Caleres reports record consolidated net sales and earnings in second quarter 2022 and reiterates full year 2022 earnings per share guidance
St. louis--(business wire)--caleres (nyse: cal, caleres.com), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the second quarter ended july 30, 2022. during the quarter, caleres continued its strong execution, delivering record second quarter sales and earnings and making significant accomplishments toward its enterprise-wide strategies. net sales rose 9.3 percent year-over-year driven by positive momentum in the brand portfolio segment reflecting the successful execution of its initiatives to elevate product design, refine product assortments and increase the availability of inventory to meet demand. notably, the company achieved net earnings of $51.2 million and generated a 45.6 percent consolidated gross profit margin. in addition, caleres strategically deployed cash to augment inventory levels ahead of the fall buying and back-to-school seasons, prioritized investment in value-enhancing growth opportunities and repurchased $27.0 million, or 1.1 million shares, of caleres common stock. “during the second quarter, caleres delivered another exceptional financial and operational performance with record second quarter sales and earnings and strong gross profit margins – marking yet another period of outstanding results,” said diane sullivan, chairman and chief executive officer. “in particular, caleres utilized its growing and dynamic portfolio to capitalize on robust consumer demand in trending footwear categories, to support strong consolidated margin levels and to drive another excellent quarter of return on sales. in short, we demonstrated again that our versatile structure provides a significant and differentiating strength that, over the long term, enables caleres to drive exceptional results in strong market environments while still generating attractive levels of profitability in difficult macro environments.” second quarter 2022 highlights (13-weeks ended july 30, 2022 compared to 13-weeks ended july 31, 2021) net sales were $738.3 million, up 9.3 percent from the second quarter of fiscal 2021; - a 3.8 percent sales decline in the famous footwear segment - a 35.6 percent sales increase in the brand portfolio segment - direct-to-consumer sales represented approximately 72 percent of total net sales gross profit was $336.8 million, while gross margin was 45.6 percent; - a 48.9 percent gross margin in the famous footwear segment - a 38.3 percent gross margin in the brand portfolio segment sg&a as percentage of sales was 36.4 percent, 206-basis points lower than second quarter of fiscal 2021; net earnings of $51.2 million, or earnings of $1.38 per diluted share, compared to net earnings of $37.4 million, or earnings of $0.97 per diluted share in the second quarter of fiscal 2021; trailing twelve-month adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) of $324.2 million; or 11.0 percent of sales; inventory levels were up approximately 36 percent, year-over-year, reflecting efforts to increase inventory levels ahead of the fall buying and back-to-school seasons. inventory was down 2.7 percent when compared to second quarter of 2019 – a more comparable period; generated $7.6 million in cash from operations; and returned $29.6 million to shareholders through dividends and share repurchases. capital return progress during the second quarter, caleres opportunistically repurchased 1.1 million shares of common stock, representing approximately 3 percent of shares outstanding, at a total cost of $27.0 million. at quarter-end, approximately 7.2 million shares remained available in the current share repurchase authorization. the company views its substantial and ongoing buyback program as a highly effective mechanism for enhancing shareholder value. in addition to buybacks, caleres returned $2.6 million to shareholders through its recurring quarterly cash dividend during the second quarter. 