Caleres reports third quarter 2019 results
St. louis--(business wire)--caleres (nyse: cal) (caleres.com), a diverse portfolio of global footwear brands, today reported third quarter 2019 financial results. record third quarter sales of $792.4 million, up 2.1% positive same-store-sales growth of 2.5% at famous footwear, the eighth consecutive year of positive back-to-school same-store-sales growth earnings per diluted share of $0.69, up 3.0%, including $0.03 net impact from tariffs full-year adjusted eps guidance top-end narrowed by $0.05 to $2.35-$2.40 to reflect tariff impacts “our third quarter results demonstrate continued execution against our strategy to broaden the reach of our powerful portfolio and strengthen consumer connections,” said diane sullivan, ceo, president and chairman of caleres. “we delivered our eighth consecutive year of positive back-to-school same-store-sales growth at famous footwear and our top brands continued to gain share within the brand portfolio. while the demand environment remains dynamic, we are focused on executing on our plan with fresh and compelling inventory and a continued emphasis on cost discipline across the organization.” third quarter 2019 results versus third quarter 2018 consolidated sales of $792.4 million, up 2.1%. famous footwear total sales of $446.6 million, with same-store-sales up 2.5%. brand portfolio sales of $359.9 million, up 4.9%. famous footwear total sales of $446.6 million, with same-store-sales up 2.5%. brand portfolio sales of $359.9 million, up 4.9%. gross profit of $319.8 million, up 2.9%, representing gross margin of 40.4%. sg&a expense of $275.3 million, up 3.7%, representing 34.7% of sales. operating earnings of $43.5 million, representing operating margin of 5.5%. adjusted operating earnings of $44.4 million, down 5.3%, representing adjusted operating margin of 5.6% excluding vionic integration expense. net earnings of $28.0 million, resulting in earnings per diluted share of $0.69, up 3.0%, including $0.07 of fair value adjustment associated with the mandatory purchase obligation of blowfish malibu and $0.02 of vionic integration expense. adjusted net earnings of $31.6 million, resulting in adjusted earnings per diluted share of $0.78, down 3.7%, including a $0.03 net impact from increased tariffs in the quarter. first nine months 2019 results versus first nine months 2018 consolidated sales of $2,222.6 million, up 5.1%. famous footwear total sales of $1,218.6 million, with same-store-sales up 1.1%. brand portfolio sales of $1,060.5 million, up 13.8%. famous footwear total sales of $1,218.6 million, with same-store-sales up 1.1%. brand portfolio sales of $1,060.5 million, up 13.8%. gross profit of $905.6 million, up 3.1%, representing gross margin of 40.7%. adjusted gross margin of 41.1%, excluding $7.2 million related to vionic inventory adjustment amortization and brand portfolio business exit expense. sg&a expense of $805.0 million, up 3.9%, representing 36.2% of sales. operating earnings of $98.1 million, up 3.5%, representing operating margin of 4.4%. adjusted operating earnings of $107.7 million, up 1.2%, representing adjusted operating margin of 4.8%. net earnings of $62.4 million, resulting in earnings per diluted share of $1.51, down 6.8%. adjusted net earnings of $72.4 million, resulting in adjusted earnings per diluted share of $1.75, down 4.4%. balance sheet and cash flow cash and equivalents of $52.5 million and cash from operations of $145.7 million year-to-date. inventory of $644.6 million, down 7.7% year-over-year. year-to-date capital expenditures of $41.6 million, up 7.4% year-over-year. there were $295.0 million of outstanding borrowings under the revolving credit facility, following the october 18, 2018 acquisition of vionic. returned $39.8 million to shareholders in the first nine months of 2019, via share repurchases and dividends. investor conference call caleres will host an investor conference call at 4:30 p.m. et today, monday, november 25. the webcast and slides will be available at investor.caleres.com/news/events. the 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 5169032. a replay will be available at investor.caleres.com/news/events/archive for a limited period. investors may also access a replay of the call through december 2 by dialing (855) 859-2056 in north america or (404) 537-3406 internationally and using the conference id 5169032. 