Caleres reports fourth quarter and full year 2022 results
St. louis--(business wire)--caleres (nyse: cal), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the fourth quarter and fiscal 2022, and provided guidance for fiscal 2023. “caleres closed a record-setting 2022 with another quarter of strong sales and earnings performance that exceeded initial expectations,” said jay schmidt, president and chief executive officer. “our fourth quarter results were led by our brand portfolio, which experienced strong growth in sales, gross margin and earnings and a solid performance from famous footwear, which continues to provide the brands, trends and value aligned with consumer preferences.” specifically, during the quarter, the brand portfolio capitalized on continued strength to drive a 6.4 percent increase in year-over-year net sales and a nearly 200 basis point improvement in gross margin resulting in record fourth quarter earnings for the segment. the brand portfolio also delivered its best-ever annual operating earnings, which topped $112 million with an 8.5 percent return on sales. at the same time, famous footwear leaned into its improved inventory position to take advantage of strong pockets of demand – leading to record fourth quarter sales as well as an increase in comparable sales. for the full year, famous achieved its second consecutive year of double-digit operating margin. “overall, caleres generated annual results well ahead of pre-pandemic levels,” said schmidt. “the power of the caleres portfolio and the structural changes made in recent years have effectively doubled the baseline earnings power of the company. looking ahead, we are confident in our ability to consistently deliver annual earnings per share of more than $4.00, generate strong cash flow, and create long-term value for our shareholders.” fourth quarter 2022 results (13-weeks ended january 28, 2023, compared to 13-weeks ended january 29, 2022) net sales were $696.4 million, up 2.5 percent from the fourth quarter of 2021; famous footwear segment sales improved 0.1 percent, with comparable sales up 0.7 percent brand portfolio segment sales increased 6.4 percent direct-to-consumer sales represented approximately 75 percent of total net sales famous footwear segment sales improved 0.1 percent, with comparable sales up 0.7 percent brand portfolio segment sales increased 6.4 percent direct-to-consumer sales represented approximately 75 percent of total net sales gross profit was $281.2 million, while gross margin was 40.4 percent; famous footwear segment gross margin of 42.4 percent brand portfolio segment gross margin of 36.0 percent famous footwear segment gross margin of 42.4 percent brand portfolio segment gross margin of 36.0 percent sg&a as a percentage of net sales was 36.7 percent, effectively in-line with the fourth quarter of fiscal 2021; net earnings of $40.8 million, or earnings per diluted share of $1.13, compared to net earnings of $33.9 million, or earnings per diluted share of $0.88 in the fourth quarter of fiscal 2021; adjusted net earnings of $23.4 million, or adjusted earnings per diluted share of $0.65, compared to adjusted net earnings of $34.9 million, or adjusted earnings per diluted share of $0.91 in the fourth quarter of fiscal 2021; fiscal year 2022 results (52-weeks ended january 28, 2023, compared to 52-weeks ended january 29, 2022) net sales were $2.97 billion, up 6.9 percent from fiscal 2021; famous footwear segment sales declined 2.5 percent, with comparable sales down 1.8 percent brand portfolio segment sales increased 22.4 percent direct-to-consumer sales represented approximately 72 percent of total net sales famous footwear segment sales declined 2.5 percent, with comparable sales down 1.8 percent brand portfolio segment sales increased 22.4 percent direct-to-consumer sales represented approximately 72 percent of total net sales gross profit was $1.28 billion, while gross margin was 43.3 percent; famous footwear segment gross margin of 46.3 percent brand portfolio segment gross margin of 37.6 percent famous footwear segment gross margin of 46.3 percent brand portfolio segment gross margin of 37.6 percent sg&a as a percentage of net sales was 36.0 percent, down 30 basis points compared to fiscal 2021; net earnings of $181.7 million, or earnings per diluted share of $4.92, compared to net earnings of $137.0 million, or earnings per diluted share of $3.56 in fiscal 2021; adjusted net earnings of $167.1 million, or adjusted earnings per diluted share of $4.52, compared to adjusted net earnings of $165.2 million, or adjusted earnings per diluted share of $4.29 in fiscal 2021; trailing twelve-month earnings before interest, taxes, depreciation, and amortization (ebitda) of $278.4 million