Caleres reports first quarter 2022 results
St. louis--(business wire)--caleres (nyse: cal, caleres.com), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the first quarter ended april 30, 2022. caleres maintained its strong momentum from 2021, delivering its best-ever first quarter performance for sales, gross profit margins and earnings. the company recorded a 15.1 percent year-over-year sales improvement, generated 44.5 percent consolidated gross profit margin and achieved net earnings of $50.5 million. in addition, the company utilized its robust cash generation to augment inventory levels to better align with strong consumer demand, to repurchase approximately 701,000 shares of caleres common stock and to fund its quarterly dividend. “caleres had an outstanding start to the year, executing at a high level and delivering record first quarter sales, gross profit margins and earnings despite significant and ongoing macro-challenges,” said diane sullivan, chairman and chief executive officer. “notably, famous extended its exceptional performance from 2021, achieving another quarter of strong gross profit margin and generating nearly $50 million in operating earnings, while strategically investing for growth. in addition, our brand portfolio returned to nearly full strength during the first quarter, setting the stage for a significantly improved earnings contribution in 2022. in fact, our strong product design, diverse and targeted assortments, and bold and strategic approach to inventory drove the best-ever quarterly sales and operating earnings performance for the brand portfolio.” first quarter 2022 highlights (13-weeks ended april 30, 2022 compared to 13-weeks ended may 1, 2021) net sales were $735.1 million, up 15.1 percent from the first quarter of fiscal 2021 -- a 3.4 percent sales decline in the famous footwear segment -- a 46.1 percent sales increase in the brand portfolio segment -- direct-to-consumer sales represented approximately 65 percent of total net sales gross profit was $327.0 million, while gross margin was 44.5 percent, or a 144-basis point improvement over the first quarter of 2021; -- a 49.2 percent gross margin in the famous footwear segment, or a 405-basis point improvement over the first quarter of 2021 -- a 38.1 percent gross margin in the brand portfolio segment, or a 53-basis point improvement over the first quarter of 2021 sg&a as percentage of sales was 35.5 percent, 266-basis points higher than first quarter of fiscal 2021 due primarily to an increase in variable costs on increased sales, an increase to marketing costs and higher wages and labor costs; net earnings of $50.5 million, or earnings of $1.32 per diluted share, compared to net earnings of $6.1 million, or earnings of $0.16 per diluted share in the first quarter of fiscal 2021; trailing twelve-month adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) of approximately $320 million; inventory levels were up approximately 45 percent, year-over-year, reflecting ongoing efforts to align inventory with robust consumer demand and includes increased in-transit inventory resulting from port delays and protracted transportation time; generated $19.7 million in cash from operations; and returned $17.3 million to shareholders through dividends and share repurchases. capital return progress during the first quarter, caleres utilized its healthy operating cash generation to repurchase 701,000 shares of common stock, representing approximately 1.9 percent of shares outstanding, at a total cost of $14.7 million. at quarter-end, nearly 8.3 million shares remained available in the current share repurchase authorization. "we remain optimistic about the company's long-term prospects and potential for strong cash flows," said ken hannah, senior vice president and chief financial officer. "we continue to view our stock as an attractive investment option and buying back shares as a prudent use of cash and expect to make ongoing purchases under the existing authorization during the remainder of 2022.” in addition, the company paid $2.6 million in cash dividends to shareholders during the first quarter of 2022. future dividend declarations and share repurchases will be based on a number of factors, including business and market conditions, the company’s future financial performance and other capital priorities. outlook “looking ahead, even with ongoing supply chain challenges and persistent macro-economic headwinds, caleres is exceptionally well-positioned to capitalize on favorable market dynamics,” said sullivan. “as we progress through the year, we are committed to advancing our strategic priorities and have redoubled our efforts to unlock the growth opportunities identified across the enterprise. with the significant step-change achieved in the long-term cash generating potential of our diversified portfolio, coupled with our carefully defined capital return program, we are confident we can drive substantial, long-term value for our shareholders.” fiscal year 2022 outlook: given the strong start to the year, robust consumer demand for its brands