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, 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) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions and other factors; (ii) rapidly changing fashion trends and consumer preferences and purchasing patterns; (iii) intense competition within the footwear industry; (iv) 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; (v) imposition of tariffs; (vi) the ability to accurately forecast sales and manage inventory levels; (vii) cybersecurity threats or other major disruption to the company’s information technology systems; (viii) customer concentration and increased consolidation in the retail industry; (ix) transitional challenges with acquisitions; (x) a disruption in the company’s distribution centers; (xi) foreign currency fluctuations; (xii) changes to tax laws, policies and treaties; (xiii) the ability to recruit and retain senior management and other key associates; (xiv) compliance with applicable laws and standards with respect to labor, trade and product safety issues; (xv) the ability to secure/exit leases on favorable terms; (xvi) the ability to maintain relationships with current suppliers; and (xvii) 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 february 2, 2019, 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. about caleres caleres is the home of today’s most coveted footwear brands and represents a diverse portfolio spanning all of life’s styles and experiences. every shoe tells a story and caleres has the perfect fit for every one of them. our collections have been developed and acquired to meet the evolving needs of today’s assorted and growing global audiences, with consumer insights driving every aspect of the innovation, design, and craft that go into our distinctly positioned brands, including famous footwear, sam edelman, naturalizer, allen edmonds, vionic, dr. scholl’s shoes, franco sarto, and more. the caleres story is most simply defined by the company’s mission: inspire people to feel great…feet first. schedule 1 caleres, inc. condensed consolidated statements of earnings (unaudited) thirteen weeks ended thirty-nine weeks ended (thousands, except per share data) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 net sales $ 792,375 $ 775,829 $ 2,222,614 $ 2,114,583 cost of goods sold 472,605 465,219 1,317,064 1,235,950 gross profit 319,770 310,610 905,550 878,633 selling and administrative expenses 275,330 265,522 804,972 774,555 restructuring and other special charges, net 969 5,340 2,434 9,240 operating earnings 43,471 39,748 98,144 94,838 interest expense, net (10,559 ) (4,210 ) (25,288 ) (11,495 ) other income, net 2,633 3,085 7,902 9,254 earnings before income taxes 35,545 38,623 80,758 92,597 income tax provision (7,784 ) (9,468 ) (18,685 ) (22,651 ) net earnings 27,761 29,155 62,073 69,946 net (loss) earnings attributable to noncontrolling interests (226 ) 2 (338 ) (65 ) net earnings attributable to caleres, inc. $ 27,987 $ 29,153 $ 62,411 $ 70,011 basic earnings per common share attributable to caleres, inc. shareholders $ 0.69 $ 0.68 $ 1.51 $ 1.62 diluted earnings per common share attributable to caleres, inc. shareholders $ 0.69 $ 0.67 $ 1.51 $ 1.62 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) november 