operating earnings (loss) 59,267 87,375 22,304 11,383 (24,814 ) (17,440 ) 56,757 81,318 operating earnings % 12.3 % 17.7 % 6.9 % 3.8 % n/m % n/m % 6.7 % 10.4 % adjusted operating earnings % 12.3 % 17.7 % 6.9 % 3.8 % n/m % n/m % 7.1 % 10.4 % same-store sales % (on a 13-week basis) (0.8 ) % 26.5 % 26.0 % 45.8 % — % — % — % — % number of stores 876 905 89 90 — — 965 995 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated october 29, october 30, october 29, october 30, october 29, october 30, october 29, october 30, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 gross profit $ 215,603 $ 235,487 $ 122,359 $ 98,898 $ 1,914 $ 966 $ 339,876 $ 335,351 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 215,603 $ 235,487 $ 122,359 $ 98,898 $ 1,914 $ 966 $ 339,876 $ 335,351 operating earnings (loss) $ 59,267 $ 87,375 $ 22,304 $ 11,383 $ (27,724 ) $ (17,440 ) $ 53,847 $ 81,318 charges/other items: organizational changes — — — — 2,910 — 2,910 — total charges/other items — — — — 2,910 — 2,910 — adjusted operating earnings (loss) $ 59,267 $ 87,375 $ 22,304 $ 11,383 $ (24,814 ) $ (17,440 ) $ 56,757 $ 81,318 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) thirty-nine weeks ended famous footwear brand portfolio eliminations and other consolidated october 29, october 30, october 29, october 30, october 29, october 30, october 29, october 30, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 net sales $ 1,302,828 $ 1,346,413 $ 1,013,043 $ 789,832 $ (44,167 ) $ (37,922 ) $ 2,271,704 $ 2,098,323 gross profit 618,442 642,715 385,800 287,791 (557 ) 2,025 1,003,685 932,531 adjusted gross profit 618,442 642,715 385,800 287,791 (557 ) 2,025 1,003,685 932,531 gross profit rate 47.5 % 47.7 % 38.1 % 36.4 % 1.3 % (5.3 ) % 44.2 % 44.4 % adjusted gross profit rate 47.5 % 47.7 % 38.1 % 36.4 % 1.3 % (5.3 ) % 44.2 % 44.4 % operating earnings (loss) 171,451 220,746 93,063 25,116 (76,052 ) (83,883 ) 188,462 161,979 adjusted operating earnings (loss) 171,451 220,746 93,063 38,598 (73,142 ) (83,883 ) 191,372 175,461 operating earnings % 13.2 % 16.4 % 9.2 % 3.2 % n/m % n/m % 8.3 % 7.7 % adjusted operating earnings % 13.2 % 16.4 % 9.2 % 4.9 % n/m % n/m % 8.4 % 8.4 % same-store sales % (on a 39-week basis) (2.5 ) % 11.5 % 36.4 % 24.3 % — % — % — % — % number of stores 876 905 89 90 — — 965 995 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) thirty-nine weeks ended famous footwear brand portfolio eliminations and other consolidated october 29, october 30, october 29, october 30, october 29, october 30, october 29, october 30, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 gross profit $ 618,442 $ 642,715 $ 385,800 $ 287,791 $ (557 ) $ 2,025 $ 1,003,685 $ 932,531 charges/other items: brand portfolio - brand exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 618,442 $ 642,715 $ 385,800 $ 287,791 $ (557 ) $ 2,025 $ 1,003,685 $ 932,531 operating earnings (loss) $ 171,451 $ 220,746 $ 93,063 $ 25,116 $ (76,052 ) $ (83,883 ) $ 188,462 $ 161,979 charges/other items: organizational changes — — — — 2,910 — 2,910 — brand portfolio - business exits — — — 13,482 — — — 13,482 total charges/other items — — — 13,482 2,910 — 2,910 13,482 adjusted operating earnings (loss) $ 171,451 $ 220,746 $ 93,063 $ 38,598 $ (73,142 ) $ (83,883 ) $ 191,372 $ 175,461 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended thirty-nine weeks ended october 29, october 30, october 29, october 30, 2022 2021 2022 2021 ($ thousands, except per share data) net earnings attributable to caleres, inc.: net earnings $ 38,992 $ 59,685 $ 140,529 $ 104,222 net loss (earnings) attributable to noncontrolling interests 254 (63 ) 404 (1,057 ) net earnings attributable to caleres, inc. 39,246 59,622 140,933 103,165 net earnings allocated to participating securities (1,723 ) (2,140 ) (5,951 ) (3,737 ) net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 37,523 $ 57,482 $ 134,982 $ 99,428 basic and diluted common shares attributable to caleres, inc.: basic common shares 34,379 36,889 35,207 36,825 dilutive effect of share-based awards 507 457 450 294 diluted common shares attributable to caleres, inc. 34,886 37,346 35,657 37,119 basic earnings per common share attributable to caleres, inc. shareholders $ 1.09 $ 1.56 $ 3.83 $ 2.70 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.08 $ 1.54 $ 3.79 $ 2.68 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended thirty-nine weeks ended october 29, october 30, october 29, october 30, 2022 2021 2022 2021 ($ thousands, except per share data) adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 41,715 $ 61,591 $ 143,252 $ 131,379 net loss (earnings) attributable to noncontrolling interests 254 (63 ) 404 (1,057 ) adjusted net earnings attributable to caleres, inc. 41,969 61,528 143,656 130,322 net earnings allocated to participating securities (1,842 ) (2,208 ) (6,067 ) (4,729 ) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 40,127 $ 59,320 $ 137,589 $ 125,593 basic and diluted common shares attributable to caleres, inc.: basic common shares 34,379 36,889 35,207 36,825 dilutive effect of share-based awards 507 457 450 294 diluted common shares attributable to caleres, inc. 34,886 37,346 35,657 37,119 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.17 $ 1.61 $ 3.91 $ 3.41 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.15 $ 1.59 $ 3.86 $ 3.38 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) trailing twelve months ended ($ thousands) october 29, 2022 october 30, 2021 ebitda: net earnings attributable to caleres, inc. $ 174,787 $ 26,189 income tax provision 59,926 51,114 interest expense, net 11,013 43,343 loss on early extinguishment of debt 362 649 depreciation and amortization (1) 49,552 53,900 ebitda $ 295,640 $ 175,195 ebitda margin 10.0 % 6.6 % adjusted ebitda: adjusted net earnings attributable to caleres, inc. (2) $ 178,524 $ 131,593 income tax provision (3) 59,461 41,514 interest expense, net (4) 11,013 18,932 depreciation and amortization (1) 49,552 53,900 adjusted ebitda $ 298,550 $ 245,939 adjusted ebitda margin 10.1 % 9.2 % includes depreciation and amortization of capitalized software and intangible assets. refer to schedule 4 for the consolidated reconciliation of net earnings attributable to caleres, inc. to adjusted net earnings attributable to caleres, inc. excludes the income tax impacts of the adjustments on schedule 4. excludes the fair value adjustment to the blowfish purchase obligation, as reflected on schedule 4.