and adjusted ebitda of $281.3 million, or 9.5 percent of sales; inventory was down 2.8 percent compared to fiscal 2021, reflecting the company’s disciplined approach to inventory management; returned $73.4 million to shareholders through dividends and share repurchases; and ended the year with $307.5 million of borrowings under its asset-based revolving credit facility. capital allocation update caleres continued to reduce the borrowings under its asset-based revolving credit facility – paying down $57 million during the fourth quarter. the company also returned $2.5 million to shareholders through its quarterly dividend. the caleres board of directors recently approved its next quarterly dividend. in fiscal 2022, caleres continued to invest in value-driving growth opportunities while at the same time returning $73.4 million to shareholders through share repurchases and dividend payments. specifically, caleres repurchased 2.6 million shares of common stock, or approximately 7 percent of shares outstanding, for $63.2 million. the company returned $10.2 million to shareholders through its quarterly dividend. fiscal 2023 outlook: the company is introducing its financial outlook for fiscal 2023 and first quarter of 2023 and notes that its fiscal 2023 is a 53-week year and compares to a 52-week year in fiscal 2022. caleres expects consolidated net sales to be flat to up 2 percent, including the 53rd week this year, compared to 2022 and earnings per diluted share to be in the range of $4.10 to $4.30. this outlook balances strong momentum in our business and structural improvements in our earnings ability against anticipated headwinds that include inflationary pressures, higher interest rates, and continuing uncertainty in the macro-economic environment. in addition, for fiscal 2023, the company expects: consolidated operating margin of 7.1 percent to 7.3 percent; interest expense of $18 million to $20 million, reflecting higher interest rates; capital expenditures of $60 million to $70 million; and effective tax rate of about 25 percent. for first quarter 2023 the company expects: consolidated net sales down 4 percent to 6 percent, due to timing of wholesale shipments in the brand portfolio in first quarter 2022 to satisfy customer restocking efforts; and diluted earnings per share of $0.92 to $0.97. investor conference call caleres will host a conference call at 10:00 a.m. et today, tuesday, march 14. the webcast and associated slides will be available at https://investor.caleres.com/events-and-presentations/default.aspx. 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 https://investor.caleres.com/events-and-presentations/default.aspx 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 13736520. 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) inflationary pressures; (ii) supply chain disruptions (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) our commitments and shareholder expectations related to environmental, social and governance considerations; (xviii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xix) 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 fifty-two weeks ended ($ thousands, except per share data) january 28, 2023 january 29, 2022 january 28, 2023 january 29, 2022 net sales $ 696,434 $ 679,280 $ 2,968,138 $ 2,777,604 cost of goods sold 415,246 384,494 1,683,265 1,550,287 gross profit 281,188 294,786 1,284,873 1,227,317 selling and administrative expenses 255,323 250,958 1,067,636 1,008,028 restructuring and other special charges, net — — 2,910 13,482 operating earnings 25,865 43,828 214,327 205,807 interest expense, net (5,378 ) (2,128 ) (14,264 ) (30,930 ) loss on early extinguishment of debt — (361 ) — (1,011 ) other income, net 3,335 3,845 12,971 15,378 earnings before income taxes 23,822 45,184 213,034 189,244 income tax benefit (provision) 15,343 (11,242 ) (33,339 ) (51,081 ) net earnings 39,165 33,942 179,695 138,163 net (loss) earnings attributable to noncontrolling interests (1,643 ) 88 (2,047 ) 1,144 net earnings attributable to caleres, inc. $ 40,808 $ 33,854 $ 181,742 $ 137,019 basic earnings per common share attributable to caleres, inc. shareholders $ 1.14 $ 0.89 $ 4.98 $ 3.59 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.13 $ 0.88 $ 4.92 $ 3.56 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) ($ thousands) january 28, 2023 january 29, 2022 assets cash and cash equivalents $ 33,700 $ 30,115 receivables, net 132,802 122,236 inventories, net 580,215 596,807 property and equipment, held for sale 16,777 5,455 prepaid expenses and other current assets 67,961 81,863 total current assets 831,455 836,476 lease right-of-use assets 518,196 503,430 property and equipment, net 160,883 150,238 goodwill and intangible assets, net 