Caleres reports second quarter 2019 results
St. louis--(business wire)--caleres (nyse: cal) (caleres.com), a diverse portfolio of global footwear brands, today reported second quarter 2019 financial results. delivered earnings per diluted share of $0.61, up 10.9%. record second quarter sales of $752.5 million, up 6.5% year-over-year positive same-store-sales of 1.5% at famous footwear on-track to deliver eighth consecutive year of positive back-to-school same-store-sales continued to evolve portfolio, announcing partnership with veronica beard and relaunch of zodiac “during the quarter we successfully executed on our strategies to strengthen the emotional connections we have with our consumers. our deep insights, combined with our industry-leading footwear capabilities, allowed us to deliver relevant product, supporting growth in the brand portfolio and positive same-store-sales growth at famous footwear,” said diane sullivan, ceo, president and chairman of caleres. “a continued focus on expense discipline improved profitability for the quarter. as a company, we remain focused on creating consistent, profitable and sustainable growth over the long term.” second quarter 2019 results versus second quarter 2018 consolidated sales of $752.5 million, up 6.5%. brand portfolio sales of $359.6 million, up 17.9%. famous footwear total sales of $419.8 million, with same-store-sales up 1.5%. brand portfolio sales of $359.6 million, up 17.9%. famous footwear total sales of $419.8 million, with same-store-sales up 1.5%. gross profit of $305.9 million, up 4.4%, representing gross margin of 40.7%. sg&a expense of $267.5 million, up 3.4%, representing 35.6% of sales. operating earnings of $37.8 million, up 17.6%, representing operating margin of 5.0%. adjusted operating earnings of $38.4 million, up 10.4%, representing adjusted operating margin of 5.1%. net earnings of $25.3 million, resulting in earnings per diluted share of $0.61, up 10.9%. adjusted net earnings of $25.8 million, resulting in adjusted earnings per diluted share of $0.62, up 5.1%. first half 2019 results versus first half 2018 consolidated sales of $1,430.2 million, up 6.8%. brand portfolio sales of $700.6 million, up 19.0%. famous footwear total sales of $772.0 million, with same-store-sales up 0.4%. brand portfolio sales of $700.6 million, up 19.0%. famous footwear total sales of $772.0 million, with same-store-sales up 0.4%. gross profit of $585.8 million, up 3.1%, representing gross margin of 41.0%. adjusted gross margin of 41.5%, excluding $7.2 million related to vionic inventory adjustment amortization and brand portfolio business exit expense. sg&a expense of $529.6 million, up 4.0%, representing 37.0% of sales. operating earnings of $54.7 million, down 0.8%, representing operating margin of 3.8%. adjusted operating earnings of $63.3 million, up 6.3%, representing adjusted operating margin of 4.4%. net earnings of $34.4 million, resulting in earnings per diluted share of $0.82, down 12.8%. adjusted net earnings of $40.8 million, resulting in adjusted earnings per diluted share of $0.98, down 3.9%. balance sheet and cash flow cash and equivalents of $42.6 million and cash from operations of $116.6 million, year-to-date. there were $300.0 million of outstanding borrowings under the revolving credit facility, following the october 18, 2018 acquisition of vionic. inventory of $792.1 million, up 10.7% year-over-year, including $50.7 million of vionic inventory. year-to-date capital expenditures of $30.2 million, up 40.3% year-over-year due to the investment in automation at the new brand portfolio fulfillment center. returned $35.8 million to shareholders in the first half 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, august 26. 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 3196093. 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 september 2 by dialing (855) 859-2056 in north america or (404) 537-3406 internationally and using the conference id 3196093. investor day caleres also invites financial analysts and institutional investors to save the date for an investor day, to be held in new york on october 2, 2019. the event will be hosted by ceo, president and chairman of the board diane sullivan, senior vice president and chief financial officer ken hannah, and other members of the executive leadership team. a formal invitation will be provided at a later date. 