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 “with $2.70 of diluted earnings per share delivered in the first half, 2022 is shaping up to be another outstanding year for caleres,” said sullivan. “even with ongoing inflationary pressures and uncertainties around the direction of consumer spending, caleres is exceptionally well-positioned to maintain its significant momentum due to its diversified portfolio that can capitalize on opportunities across a broad spectrum of consumer segments and throughout a wide a range of market environments. furthermore, the caleres team is committed to utilizing our core competencies – in brand building, merchandising, marketing and logistics – to further our strategic priorities, while mobilizing quickly to unlock enterprise-wide growth opportunities. with the work we’ve done to structurally strengthen the long-term cash generating potential of the enterprise we are enthusiastic about the long-term prospects for profitability and remain sharply focused on creating value for our shareholders through our capital return program.” fiscal year 2022 outlook: caleres is reiterating its fiscal year 2022 financial outlook. specifically, the company is raising and tightening its consolidated sales levels from up between 2 percent and 5 percent to up between 4 percent to 6 percent when compared to fiscal year 2021 and still expects earnings per diluted share to be between $4.20 and $4.40, which would represent 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, august 23. 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 analysts in north america or (201) 389-0920 for international analysts, no passcode necessary. a replay will be 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 13732134. 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 (unaudited) thirteen weeks ended twenty-six weeks ended ($ thousands, except per share data) july 30, 2022 july 31, 2021 july 30, 2022 july 31, 2021 net sales $ 738,330 $ 675,531 $ 1,473,445 $ 1,314,167 cost of goods sold 401,515 353,238 809,636 716,987 gross profit 336,815 322,293 663,809 597,180 selling and administrative expenses 268,395 259,501 529,194 503,036 restructuring and other special charges, net — — — 13,482 operating earnings 68,420 62,792 134,615 80,662 interest expense, net (2,584) (11,941) (4,883) (23,734) other income, net 3,217 3,860 6,639 7,688 earnings before income taxes 69,053 54,711 136,371 64,616 income tax provision (17,500) (16,559) (34,833) (20,080) net earnings 51,553 38,152 101,538 44,536 net earnings (loss) attributable to noncontrolling interests 375 756 (149) 993 net earnings attributable to caleres, inc. $ 51,178 $ 37,396 $ 101,687 $ 43,543 basic earnings per common share attributable to caleres, inc. shareholders $ 1.40 $ 0.98 $ 2.74 $ 1.14 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.38 $ 0.97 $ 2.70 $ 1.13 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) ($ thousands) july 30, 2022 july 31, 2021 assets cash and cash equivalents $ 45,955 $ 54,684 receivables, net 127,580 110,522 inventories, net 770,652 565,512 property and equipment, held for sale 16,777 — prepaid expenses and other current assets 57,827 76,645 total current assets 1,018,791 807,363 lease right-of-use assets 516,486 508,597 property and equipment, net 137,007 161,066 goodwill and intangible assets, net 221,447 233,777 other assets 131,477 122,095 total assets $ 2,025,208 $ 1,832,898 liabilities and equity borrowings under revolving credit agreement $ 348,500 $ 100,000 current portion of long-term debt — 99,540 mandatory purchase obligation - blowfish malibu — 52,639 trade accounts payable 399,265 348,795 lease obligations 131,601 126,820 other accrued expenses 260,434 250,875 total current liabilities 1,139,800 978,669 noncurrent lease obligations 451,657 463,746 long-term debt — 99,540 other liabilities 48,874 45,652 total other liabilities 500,531 608,938 total caleres, inc. shareholders’ equity 379,133 240,697 noncontrolling interests 5,744 4,594 total equity 384,877 245,291 total liabilities and equity $ 2,025,208 $ 1,832,898 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) twenty-six weeks ended ($ thousands) july 30, 2022 july 31, 2021 operating activities: net cash provided by operating activities $ 27,251 $ 135,547 investing activities: purchases of property and equipment (16,820 ) (6,816 ) capitalized software (3,906 ) (2,581 ) net cash used for investing activities (20,726 ) (9,397 ) financing activities: borrowings under revolving credit agreement 437,500 164,500 repayments under revolving credit agreement (379,000 ) (314,500 ) dividends paid (5,200 ) (5,336 ) acquisition