CAL - Earnings call transcript Q2 2018

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Operator

Good afternoon. My name is Katherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 '18 Caleres Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. that is note recorded. Please Instructions] today’s being conference [Operator Thank you. Ms. you Peggy conference. may Tharp, your begin Reilly

Peggy Reilly Tharp

risk uncertainties. risk you, press XX-K the Thank I'd and to, and afternoon. XXXX with Investor you Good for filings release Katherine. factors joining Please earnings Securities factors Relations Form President Tharp, for with filings the Commission. A for of differ call the at Vice tables our financial today's U.S. time. both a SEC and Caleres, Company's not more contains due online. statements, press second including, other and are our forward-looking are but of reports and today's other discussion disclosed update subject any number to in caleres.com. to and limited of may Exchange like could at detailed information in no to Webcast. factors refer thank available Copies statements. I'm available slides Actual impact to risks quarter obligation Peggy any various to factors discussed and which information materially call and on aware, forward-looking Please release these results are The undertakes Reilly Company which be this

over are call President, to Officer. Ken Hannah, Diane. And Joining Diane Chief Sullivan, the the and call Financial to like I today CEO, Chairman; turn and would now

Diane Sullivan

our talk good Thanks, about to and afternoon Peggy, results. today for everyone, thanks us and joining

little Q&A. will we guidance. a more about quarters, then, and of will around business going follow-up I are the We follow you Ken talk And finish financials format and details and do a to review with then with a the strategy, while we bit similar will give like most overall

a few So let highlights. start by me sharing

reported record Footwear the up line XX% the in consecutive For to top second for brand our both and at We Famous take quarter portfolio market. to on basis sales $X.XX, Famous. our XXXX. expectations on adjusted brands earnings of consistent with share seventh We back-to-school year continue and operating quarter, comp per with share our second remained the deliver a in in consolidated record the quarter for brand we and we addition positive delivered grow in of earnings sales guidance track second to portfolio, consumer and

cash also balance We to have maintained continued always, invest return invested our and our as strategy strong capital. and sheet, And on flow, the execute business. in we

total of with heard comp The mid-single highlight styles have footbed with quarter strong digits interest sandals sales Same-store traffic, $XXX athletic -- X.X% we very that up sales, our styles second in than total quarter we more the the solid transaction. segment, comp with again also were digits. review Without pairs Ecommerce with saw athletic So up mid-single When performance more sales and of total than in better by up lifestyle quarter improvements lifestyle record and improved Women's quarter comped sales let's the well sandals. was mid-single Women’s all where even at up Famous performed lifestyle million and about. at were and driven women's doubt, Famous, up at much XX%. adult consumer sales digits a related look the athletic at category of the represented X.X% in at as base. about sales per XX% XX%. XX% conversions, comped and at the of we that in athletic

not consumer in keep nonathletic. In athletic down we pace see quarter that declines softness low-single styles in demand. with we in growth digits were couldn't strong offset fact, was so was this Kids, could Where did retro which as

shoes second the assortment quarter do focused million also, were centers, stores, including more our turning not and investment and individually this people In pairs consumers the than of on while is area speed our around to XX of our to in consumer The than XXX,XXX helped way distribution approximately better we’ve team growth, consumer but pairs XXX,XXX pairs in leaving in million profitability. stores our We performance at and continue shipped modernizing from processed our this Tennessee. productivity Nearly visiting with have with consumers the X our has our to Lebanon, shop improved aligning made their facility work only and were demand. to to more expanding directly strategic facility and drive with shoes. has

an year improvement quarter really late basis made and reduced operating For It X second down with changes operating reflects of margin profit, our quarter, ability to and shifting better districts from trends. up number growth and team. to vendors, we the up both XX the operations eliminated X during record Together portfolio regions bottom grow than engagement shopping at profitably and bottom line in last we Footwear. still also door new X.X%, they remain that who field year-over-year. And our manage as is while with at business, the consumer to in Famous, sales, align the demonstrates with the retail fewer consumer joined Famous of Famous and XX.X% committed they She to a more XXX second quarter. delivered This points. as being continue integrated best-in-class stores, Adams, visiting fully XX Molly the working us the top operating finally have -- in drive the leader doors meeting to at consistent into at we