2, 2019 november 3, 2018 february 2, 2019 (thousands) assets cash and cash equivalents $ 52,502 $ 90,491 $ 30,200 receivables, net 156,253 192,246 191,722 inventories, net 644,646 698,265 683,171 prepaid expenses and other current assets 48,245 63,166 71,354 total current assets 901,646 1,044,168 976,447 lease right-of-use assets 704,244 — — property and equipment, net 230,261 218,103 230,784 goodwill and intangible assets, net 542,845 653,852 549,897 other assets 92,214 92,279 81,440 total assets $ 2,471,210 $ 2,008,402 $ 1,838,568 liabilities and equity borrowings under revolving credit agreement $ 295,000 $ 350,000 $ 335,000 trade accounts payable 275,699 317,499 316,298 lease obligations 144,501 — — other accrued expenses 179,030 209,479 202,038 total current liabilities 894,230 876,978 853,336 noncurrent lease obligations 629,731 — — long-term debt 198,276 197,817 197,932 deferred rent — 51,930 54,850 other liabilities 95,623 114,592 97,015 total other liabilities 923,630 364,339 349,797 total caleres, inc. shareholders’ equity 650,840 765,753 634,053 noncontrolling interests 2,510 1,332 1,382 total equity 653,350 767,085 635,435 total liabilities and equity $ 2,471,210 $ 2,008,402 $ 1,838,568 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) thirty-nine weeks ended (thousands) november 2, 2019 november 3, 2018 operating activities: net cash provided by operating activities $ 145,737 $ 94,410 investing activities: purchases of property and equipment (37,354 ) (35,244 ) disposals of property and equipment 636 — capitalized software (4,893 ) (3,505 ) acquisition of blowfish malibu, net of cash received — (17,284 ) acquisition of vionic, net of cash received — (344,942 ) net cash used for investing activities (41,611 ) (400,975 ) financing activities: borrowings under revolving credit agreement 237,000 360,000 repayments under revolving credit agreement (277,000 ) (10,000 ) dividends paid (8,631 ) (9,059 ) acquisition of treasury stock (31,168 ) (3,288 ) issuance of common stock under share-based plans, net (2,605 ) (4,318 ) contributions by noncontrolling interests 1,500 — other (1,022 ) (114 ) net cash (used for) provided by financing activities (81,926 ) 333,221 effect of exchange rate changes on cash and cash equivalents 102 (212 ) increase in cash and cash equivalents 22,302 26,444 cash and cash equivalents at beginning of period 30,200 64,047 cash and cash equivalents at end of period $ 52,502 $ 90,491 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 november 2, 2019 november 3, 2018 (thousands, except per share data) pre-tax impact of charges/other items net earnings attributable to caleres, inc. diluted earnings per share pre-tax impact of charges/other items net earnings attributable to caleres, inc. diluted earnings per share gaap earnings $ 27,987 $ 0.69 $ 29,153 $ 0.67 charges/other items: vionic acquisition and integration-related costs $ 969 719 0.02 $ 5,022 4,170 0.10 fair value adjustment to blowfish purchase obligation 3,883 2,884 0.07 — — — blowfish malibu acquisition and integration-related costs — — — 1,000 743 0.02 acquisition, integration and reorganization of men's brands — — — 1,164 864 0.02 total charges/other items $ 4,852 $ 3,603 $ 0.09 $ 7,186 $ 5,777 $ 0.14 adjusted earnings $ 31,590 $ 0.78 $ 34,930 $ 0.81 (unaudited) thirty-nine weeks ended november 2, 2019 november 3, 2018 (thousands, except per share data) pre-tax impact of charges/other items net earnings attributable to caleres, inc. diluted earnings per share pre-tax impact of charges/other items net earnings attributable to caleres, inc. diluted earnings per share gaap earnings $ 62,411 $ 1.51 $ 70,011 $ 1.62 charges/other items: vionic acquisition and integration-related costs $ 7,696 5,714 0.14 $ 5,022 4,170 0.10 fair value adjustment to blowfish purchase obligation 3,883 2,884 0.07 — — — brand