215,392 227,503 other assets 110,546 126,279 total assets $ 1,836,472 $ 1,843,926 liabilities and equity borrowings under revolving credit agreement $ 307,500 $ 290,000 trade accounts payable 229,908 331,470 lease obligations 136,051 128,495 other accrued expenses 237,737 275,648 total current liabilities 911,196 1,025,613 noncurrent lease obligations 444,074 452,909 other liabilities 55,089 42,017 total other liabilities 499,163 494,926 total caleres, inc. shareholders’ equity 420,683 318,570 noncontrolling interests 5,430 4,817 total equity 426,113 323,387 total liabilities and equity $ 1,836,472 $ 1,843,926 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) fifty-two weeks ended ($ thousands) january 28, 2023 january 29, 2022 operating activities: net cash provided by operating activities $ 125,879 $ 168,441 investing activities: purchases of property and equipment (55,913 ) (18,393 ) capitalized software (8,124 ) (5,752 ) net cash used for investing activities (64,037 ) (24,145 ) financing activities: borrowings under revolving credit agreement 859,500 632,000 repayments under revolving credit agreement (842,000 ) (592,000 ) redemption of senior notes — (200,000 ) dividends paid (10,184 ) (10,648 ) acquisition of treasury stock (63,225 ) (16,965 ) issuance of common stock under share-based plans, net (5,387 ) (3,910 ) contributions by noncontrolling interests, net 3,142 — blowfish malibu mandatory purchase obligation — (8,996 ) debt issuance costs — (1,190 ) other — (676 ) net cash used for financing activities (58,154 ) (202,385 ) effect of exchange rate changes on cash and cash equivalents (103 ) (91 ) increase (decrease) in cash and cash equivalents 3,585 (58,180 ) cash and cash equivalents at beginning of period 30,115 88,295 cash and cash equivalents at end of period $ 33,700 $ 30,115 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 january 28, 2023 january 29, 2022 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 $ 40,808 $ 1.13 $ 33,854 $ 0.88 charges/other items: deferred tax valuation allowance adjustment $ — (17,374 ) (0.48 ) $ — 746 0.02 loss on early extinguishment of debt — — — 361 268 0.01 total charges/other items $ — $ (17,374 ) $ (0.48 ) $ 361 $ 1,014 $ 0.03 adjusted earnings $ 23,434 $ 0.65 $ 34,868 $ 0.91 (unaudited) fifty-two weeks ended january 28, 2023 january 29, 2022 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 $ 181,742 $ 4.92 $ 137,019 $ 3.56 charges/other items: deferred tax valuation allowance adjustment $ — (17,374 ) (0.47 ) $ — 4,040 $ 0.10 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 — — — 1,011 750 0.02 total charges/other items $ 2,910 $ (14,651 ) $ (0.40 ) $ 29,916 $ 28,171 $ 0.73 adjusted earnings $ 167,091 $ 4.52 $ 165,190 $ 4.29 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated january 28, january 29, january 28, january 29, january 28, january 29, january 28, january 29, ($ thousands) 2023 2022 2023 2022 2023 2022 2023 2022 net sales $ 402,265 $ 401,877 $ 309,729 $ 291,171 $ (15,560 ) $ (13,768 ) $ 696,434 $ 679,280 gross profit 170,562 196,686 111,465 98,989 (839 ) (889 ) 281,188 294,786 adjusted gross profit 170,562 196,686 111,465 98,989 (839 ) (889 ) 281,188 294,786 gross profit rate 42.4 % 48.9 % 36.0 % 34.0 % 5.4 % 6.5 % 40.4 % 43.4 % adjusted gross profit rate 42.4 % 48.9 % 36.0 % 34.0 % 5.4 % 6.5 % 40.4 % 43.4 % operating earnings (loss) 24,386 55,668 19,281 10,812 (17,802 ) (22,652 ) 25,865 43,828 adjusted operating earnings (loss) 24,386 55,668 19,281 10,812 (17,802 ) (22,652 ) 25,865 43,828 operating earnings % 6.1 % 13.9 % 6.2 % 3.7 % n/m % n/m % 3.7 % 6.5 % adjusted operating earnings % 6.1 % 13.9 % 6.2 % 3.7 % n/m % n/m % 3.7 % 6.5 % comparable sales % (on a 13-week basis) 0.7 % 15.2 % 20.4 % 46.4 % — % — % — % — % number of stores 873 894 92 86 — — 965 980 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated january 28, january 29, january 28, january 29, january 28, january 29, january 28, january 29, ($ thousands) 2023 2022 2023 2022 2023 2022 2023 2022 gross profit $ 170,562 $ 196,686 $ 111,465 $ 98,989 $ (839 ) $ (889 ) $ 281,188 $ 294,786 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 170,562 $ 196,686 $ 111,465 $ 98,989 $ (839 ) $ (889 ) $ 281,188 $ 294,786 operating earnings (loss) $ 24,386 $ 55,668 $ 19,281 $ 10,812 $ (17,802 ) $ (22,652 ) $ 25,865 $ 43,828 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted operating earnings (loss) $ 24,386 $ 55,668 $ 19,281 $ 10,812 $ (17,802 $ (22,652 $ 25,865 $ 43,828 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) fifty-two weeks ended famous footwear brand portfolio eliminations and other consolidated january 28, january 29, january 28, january 29, january 28, january 29, january 28, january 29, ($ thousands) 2023 