brands leading more and we growth Dr. with women's success five we've to a rates Five up the and way. to the share and against from gain take market grow ranging our in strategy, our Edelman second market than brand XXXX Women's seen Sam all This our brands talk Naturalizer which a in quarter. market market way the of significant reflects share, the share with digits again strength the bit about mid-single at Scholl's. gains for let's to the share top little of our to executing gained continued where XX% was portfolio the posted product consumer, with So resonate once

[ph], quarter while reported X% North Vince its At the was impacted sales. second in Naturalizer under distribution fourth Sam, saw For growth brand sales quarter. This increase same-store a channel pressure in the and softness aligned delivered quarter and from brand in overall gross margin consecutive resulting also the parent shifts, of America the its during wholesale overall history, brand we in with as strategy. largest

in this Going sales some channel expect mix for continued to brand. forward, shift we and see

XX% even the had with an Now sales double-digit fuel sales the XX%. In sales component up sales ship total, were inspired growth, of digits. up of outstanding making portfolio sales our of than helped improvement portfolio our XX% brand the were perspective, related from in more year-over-year growth. Ecommerce drop triple more growing this seventh quarter at a Sandals sport quarter another brand than product key with category with up and X.X% strategic majority brands consecutive styles in this year-over-year. our

efficiently quarter in think through stores trends read to total we styles and has we’re and of been portfolio focused really sales XX% ability our more very quarter of focused our rate, our been well is X%. on success consumer retail into program. Excluding the in in marketplace gradually rapidly This get more the to was programs. speed-to-consumer the quarter. this channel, been the our quite in XX% brand exiting, quarter sandal well, selling At the also leg up which best-selling were has back to the performed speed-to-market Part than speed-to-market is and able second brand in utilized we're as that mass we’ve program than our second this as sales process. it reflected We of summer accelerating portfolio, react the up the on journey which to our our past this in

shared to more on calls, details shift a about our have specifics. I in-house few strategic provide While like just few I'd previous fulfillment a

through success I new allow in ecommerce we increased growth As and consumer to new our to continue as us help continue continue us grow making investment automation business meet see and orders this us give more our will these process related sales The and to to distribution in to will center capacity and efficiently drive facility expectations. enable productivity grow. we're mentioned, in we

investment the is The automation first campus half with coming in year. up next our running and of

short-term are creating we expense this to is getting While isn't with solution brand agility, point and competitive our to a on portfolio in-house advantage associated impact having a gaining motivated the with provider an deliver. margin just third-party operating a

service better levels. to are improved We shifting respond customer requirements be to going and able rapidly to

on manage actively gains. productivity to future the basis offset and will ship a per cost cost with increases We pair

more up and and XX%. in same-store would I few Now, brand sales ecommerce Edmonds, around diversification comments a X.X% Allen make efforts our quarter thought the sales where we comp were saw I up just than

campaign total, next in designed consumer months. middle in We storytelling. see them look some through and And as the and out added roll will million be like keep sharing accomplished and we the and This In consumer more continue was going. We’ve XX you you We've and progress quality able facing American the improved all new consumers than merchandise with what Allen brand to We've appeal we freedom, relocated called luxury better we're in we've week brand of September. Louis differentiated, brand. of television our artisans to spring, and of the American-made stores are we of broaden products, are about and enhancing relaunch. focus the a a St. accessories And collections, new to Edmonds will rebranding excited effort and XX all of designed new to on this franchise we've over the effort, be growth this the which the investing our to apparel of more our effort product. brand new our again rebranding activities launching and this $X days. last all into the strategy making core our forward refreshed our to added in something last bring

brands did it Blowfish younger acquisition expansion Malibu of of lifestyle gives diversify second We our consumer continued also in the to us to of additional exposure the allow only acquisition expand and quarter. segment further overall in the continue for growing casual with the the with portfolio now sneaker Blowfish business, that our of to and the that with days. seeing one, into what the in The And an our potential that insight enjoyed power was relationship these has greater newly Famous relationship, long-standing we're with and and team. had expanded to brand partner with we early pleased easy even the market. we're decision of thanks Not