portfolio - business exits 1,905 1,415 0.03 — — — blowfish malibu acquisition-related costs — — — 1,778 1,319 0.03 acquisition, integration and reorganization of men's brands — — — 4,826 3,573 0.08 total charges/other items $ 13,484 $ 10,013 $ 0.24 $ 11,626 $ 9,062 $ 0.21 adjusted earnings $ 72,424 $ 1.75 $ 79,073 $ 1.83 schedule 5 caleres, inc. summary financial results by segment summary financial results (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated (thousands) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 net sales $ 446,583 $ 448,765 $ 359,863 $ 343,032 $ (14,071 ) $ (15,968 ) $ 792,375 $ 775,829 gross profit 183,267 182,487 133,761 126,558 2,742 1,565 319,770 310,610 adjusted gross profit 183,267 182,487 133,761 128,404 2,742 1,565 319,770 312,456 gross profit rate 41.0 % 40.7 % 37.2 % 36.9 % (19.5 )% (9.8 )% 40.4 % 40.0 % adjusted gross profit rate 41.0 % 40.7 % 37.2 % 37.4 % (19.5 )% (9.8 )% 40.4 % 40.3 % operating earnings (loss) 27,681 24,414 19,398 25,114 (3,608 ) (9,780 ) 43,471 39,748 adjusted operating earnings (loss) 27,681 24,414 19,398 28,015 (2,639 ) (5,495 ) 44,440 46,934 operating earnings % 6.2 % 5.4 % 5.4 % 7.3 % 25.6 % 61.2 % 5.5 % 5.1 % adjusted operating earnings % 6.2 % 5.4 % 5.4 % 8.2 % 18.8 % 34.4 % 5.6 % 6.0 % same-store sales % (on a 13-week basis) 2.5 % 2.8 % (5.1 )% 1.7 % — % — % — % — % number of stores 960 1,007 232 232 — — 1,192 1,239 reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated (thousands) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 gross profit $ 183,267 $ 182,487 $ 133,761 $ 126,558 $ 2,742 $ 1,565 $ 319,770 $ 310,610 charges/other items: blowfish malibu acquisition-related costs — — — 932 — — — 932 vionic acquisition-related costs — — — 914 — — — 914 total charges/other items — — — 1,846 — — — 1,846 adjusted gross profit $ 183,267 $ 182,487 $ 133,761 $ 128,404 $ 2,742 $ 1,565 $ 319,770 $ 312,456 operating earnings (loss) $ 27,681 $ 24,414 $ 19,398 $ 25,114 $ (3,608 ) $ (9,780 ) $ 43,471 $ 39,748 charges/other items: blowfish malibu acquisition-related costs — — — 932 — 68 — 1,000 vionic acquisition and integration-related costs — — — 914 969 4,108 969 5,022 acquisition, integration and reorganization of men's brands — — — 1,055 — 109 — 1,164 total charges/other items — — — 2,901 969 4,285 969 7,186 adjusted operating earnings (loss) $ 27,681 $ 24,414 $ 19,398 $ 28,015 $ (2,639 ) $ (5,495 ) $ 44,440 $ 46,934 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 (thousands) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 net sales $ 1,218,589 $ 1,241,648 $ 1,060,488 $ 931,550 $ (56,463 ) $ (58,615 ) $ 2,222,614 $ 2,114,583 gross profit 518,261 534,802 385,461 343,707 1,828 124 905,550 878,633 adjusted gross profit 518,261 534,802 392,628 346,094 1,828 124 912,717 881,020 gross profit rate 42.5 % 43.1 % 36.3 % 36.9 % (3.2 )% (0.2 )% 40.7 % 41.6 % adjusted gross profit rate 42.5 % 43.1 % 37.0 % 37.2 % (3.2 )% (0.2 )% 41.1 % 41.7 % operating earnings (loss) 70,036 79,511 46,225 52,650 (18,117 ) (37,324 ) 98,144 94,837 adjusted operating earnings (loss) 70,036 79,511 54,019 59,473 (16,310 ) (32,521 ) 107,745 106,463 operating earnings % 5.7 % 6.4 % 4.4 % 5.7 % 32.1 % 63.7 % 4.4 % 4.5 % adjusted operating earnings % 5.7 % 6.4 % 5.1 % 6.4 % 28.9 % 55.5 % 4.8 % 5.0 % same-store sales % (on a 39-week basis) 1.1 % 1.7 % (7.6 )% (0.2 )% — % — % — % — % number of stores 960 1,007 232 232 — — 1,192 1,239 reconciliation of adjusted results (non-gaap) (unaudited) thirty-nine weeks ended famous footwear brand portfolio eliminations and other consolidated (thousands) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 gross profit $ 518,261 $ 534,802 $ 385,461 $ 343,707 $ 1,828 $ 124 $ 905,550 $ 878,633 charges/other items: vionic acquisition and integration-related costs — — 5,812 914 — — 5,812 914 brand portfolio - business exits — — 1,355 — — — 1,355 — blowfish malibu acquisition-related costs — — — 1,473 — — — 1,473 total charges/other items — — 7,167 2,387 — — 7,167 2,387 adjusted gross profit $ 518,261 $ 534,802 $ 392,628 $ 346,094 $ 1,828 $ 124 $ 912,717 $ 881,020 operating earnings (loss) $ 70,036 $ 79,511 $ 46,225 $ 52,650 $ (18,117 ) $ (37,324 ) $ 98,144 $ 94,837 charges/other items: vionic acquisition and integration-related costs — — 5,889 914 1,807 4,108 7,696 5,022 brand portfolio - business exits — — 1,905 — — — 1,905 — blowfish malibu acquisition-related costs — — — 1,473 — 305 — 1,778 acquisition, integration and reorganization of men's brands — — — 4,436 — 390 — 4,826 total charges/other items — — 7,794 6,823 1,807 4,803 9,601 11,626 adjusted operating earnings (loss) $ 70,036 $ 79,511 $ 54,019 $ 59,473 $ (16,310 ) $ (32,521 ) $ 107,745 $ 106,463 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended thirty-nine weeks ended (thousands, except per share data) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 net earnings attributable to caleres, inc.: net earnings $ 27,761 $ 29,155 $ 62,073 $ 69,946 net loss (earnings) attributable to noncontrolling interests 226 (2 ) 338 65 net earnings attributable to caleres, inc. 27,987 29,153 62,411 70,011 net earnings allocated to participating securities (946 ) (800 ) (2,042 ) (1,950 ) net earnings attributable to caleres, inc. after allocation of earnings to participating securities 27,041 28,353 $ 60,369 $ 68,061 basic and diluted common shares attributable to caleres, inc.: basic common shares 39,258 41,999 39,983 41,958 dilutive effect of share-based awards 55 107 57 116 diluted common shares attributable to caleres, inc. 39,313 42,106 40,040 42,074 basic earnings per common share attributable to caleres, inc. shareholders $ 0.69 $ 0.68 $ 1.51 $ 1.62 diluted earnings per common share attributable to caleres, inc. shareholders $ 0.69 $ 0.67 $ 1.51 $ 1.62 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended thirty-nine weeks ended (thousands, except per share data) november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 31,364 $ 34,932 $ 72,086 $ 79,008 net loss (earnings) attributable to noncontrolling interests 226 (2 ) 338 65 adjusted net earnings attributable to caleres, inc. 31,590 34,930 72,424 79,073 net earnings allocated to participating securities (1,070 ) (961 ) (2,376 ) (2,204 ) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities 30,520 33,969 $ 70,048 $ 76,869 basic and diluted common shares attributable to caleres, inc.: basic common shares 39,258 41,999 39,983 41,958 dilutive effect of share-based awards 55 107 57 116 diluted common shares attributable to caleres, inc. 39,313 42,106 40,040 42,074 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.78 $ 0.81 $ 1.75 $ 1.83 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.78 $ 0.81 $ 1.75 $ 1.83 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) (unaudited) thirteen weeks ended thirty-nine weeks ended november 2, 2019 november 3, 2018 november 2, 2019 november 3, 2018 (in 000's) ebitda net earnings attributable to caleres, inc. $ 27,987 $ 29,153 $ 62,411 $ 70,011 income tax provision 7,784 9,468 18,685 22,651 interest expense, net 10,559 4,210 25,288 11,495 depreciation and amortization (1) 16,238 15,831 49,012 45,351 ebitda $ 62,568 $ 58,662 $ 155,396 $ 149,508 ebitda margin 7.9 % 7.6 % 7.0 % 7.1 % adjusted ebitda adjusted net earnings attributable to caleres, inc. $ 31,590 $ 34,930 $ 72,424 $ 79,073 income tax provision 9,033 10,877 22,156 25,215 interest expense, net 6,676 4,210 21,405 11,495 depreciation and amortization (1) 16,238 15,831 49,012 45,351 adjusted ebitda $ 63,537 $ 65,848 $ 164,997 $ 161,134 adjusted ebitda margin 8.0 % 8.5 % 7.4 % 7.6 % (1) includes depreciation and amortization of capitalized software and intangible assets