of treasury stock (41,672 ) — issuance of common stock under share-based plans, net (3,814 ) (3,752 ) contributions by noncontrolling interests, net 1,500 — other — (677 ) net cash provided by (used for) financing activities 9,314 (159,765 ) effect of exchange rate changes on cash and cash equivalents 1 4 increase (decrease) in cash and cash equivalents 15,840 (33,611 ) cash and cash equivalents at beginning of period 30,115 88,295 cash and cash equivalents at end of period $ 45,955 $ 54,684 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 july 30, 2022 july 31, 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 $ 51,178 $ 1.38 $ 37,396 $ 0.97 charges/other items: fair value adjustment to blowfish purchase obligation $ — $ — $ — $ 7,115 $ 5,284 $ 0.14 deferred tax valuation allowances — — — — 3,294 0.08 total charges/other items $ — $ — $ — $ 7,115 $ 8,578 $ 0.22 adjusted earnings $ 51,178 $ 1.38 $ 45,974 $ 1.19 (unaudited) twenty-six weeks ended july 30, 2022 july 31, 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 $ 101,687 $ 2.70 $ 43,543 $ 1.13 charges/other items: fair value adjustment to blowfish purchase obligation $ — — — $ 13,505 10,030 $ 0.26 brand portfolio - business exits — — — 13,482 11,927 0.31 deferred tax valuation allowances — — — — 3,294 0.09 total charges/other items $ — $ — $ — $ 26,987 $ 25,251 $ 0.66 adjusted earnings $ 101,687 $ 2.70 $ 68,794 $ 1.79 (unaudited) trailing twelve months july 30, 2022 july 31, 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) $ 195,163 $ (19,016 ) charges/other items: fair value adjustment to blowfish purchase obligation $ 1,918 1,424 $ 27,618 20,509 loss on early extinguishment of debt 1,011 750 — — deferred tax valuation allowances — 746 — 3,294 brand portfolio - business exits — — 28,256 25,607 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 $ 2,929 $ 2,920 $ 98,360 $ 107,302 adjusted earnings $ 198,083 $ 88,286 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated july 30, july 31, july 30, july 31, july 30, july 31, july 30, july 31, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 net sales $ 436,375 $ 453,649 $ 324,060 $ 239,013 $ (22,105) $ (17,131) $ 738,330 $ 675,531 gross profit 213,605 227,414 124,142 94,890 (932) (11) 336,815 322,293 adjusted gross profit 213,605 227,414 124,142 94,890 (932) (11) 336,815 322,293 gross profit rate 48.9 % 50.1 % 38.3 % 39.7 % 4.2 % 0.0 % 45.6 % 47.7 % adjusted gross profit rate 48.9 % 50.1 % 38.3 % 39.7 % 4.2 % 0.0 % 45.6 % 47.7 % operating earnings (loss) 62,496 85,498 29,410 16,554 (23,486) (39,260) 68,420 62,792 adjusted operating earnings (loss) 62,496 85,498 29,410 16,554 (23,486) (39,260) 68,420 62,792 operating earnings (loss) % 14.3 % 18.8 % 9.1 % 6.9 % n/m % n/m % 9.3 % 9.3 % adjusted operating earnings (loss) % 14.3 % 18.8 % 9.1 % 6.9 % n/m % n/m % 9.3 % 9.3 % same-store sales % (on a 13-week basis) (3.1) % (1.1) % 23.5 % 16.3 % — % — % — % — % number of stores 881 912 85 87 — — 966 999 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated july 30, july 31, july 30, july 31, july 30, july 31, july 30, july 31, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 gross profit $ 213,605 $ 227,414 $ 124,142 $ 94,890 $ (932 ) $ (11 ) $ 336,815 $ 322,293 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 213,605 $ 227,414 $ 124,142 $ 94,890 $ (932 ) $ (11 ) $ 336,815 $ 322,293 operating earnings (loss) $ 62,496 $ 85,498 $ 29,410 $ 16,554 $ (23,486 ) $ (39,260 ) $ 68,420 $ 62,792 charges/other items: brand portfolio - business exits — — — — — — — — total charges/other items — — — — — — — — adjusted operating earnings (loss) $ 62,496 $ 85,498 $ 29,410 $ 16,554 $ (23,486 ) $ (39,260 ) $ 68,420 $ 62,792 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) twenty-six weeks ended famous footwear brand portfolio eliminations and other consolidated july 30, july 31, july 30, july 31, july 30, july 31, july 30, july 31, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 net sales $ 820,877 $ 851,754 $ 689,800 $ 489,318 $ (37,232) $ (26,905) $ 1,473,445 $ 1,314,167 gross profit 402,839 407,229 263,441 188,892 (2,471) 1,059 663,809 597,180 adjusted gross profit 402,839 407,229 263,441 188,892 (2,471) 1,059 663,809 597,180 gross profit rate 49.1 % 47.8 % 38.2 % 38.6 % 6.6 % (3.9) % 45.1 % 45.4 % adjusted gross profit