as overall to have clear consumer take great As last exposure are our continue business remain really we with mentioned to growth to additional have It's portfolio. necessary and think potential. right those our that’s the brands to long-term over quarter it beyond brand the excited a that we well, infrastructure we I or strength expand on acquisitions with for I Ken? our have look that and brands little that turn in the that, bench And to looking cover more for detail. and will I financials current Ken

Ken Hannah

good and everyone. afternoon, Diane, you, Thank

the up of shifted our and per year. team with were half year with diluted year-over-year, the adjusted per of For prior $X.XX, one of accounting total prior to earnings for Footwear, up delivered of XX.X% earnings were the and $XXX.X third the were share million XXXX million comp associated sales St. year. quarter for $X.XX earnings sales transition second earnings over X.X% the $XX were million XX%. the into guidance share per diluted for Famous the quarter the marketing At XX% quarter share included up of XX% growth per the of share Louis, the sales ecommerce sales merchandising the $X.XX, of fiscal Consolidated Blowfish year, versus acquisition of per included Malibu. of the second year. of Famous quarter for which X.X% in X.X%.This second $XXX.X share to and calling versus $X.XX approximately Reported second announced amount quarter, Through costs week this last of Allen consistent and Edmonds purchase we up for first previously was adjusted

result a XX portfolio, year-over-year. doors fewer operated actively As our we of managing store

in XXXX. sales X.X% driven planned our approximately sales in X% first Year-to-date, total up the by consolidated For $X.X to quarter growth $XXX.X in brand excluding XXXX were second X.X% were of of $XXX.X were Footwear up billion sales by and the versus portfolio, up Famous mass million ecommerce sales more up X% million reduction than stores. half fewer offset strong total year-over-year, of channel.

Our sales in were same-store X% annual Famous our line at guidance. up with

and XXXX, of first For ahead Sam $XXX.X brand Naturalizer were by portfolio, Edelman sales our half of brands. X.X% driven of million primarily the

Let's turn to gross $XXX.X X% at in million year-over-year. quarter, came in profit, which second the up

the on by point ecommerce was margin decline reported down in quarter Our for XX.X% continued Footwear and week business. driven to at basis due points of quarter the basis, a Famous nearly the XXX in sales strength in additional consolidated of gross XXX part BOGO our

X channel brand as to For second was mix. XX.X% of year-over-year, impacted to this by brand basis portfolio, continues Vince, quarter points sales and down driven gross changes by be margin

our There it per profit adoption to second share get we want does due earnings to the to from XXXX the statement to operating the other Before earnings of remind retirement including this income. of required and new or impact into expense a accounting plan quarter impact million the I geography margins. everyone was no shift net but standard, of SG&A $X.X XXXX expense, effective operating the do of standard quarter income of year, pension the income second which

Our nearly down fulfillment the of the million quarter than duplicate XX.X% we costs $X basis, fulfillment year-to-date and the million of capability. XXXX our distribution down SG&A and versus in of a sales, second additional SG&A of for investment On more expense, Despite XX distribution to increased in center $X points SG&A XX% to of we solution distribution brand of in-source decreased total XXXX. basis quarter invested center warehousing costs important portfolio. including for this approximately this approximately to consolidated warehousing basis second as points included XXX in-house duplicative sales, transition expense as our

$XX.X XX.X% in period the fewer down by store million XXXX, same openings. second of was the depreciation driven amortization versus and quarter Our in

XX.X% the Our on basis, $XX.X margin second expenses. duplicative a operating points X.X% million costs. in second the up the while Footwear, operating center million reported including the $X was basis margin adjusted duplicative distribution earnings earnings million up At a over basis including XX Famous million operating of reported of prior basis $XX.X We $XX.X year were operating quarter X points of up on distribution year-over-year, both delivered and were adjusted, quarter. numbers

of reductions margin than overall X.X% changes counts. late operating we points align field more in to in While operations made last our reflecting increased store year XXX basis with

the operating brands. of investment capacity earnings future to million making we're adjusted portfolio, in-house for brand our For our by in center with and $XX.X transition were impacted an profitability distribution

and approximately expenses. As of the duplicative quarter, $X second saw for discussed million center we warehousing distribution