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 twenty-six weeks ended (thousands, except per share data) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 net sales $ 752,485 $ 706,612 $ 1,430,239 $ 1,338,754 cost of goods sold 446,541 413,511 844,459 770,731 gross profit 305,944 293,101 585,780 568,023 selling and administrative expenses 267,531 258,835 529,642 509,033 restructuring and other special charges, net 609 2,123 1,465 3,900 operating earnings 37,804 32,143 54,673 55,090 interest expense, net (7,389 ) (3,602 ) (14,729 ) (7,285 ) other income, net 2,650 3,078 5,269 6,169 earnings before income taxes 33,065 31,619 45,213 53,974 income tax provision (7,838 ) (8,008 ) (10,901 ) (13,183 ) net earnings 25,227 23,611 34,312 40,791 net loss attributable to noncontrolling interests (114 ) (35 ) (112 ) (67 ) net earnings attributable to caleres, inc. $ 25,341 $ 23,646 $ 34,424 $ 40,858 basic earnings per common share attributable to caleres, inc. shareholders $ 0.61 $ 0.55 $ 0.83 $ 0.95 diluted earnings per common share attributable to caleres, inc. shareholders $ 0.61 $ 0.55 $ 0.82 $ 0.94 schedule 2 caleres, inc. condensed consolidated balance sheets (unaudited) august 3, 2019 august 4, 2018 february 2, 2019 (thousands) assets cash and cash equivalents $ 42,601 $ 102,884 $ 30,200 receivables, net 167,727 153,421 191,722 inventories, net 792,064 715,705 683,171 prepaid expenses and other current assets 51,394 62,159 71,354 total current assets 1,053,786 1,034,169 976,447 lease right-of-use assets 723,415 — — property and equipment, net 232,045 207,726 230,784 goodwill and intangible assets, net 546,110 362,049 549,897 other assets 89,037 89,701 81,440 total assets $ 2,644,393 $ 1,693,645 $ 1,838,568 liabilities and equity borrowings under revolving credit agreement $ 300,000 $ — $ 335,000 trade accounts payable 448,596 400,391 316,298 lease obligations 143,202 — — other accrued expenses 190,331 195,987 202,038 total current liabilities 1,082,129 596,378 853,336 noncurrent lease obligations 649,100 — — long-term debt 198,161 197,702 197,932 deferred rent — 52,396 54,850 other liabilities 90,325 109,975 97,015 total other liabilities 937,586 360,073 349,797 total caleres, inc. shareholders’ equity 623,429 735,853 634,053 noncontrolling interests 1,249 1,341 1,382 total equity 624,678 737,194 635,435 total liabilities and equity $ 2,644,393 $ 1,693,645 $ 1,838,568 schedule 3 caleres, inc. condensed consolidated statements of cash flows (unaudited) twenty-six weeks ended (thousands) august 3, 2019 august 4, 2018 operating activities: net cash provided by operating activities $ 116,578 $ 91,007 investing activities: purchases of property and equipment (26,741 ) (18,559 ) disposals of property and equipment 636 — capitalized software (4,084 ) (2,951 ) acquisition cost, net of cash received — (16,793 ) net cash used for investing activities (30,189 ) (38,303 ) financing activities: borrowings under revolving credit agreement 149,000 — repayments under revolving credit agreement (184,000 ) — repayments of capital lease obligation (609 ) — dividends paid (5,808 ) (6,053 ) acquisition of treasury stock (29,995 ) (3,288 ) issuance of common stock under share-based plans, net (2,547 ) (4,365 ) other (85 ) — net cash used for financing activities (74,044 ) (13,706 ) effect of exchange rate changes on cash and cash equivalents 56 (161 ) increase in cash and cash equivalents 12,401 38,837 cash and cash equivalents at beginning of period 30,200 64,047 cash and cash equivalents at end of period $ 42,601 $ 102,884 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 august 3, 2019 august 4, 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 $ 25,341 $ 0.61 $ 23,646 $ 0.55 charges/other items: vionic integration-related costs $ 609 452 0.01 $ — — — blowfish malibu acquisition-related costs — — — 778 576 0.01 acquisition, integration and reorganization of men's brands — — — 1,885 1,394 0.03 total