and products and the significant structural changes implemented across its business, caleres is raising its fiscal-year 2022 financial outlook. specifically, the company now expects consolidated sales levels to be up between 2 percent and 5 percent when compared to fiscal year 2021 and expects earnings per diluted share to be between $4.20 and $4.40, representing another year of record or near-record earnings for the organization. investor conference call caleres will host an investor conference call at 5:00 p.m. et today, tuesday, may 24. the webcast and associated slides will be available at investor.caleres.com/news/events. a live conference call will be available at (877) 217-9089 for analysts in north america or (706) 679-1723 for international analysts by using the conference id 1948187. a replay will be available at investor.caleres.com/news/events/archive for a limited period. investors may also access the replay by dialing (855) 859-2056 in north america or (404) 537-3406 internationally and using the conference id 1948187. 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 adjusted to exclude certain gains, charges, and recoveries, earnings before interest, taxes, depreciation and amortization, 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 thirteen weeks ended ($ thousands, except per share data) april 30, 2022 may 1, 2021 net sales $ 735,116 $ 638,636 cost of goods sold 408,122 363,749 gross profit 326,994 274,887 selling and administrative expenses 260,799 243,535 restructuring and other special charges, net — 13,482 operating earnings 66,195 17,870 interest expense, net (2,299) (11,792) other income, net 3,422 3,828 earnings before income taxes 67,318 9,906 income tax provision (17,333) (3,521) net earnings 49,985 6,385 net (loss) earnings attributable to noncontrolling interests (524) 238 net earnings attributable to caleres, inc. $ 50,509 $ 6,147 basic earnings per common share attributable to caleres, inc. shareholders $ 1.34 $ 0.16 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.32 $ 0.16 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) ($ thousands) april 30, 2022 may 1, 2021 assets cash and cash equivalents $ 33,717 $ 98,244 receivables, net 181,551 132,698 inventories, net 643,527 445,299 property and equipment, held for sale 16,777 — prepaid expenses and other current assets 58,069 80,877 total current assets 933,641 757,118 lease right-of-use assets 503,393 526,011 property and equipment, net 137,600 165,118 goodwill and intangible assets, net 224,475 236,924 other assets 129,189 117,652 total assets $ 1,928,298 $ 1,802,823 liabilities and equity borrowings under revolving credit agreement $ 305,000 $ 200,000 mandatory purchase obligation - blowfish malibu — 45,523 trade accounts payable 386,821 293,309 lease obligations 118,692 133,327 other accrued expenses 259,374 193,778 total current liabilities 1,069,887 865,937 noncurrent lease obligations 452,742 490,355 long-term debt — 198,966 other liabilities 47,641 40,909 total other liabilities 500,383 730,230 total caleres, inc. shareholders’ equity 352,236 202,869 noncontrolling interests 5,792 3,787 total equity 358,028 206,656 total liabilities and equity $ 1,928,298 $ 1,802,823 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) thirteen weeks ended ($ thousands) april 30, 2022 may 1, 2021 operating activities: net cash provided by operating activities $ 19,686 $ 70,378 investing activities: purchases of property and equipment (9,305) (2,659) capitalized software (2,345) (1,218) net cash used for investing activities (11,650) (3,877) financing activities: borrowings under revolving credit agreement 205,000 110,500 repayments under revolving credit agreement (190,000) (160,500) dividends paid (2,648) (2,663) acquisition of treasury stock (14,673) — issuance of common stock under share-based plans, net (3,599) (3,501) contributions by noncontrolling interests, net 1,500 — other — (450) net cash used for provided by financing activities (4,420) (56,614) effect of exchange rate changes on cash and cash equivalents (14) 62 increase in cash and cash equivalents 3,602 9,949 cash and cash equivalents at beginning of period 30,115 88,295 cash and cash equivalents at end of period $ 33,717 $ 98,244 schedule 4 caleres, inc. reconciliation of net earnings (loss) and diluted earnings per share (gaap basis) to adjusted net earnings and adjusted diluted earnings per share (non-gaap basis) (unaudited) thirteen weeks ended april 30, 2022 may 1, 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 $ 50,509 $ 1.32 $ 6,147 $ 0.16 charges/other items: brand portfolio - business exits — — — 13,482 11,927 0.31 fair value adjustment to blowfish purchase obligation — — — 6,389 4,745 0.13 total charges/other items $ — $ — $ — $ 19,871 $ 16,672 $ 0.44 adjusted earnings $ 50,509 $ 1.32 $ 22,819 $ 0.60 (unaudited) trailing twelve months april 30, 2022 may 1, 2021 pre-tax net earnings pre-tax net (loss) impact of attributable impact of earnings charges/other to caleres, charges/other attributable to ($ thousands) items inc. items caleres, inc. gaap