rate 49.1 % 47.8 % 38.2 % 38.6 % 6.6 % (3.9) % 45.1 % 45.4 % operating earnings (loss) 112,184 133,371 70,760 13,733 (48,329) (66,442) 134,615 80,662 adjusted operating earnings (loss) 112,184 133,371 70,760 27,215 (48,329) (66,442) 134,615 94,144 operating earnings (loss)% 13.7 % 15.7 % 10.3 % 2.8 % n/m % n/m % 9.1 % 6.1 % adjusted operating earnings (loss)% 13.7 % 15.7 % 10.3 % 5.6 % n/m % n/m % 9.1 % 7.2 % same-store sales % (on a 26-week basis) (3.5) % 0.5 % 43.8 % 10.2 % — % — % — % — % number of stores 881 912 85 87 — — 966 999 n/m – not meaningful reconciliation of adjusted results (non-gaap) (unaudited) twenty-six weeks ended famous footwear brand portfolio eliminations and other consolidated july 30, july 31, july 30, july 31, july 30, july 31, july 30, july 31, ($ thousands) 2022 2021 2022 2021 2022 2021 2022 2021 gross profit $ 402,839 $ 407,229 $ 263,441 $ 188,892 $ (2,471 ) $ 1,059 $ 663,809 $ 597,180 charges/other items: brand portfolio - brand exits — — — — — — — — total charges/other items — — — — — — — — adjusted gross profit $ 402,839 $ 407,229 $ 263,441 $ 188,892 $ (2,471 ) $ 1,059 $ 663,809 $ 597,180 operating earnings (loss) $ 112,184 $ 133,371 $ 70,760 $ 13,733 $ (48,329 ) $ (66,442 ) $ 134,615 $ 80,662 charges/other items: brand portfolio - business exits — — — 13,482 — — — 13,482 total charges/other items — — — 13,482 — — — 13,482 adjusted operating earnings (loss) $ 112,184 $ 133,371 $ 70,760 $ 27,215 $ (48,329 ) $ (66,442 ) $ 134,615 $ 94,144 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended twenty-six weeks ended july 30, july 31, july 30, july 31, 2022 2021 2022 2021 ($ thousands, except per share data) net earnings attributable to caleres, inc.: net earnings $ 51,553 $ 38,152 $ 101,538 $ 44,536 net (earnings) loss attributable to noncontrolling interests (375 ) (756 ) 149 (993 ) net earnings attributable to caleres, inc. 51,178 37,396 101,687 43,543 net earnings allocated to participating securities (2,226 ) (1,360 ) (4,216 ) (1,575 ) net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 48,952 $ 36,036 $ 97,471 $ 41,968 basic and diluted common shares attributable to caleres, inc.: basic common shares 35,031 36,880 35,620 36,794 dilutive effect of share-based awards 467 267 467 212 diluted common shares attributable to caleres, inc. 35,498 37,147 36,087 37,006 basic earnings per common share attributable to caleres, inc. shareholders $ 1.40 $ 0.98 $ 2.74 $ 1.14 diluted earnings per common share attributable to caleres, inc. shareholders $ 1.38 $ 0.97 $ 2.70 $ 1.13 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended twenty-six weeks ended july 30, july 31, july 30, july 31, 2022 2021 2022 2021 ($ thousands, except per share data) adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 51,553 $ 46,730 $ 101,538 $ 69,787 net (earnings) loss attributable to noncontrolling interests (375 ) (756 ) 149 (993 ) adjusted net earnings attributable to caleres, inc. 51,178 45,974 101,687 68,794 net earnings allocated to participating securities (2,226 ) (1,673 ) (4,216 ) (2,504 ) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities $ 48,952 $ 44,301 $ 97,471 $ 66,290 basic and diluted common shares attributable to caleres, inc.: basic common shares 35,031 36,880 35,620 36,794 dilutive effect of share-based awards 467 267 467 212 diluted common shares attributable to caleres, inc. 35,498 37,147 36,087 37,006 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.40 $ 1.20 $ 2.74 $ 1.80 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 1.38 $ 1.19 $ 2.70 $ 1.79 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) trailing twelve months ended ($ thousands) july 30, 2022 july 31, 2021 ebitda: net earnings (loss) attributable to caleres, inc. $ 195,163 $ (19,016) income tax provision 65,834 31,081 interest expense, net 12,079 49,155 loss on early extinguishment of debt 1,011 — depreciation and amortization (1) 50,065 55,845 ebitda $ 324,152 $ 117,065 ebitda margin 11.0 % 4.6 % adjusted ebitda: adjusted net earnings attributable to caleres, inc. (2) $ 198,083 $ 88,286 income tax provision (3) 65,843 22,139 interest expense, net (4) 10,161 21,537 depreciation and amortization (1) 50,065 55,845 adjusted ebitda $ 324,152 $ 187,807 adjusted ebitda margin 11.0 % 7.4 % (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.