2022 2023 2022 2023 2022 2023 2022 net sales $ 1,705,093 $ 1,748,291 $ 1,322,772 $ 1,081,003 $ (59,727 ) $ (51,690 ) $ 2,968,138 $ 2,777,604 gross profit 789,004 839,401 497,265 386,780 (1,396 ) 1,136 1,284,873 1,227,317 adjusted gross profit 789,004 839,401 497,265 386,780 (1,396 ) 1,136 1,284,873 1,227,317 gross profit rate 46.3 % 48.0 % 37.6 % 35.8 % 2.3 % (2.2 ) % 43.3 % 44.2 % adjusted gross profit rate 46.3 % 48.0 % 37.6 % 35.8 % 2.3 % (2.2 ) % 43.3 % 44.2 % operating earnings (loss) 195,837 276,415 112,345 35,928 (93,855 ) (106,536 ) 214,327 205,807 adjusted operating earnings (loss) 195,837 276,415 112,345 49,410 (90,945 ) (106,536 ) 217,237 219,289 operating earnings % 11.5 % 15.8 % 8.5 % 3.3 % n/m % n/m % 7.2 % 7.4 % adjusted operating earnings % 11.5 % 15.8 % 8.5 % 4.6 % n/m % n/m % 7.3 % 7.9 % comparable sales % (on a 52-week basis) (1.8 ) % 12.5 % 31.4 % 30.6 % — % — % — % — % number of stores 873 894 92 86 — — 965 980 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) fifty-two weeks ended famous footwear brand portfolio eliminations and other consolidated january 28, january 29, january 28, january 29, january 28, january 29, january 28, january 29, ($ thousands) 2023 2022 2023 2022 2023 2022 2023 2022 gross profit $ 789,004 $ 839,401 $ 497,265 $ 386,780 $ (1,396 ) $ 1,136 $ 1,284,873 $ 1,227,317 charges/other items: brand portfolio - brand exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 789,004 $ 839,401 $ 497,265 $ 386,780 $ (1,396 ) $ 1,136 $ 1,284,873 $ 1,227,317 operating earnings (loss) $ 195,837 $ 276,415 $ 112,345 $ 35,928 $ (93,855 ) $ (106,536 ) $ 214,327 $ 205,807 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) $ 195,837 $ 276,415 $ 112,345 $ 49,410 $ (90,945 ) $ (106,536 ) $ 217,237 $ 219,289 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended fifty-two weeks ended january 28, january 29, january 28, january 29, 2023 2022 2023 2022 ($ thousands, except per share data) net earnings attributable to caleres, inc.: net earnings $ 39,165 $ 33,942 $ 179,695 $ 138,163 net loss (earnings) attributable to noncontrolling interests 1,643 (88 ) 2,047 (1,144 ) net earnings attributable to caleres, inc. 40,808 33,854 181,742 137,019 net earnings allocated to participating securities (1,763 ) (1,240 ) (7,716 ) (4,982 ) net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 39,045 $ 32,614 $ 174,026 $ 132,037 basic and diluted common shares attributable to caleres, inc.: basic common shares 34,102 36,486 34,930 36,741 dilutive effect of share-based awards 548 533 475 354 diluted common shares attributable to caleres, inc. 34,650 37,019 35,405 37,095 basic earnings per common share attributable to caleres, inc. shareholders $ 1.14 $ 0.89 $ 4.98 $ 3.59 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.13 $ 0.88 $ 4.92 $ 3.56 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended fifty-two weeks ended january 28, january 29, january 28, january 29, 2023 2022 2023 2022 ($ thousands, except per share data) adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 21,791 $ 34,956 $ 165,044 $ 166,334 net loss (earnings) attributable to noncontrolling interests 1,643 (88 ) 2,047 (1,144 ) adjusted net earnings attributable to caleres, inc. 23,434 34,868 167,091 165,190 net earnings allocated to participating securities (1,012 ) (1,277 ) (7,092 ) (6,013 ) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 22,422 $ 33,591 $ 159,999 $ 159,177 basic and diluted common shares attributable to caleres, inc.: basic common shares 34,102 36,486 34,930 36,741 dilutive effect of share-based awards 548 533 475 354 diluted common shares attributable to caleres, inc. 34,650 37,019 35,405 37,095 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.66 $ 0.92 $ 4.58 $ 4.33 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.65 $ 0.91 $ 4.52 $ 4.29 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) trailing twelve months ended ($ thousands) january 28, 2023 january 29, 2022 ebitda: net earnings attributable to caleres, inc. $ 181,742 $ 137,019 income tax provision 33,339 51,081 interest expense, net 14,264 30,930 loss on early extinguishment of debt — 1,011 depreciation and amortization (1) 49,011 52,330 ebitda $ 278,356 $ 272,371 ebitda margin 9.4 % 9.8 % adjusted ebitda: adjusted net earnings attributable to caleres, inc. (2) $ 167,091 $ 165,190 income tax provision (3) 50,900 52,825 interest expense, net (4) 14,264 15,507 depreciation and amortization (1) 49,011 52,330 adjusted ebitda $ 281,266 $ 285,852 adjusted ebitda margin 9.5 % 10.3 % (1) includes depreciation and amortization of capitalized software and intangible assets. (2) refer to schedule 4 for the consolidated reconciliation of net earnings 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.