charges/other items $ 609 $ 452 $ 0.01 $ 2,663 $ 1,970 $ 0.04 adjusted earnings $ 25,793 $ 0.62 $ 25,616 $ 0.59 (unaudited) twenty-six weeks ended august 3, 2019 august 4, 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 $ 34,424 $ 0.82 $ 40,858 $ 0.94 charges/other items: vionic acquisition and integration-related costs $ 6,727 4,996 0.13 $ — — — brand portfolio - business exits 1,905 1,415 0.03 — — — blowfish malibu acquisition-related costs — — — 778 576 0.01 acquisition, integration and reorganization of men's brands — — — 3,662 2,709 0.07 total charges/other items $ 8,632 $ 6,411 $ 0.16 $ 4,440 $ 3,285 $ 0.08 adjusted earnings $ 40,835 $ 0.98 $ 44,143 $ 1.02 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) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 net sales $ 419,841 $ 429,472 $ 359,575 $ 305,021 $ (26,931 ) $ (27,881 ) $ 752,485 $ 706,612 gross profit 182,301 187,114 124,840 108,288 (1,197 ) (2,301 ) 305,944 293,101 adjusted gross profit 182,301 187,114 124,840 108,828 (1,197 ) (2,301 ) 305,944 293,641 gross profit rate 43.4 % 43.6 % 34.7 % 35.5 % 4.4 % 8.3 % 40.7 % 41.5 % adjusted gross profit rate 43.4 % 43.6 % 34.7 % 35.7 % 4.4 % 8.3 % 40.7 % 41.6 % operating earnings (loss) 31,542 33,240 13,898 15,909 (7,636 ) (17,006 ) 37,804 32,143 adjusted operating earnings (loss) 31,542 33,240 13,916 18,248 (7,045 ) (16,682 ) 38,413 34,806 operating earnings % 7.5 % 7.7 % 3.9 % 5.2 % 28.4 % 61.0 % 5.0 % 4.5 % adjusted operating earnings % 7.5 % 7.7 % 3.9 % 6.0 % 26.2 % 59.8 % 5.1 % 4.9 % same-store sales % (on a 13-week basis) 1.5 % 2.6 % (9.3 )% (1.3 )% — % — % — % — % number of stores 973 1,008 231 233 — — 1,204 1,241 reconciliation of adjusted results (non-gaap) (unaudited) thirteen weeks ended famous footwear brand portfolio eliminations and other consolidated (thousands) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 gross profit $ 182,301 $ 187,114 $ 124,840 $ 108,288 $ (1,197 ) $ (2,301 ) $ 305,944 $ 293,101 charges/other items: blowfish malibu acquisition-related costs — — — 540 — — — 540 total charges/other items — — — 540 — — — 540 adjusted gross profit $ 182,301 $ 187,114 $ 124,840 $ 108,828 $ (1,197 ) $ (2,301 ) $ 305,944 $ 293,641 operating earnings (loss) $ 31,542 $ 33,240 $ 13,898 $ 15,909 $ (7,636 ) $ (17,006 ) $ 37,804 $ 32,143 charges/other items: vionic integration-related costs — — 18 — 591 — 609 — blowfish malibu acquisition-related costs — — — 540 — 238 — 778 acquisition, integration and reorganization of men's brands — — — 1,799 — 86 — 1,885 total charges/other items — — 18 2,339 591 324 609 2,663 adjusted operating earnings (loss) $ 31,542 $ 33,240 $ 13,916 $ 18,248 $ (7,045 ) $ (16,682 ) $ 38,413 $ 34,806 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 (thousands) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 net sales $ 772,006 $ 792,883 $ 700,625 $ 588,518 $ (42,392 ) $ (42,647 ) $ 1,430,239 $ 1,338,754 gross profit 334,994 352,316 251,700 217,149 (914 ) (1,442 ) 585,780 568,023 adjusted gross profit 334,994 352,316 258,867 217,689 (914 ) (1,442 ) 592,947 568,563 gross profit rate 43.4 % 44.4 % 35.9 % 36.9 % 2.2 % (3.4 )% 41.0 % 42.4 % adjusted gross profit rate 43.4 % 44.4 % 36.9 % 37.0 % 2.2 % (3.4 )% 41.5 % 42.5 % operating earnings (loss) 42,355 55,097 26,827 27,536 (14,509 ) (27,543 ) 54,673 55,090 adjusted operating earnings (loss) 42,355 55,097 34,621 31,458 (13,671 ) (27,025 ) 63,305 59,530 operating earnings % 5.5 % 6.9 % 3.8 % 4.7 % 34.2 % 64.6 % 3.8 % 4.1 % adjusted operating earnings % 5.5 % 6.9 % 4.9 % 5.3 % 32.2 % 63.4 % 4.4 % 4.4 % same-store sales % (on a 26-week basis) 0.4 % 1.0 % (8.9 )% (1.2 )% — % — % — % — % number of stores 973 1,008 231 233 — — 1,204 1,241 reconciliation of adjusted results (non-gaap) (unaudited) twenty-six weeks ended famous footwear brand portfolio eliminations and other consolidated (thousands) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 gross profit $ 334,994 $ 352,316 $ 251,700 $ 217,149 $ (914 ) $ (1,442 ) $ 585,780 $ 568,023 charges/other items: vionic acquisition and integration-related costs — — 5,812 — — — 5,812 — brand portfolio - business exits — — 1,355 — — — 1,355 — blowfish malibu