earnings (loss) $ 181,381 $ (87,129) charges/other items: fair value adjustment to blowfish purchase obligation $ 9,034 6,709 $ 27,091 20,117 loss on early extinguishment of debt 1,011 750 — — deferred tax valuation allowances — 4,040 — — brand portfolio - business exits — — 28,256 25,607 intangible asset impairment charges — — 23,805 17,854 covid-19-related expenses — — 20,673 42,195 vionic integration-related costs — — 3,436 2,552 total charges/other items $ 10,045 $ 11,499 $ 103,261 $ 108,325 adjusted earnings $ 192,880 $ 21,196 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated april 30, may 1, april 30, may 1, april 30, may 1, april 30, may 1, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 net sales $ 384,502 $ 398,104 $ 365,740 $ 250,305 $ (15,126) $ (9,773) $ 735,116 $ 638,636 gross profit 189,234 179,815 139,299 94,003 (1,539) 1,069 326,994 274,887 adjusted gross profit 189,234 179,815 139,299 94,003 (1,539) 1,069 326,994 274,887 gross profit rate 49.2 % 45.2 % 38.1 % 37.6 % 10.2 % (10.9) % 44.5 % 43.0 % adjusted gross profit rate 49.2 % 45.2 % 38.1 % 37.6 % 10.2 % (10.9) % 44.5 % 43.0 % operating earnings (loss) 49,688 47,873 41,349 (2,821) (24,842) (27,182) 66,195 17,870 adjusted operating earnings (loss) 49,688 47,873 41,349 10,661 (24,842) (27,182) 66,195 31,352 operating earnings (loss) % 12.9 % 12.0 % 11.3 % (1.1) % n/m % n/m % 9.0 % 2.8 % adjusted operating earnings (loss) % 12.9 % 12.0 % 11.3 % 4.3 % n/m % n/m % 9.0 % 4.9 % same-store sales % (on a 13-week basis) (4.0) % 3.3 % 66.0 % 5.1 % — % — % — % — % number of stores 887 913 83 95 — — 970 1,008 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated april 30, may 1, april 30, may 1, april 30, may 1, april 30, may 1, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 gross profit $ 189,234 $ 179,815 $ 139,299 $ 94,003 $ (1,539) $ 1,069 $ 326,994 $ 274,887 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 189,234 $ 179,815 $ 139,299 $ 94,003 $ (1,539) $ 1,069 $ 326,994 $ 274,887 operating earnings (loss) $ 49,688 $ 47,873 $ 41,349 $ (2,821) $ (24,842) $ (27,182) $ 66,195 $ 17,870 charges/other items: brand portfolio - business exits — — — 13,482 — — — 13,482 total charges/other items — — — 13,482 — — — 13,482 adjusted operating earnings (loss) $ 49,688 $ 47,873 $ 41,349 $ 10,661 $ (24,842) $ (27,182) $ 66,195 $ 31,352 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended april 30, may 1, 2022 2021 ($ thousands, except per share data) net earnings attributable to caleres, inc.: net earnings $ 49,985 $ 6,385 net loss (earnings) attributable to noncontrolling interests 524 (238) net earnings attributable to caleres, inc. 50,509 6,147 net earnings allocated to participating securities (2,017) (210) net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 48,492 $ 5,937 basic and diluted common shares attributable to caleres, inc.: basic common shares 36,209 36,707 dilutive effect of share-based awards 467 158 diluted common shares attributable to caleres, inc. 36,676 36,865 basic earnings per common share attributable to caleres, inc. shareholders $ 1.34 $ 0.16 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.32 $ 0.16 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended april 30, may 1, 2022 2021 ($ thousands, except per share data) adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 49,985 $ 23,057 net loss (earnings) attributable to noncontrolling interests 524 (238) adjusted net earnings attributable to caleres, inc. 50,509 22,819 net earnings allocated to participating securities (2,017) (828) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 48,492 $ 21,991 basic and diluted common shares attributable to caleres, inc.: basic common shares 36,209 36,707 dilutive effect of share-based awards 467 158 diluted common shares attributable to caleres, inc. 36,676 36,865 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.34 $ 0.60 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.32 $ 0.60 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) trailing twelve months ended ($ thousands) april 30, 2022 may 1, 2021 ebitda: net earnings (loss) attributable to caleres, inc. $ 181,381 $ (87,129) income tax provision 64,893 11,336 interest expense, net 21,437 50,601 loss on early extinguishment of debt 1,011 — depreciation and amortization (1) 51,076 57,326 ebitda $ 319,798 $ 32,134 ebitda margin 11.1 % 1.4 % adjusted ebitda: adjusted net earnings attributable to caleres, inc. (2) $ 192,880 $ 21,196 income tax provision (3) 63,439 6,272 interest expense, net (4) 12,403 23,511 depreciation and amortization (1) 51,076 57,326 adjusted ebitda $ 319,798 $ 108,305 adjusted ebitda margin 11.1 % 4.6 % (1) includes depreciation and amortization of capitalized software and intangible assets. (2) refer to schedule 4 for the consolidated reconciliation of net earnings (loss) attributable to caleres, inc. to adjusted net earnings attributable to caleres, inc. (3) excludes the income tax impacts of the adjustments on schedule 4. (4) excludes the fair value adjustment to the blowfish purchase obligation, as reflected on schedule 4.