acquisition-related costs — — — 540 — — — 540 total charges/other items — — 7,167 540 — — 7,167 540 adjusted gross profit $ 334,994 $ 352,316 $ 258,867 $ 217,689 $ (914 ) $ (1,442 ) $ 592,947 $ 568,563 operating earnings (loss) $ 42,355 $ 55,097 $ 26,827 $ 27,536 $ (14,509 ) $ (27,543 ) $ 54,673 $ 55,090 charges/other items: vionic acquisition and integration-related costs — — 5,889 — 838 — 6,727 — brand portfolio - business exits — — 1,905 — — — 1,905 — blowfish malibu acquisition-related costs — — — 540 — 238 — 778 acquisition, integration and reorganization of men's brands — — — 3,382 — 280 — 3,662 total charges/other items — — 7,794 3,922 838 518 8,632 4,440 adjusted operating earnings (loss) $ 42,355 $ 55,097 $ 34,621 $ 31,458 $ (13,671 ) $ (27,025 ) $ 63,305 $ 59,530 schedule 6 caleres, inc. basic and diluted earnings per share reconciliation (unaudited) thirteen weeks ended twenty-six weeks ended (thousands, except per share data) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 net earnings attributable to caleres, inc.: net earnings $ 25,227 $ 23,611 $ 34,312 $ 40,791 net loss attributable to noncontrolling interests 114 35 112 67 net earnings attributable to caleres, inc. 25,341 23,646 34,424 40,858 net earnings allocated to participating securities (857 ) (673 ) (1,125 ) (1,148 ) net earnings attributable to caleres, inc. after allocation of earnings to participating securities 24,484 22,973 $ 33,299 $ 39,710 basic and diluted common shares attributable to caleres, inc.: basic common shares 39,951 41,964 40,346 41,937 dilutive effect of share-based awards 55 117 58 120 diluted common shares attributable to caleres, inc. 40,006 42,081 40,404 42,057 basic earnings per common share attributable to caleres, inc. shareholders $ 0.61 $ 0.55 $ 0.83 $ 0.95 diluted earnings per common share attributable to caleres, inc. shareholders $ 0.61 $ 0.55 $ 0.82 $ 0.94 schedule 7 caleres, inc. basic and diluted adjusted earnings per share reconciliation (unaudited) thirteen weeks ended twenty-six weeks ended (thousands, except per share data) august 3, 2019 august 4, 2018 august 3, 2019 august 4, 2018 adjusted net earnings attributable to caleres, inc.: adjusted net earnings $ 25,679 $ 25,581 $ 40,723 $ 44,076 net loss attributable to noncontrolling interests 114 35 112 67 adjusted net earnings attributable to caleres, inc. 25,793 25,616 40,835 44,143 net earnings allocated to participating securities (873 ) (729 ) (1,336 ) (1,241 ) adjusted net earnings attributable to caleres, inc. after allocation of earnings to participating securities 24,920 24,887 $ 39,499 $ 42,902 basic and diluted common shares attributable to caleres, inc.: basic common shares 39,951 41,964 40,346 41,937 dilutive effect of share-based awards 55 117 58 120 diluted common shares attributable to caleres, inc. 40,006 42,081 40,404 42,057 basic adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.62 $ 0.59 $ 0.98 $ 1.02 diluted adjusted earnings per common share attributable to caleres, inc. shareholders $ 0.62 $ 0.59 $ 0.98 $ 1.02 schedule 8 caleres, inc. calculation of ebitda and adjusted ebitda (non-gaap metrics) (unaudited) twenty-six weeks ended august 3, 2019 august 4, 2018 (in 000's) ebitda net earnings attributable to caleres, inc. $34,424 $40,858 income tax provision 10,901 13,183 interest expense, net 14,729 7,285 depreciation and amortization (1) 32,774 29,520 ebitda $92,828 $90,846 adjusted ebitda adjusted net earnings attributable to caleres, inc. $40,835 $44,143 income tax provision 13,123 14,338 interest expense, net 14,729 7,285 depreciation and amortization (1) 32,774 29,520 adjusted ebitda $101,461 $95,286 (1) includes depreciation and amortization of capitalized software and intangible assets earnings before interest expense, income taxes and depreciation and amortization (ebitda) and adjusted earnings before interest expense, income taxes and depreciation and amortization (adjusted ebitda) are non-gaap financial measures that we believe provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results, including the amortization of intangible assets. these measures should not be considered a substitute for or superior to gaap results.