$X.X quarter for Allen December of expense interest net Our was Edmonds. when we nearly year down XX% the were second versus second down the last quarter million, paying our of XXXX acquisition

on across the year-over-year reduction tax of quarter basis rate doors expenditures reflecting XX.X% GAAP than XX.X% in million the basis, of more for Our reduction quarter, for versus second rate quarter XXXX number second a XX.X%.Our of new down were was second capital the the the XXX portfolio. $XX.X a a points

Blowfish the to financed million, quarter. second also of with in turning year. acquisition cash from cash Now We last balance $XX million of versus the operations This $XXX.X our reflects the and which Malibu, equivalents ended up sheet. quarter with was nearly

end at as was position in to inventory. investments quarter $XXX.X continue manage million inventory we our consolidated Our

was slightly For calendar. the Famous X.X%, At brand XX-week On was basis, $X portfolio, down overall shift X.X% Footwear, in at up inventory inventory the reflecting up inventory one million. than less week year-over-year. was a

in fewer into actively X,XXX the with continue portfolio manage Famous Footwear of last the doors, at quarter We the real Famous and Footwear second XX year. quarter to estate second

sheet closed advantage. retail our two provide us doors total continues at Naturalizer with with of The end. leaving a For XXX and our strategic flexibility brand quarter we portfolio, strength to quarter, brand the doors in us portfolio balance

and XX.X% year. the overall in basis That’s XXX returns, quarter. on return approximately As our invested an capital last the up managed of period delivered our we points second capital same adjusted we strengthened over effectively invested

lower to effective per Before due acquisition of share be we total Blowfish of begin XX% XXXX. additional of fiscal previously per like approximately of expense. benefit rate. $X.XX as over excludes our $X.XX Edmonds includes announced, transition share you It cost Malibu Allen expected to Q&A, XXXX to our approximately I rate $X.XX would This to $X.XX earnings guidance, remind to reflects tax up to an $X.XX an which XX% diluted growth

third quarter, should events. to to the approximately see related expect $X.XX these you For $X.XX to

usual claris.com. of can these be available found details as a on slides openings guidance includes Our and the earnings closings store and number at

calendar XXXX week, we’ve a As immaterial XXXX increased XXrd due by related million Footwear back to shift, the to Diane. already that over approximately turn operator included And a impact by million. call portfolio $X.X to back over discussed, sales like down earnings. which as Footwear $XX.X Famous reminder, expect with sales at the will quarter our we brand the million -- on an [ph] $XX third sales I and And XXXX that, be had to would Famous

Diane Sullivan

that Well, How is will go I we Q&A. to think [indiscernible].

Ken Hannah

There right. you All go.

Diane Sullivan

All right.

Operator

of And Company. we first take Needham from will question [Operator & Instructions] Rick our line the with Patel

Rick Patel

Thank you. Good afternoon, everyone.

Diane Sullivan

afternoon. Good

Rick Patel

timing the for where any that as enhancements work turnaround? Famous done men's Hoping could to about be you are I’m you of Famous, most well? sorry about if kids business performance that we the on it, missed expect think when merchandising but as the the about I talk details underway, and needs to talk part you at the outlook at the of of And can

Diane Sullivan

sure. Yes,

we start kids’ And your first. our been for with kids’ has just who -- business Liz DMM a with Robertson, woman -- named me team just new question while. actually, kids, Let the a signed we a

segment basically change we do and do her, we're need that good. Molly business, and put we sure we is it as our in quickly of weaker, better doing kids’ are a possible bit great happy the really -- around and a assortment primarily to to and what are are The pretty take performance can Colin everything side it’s need little work products and to to consumer. and front the what beginning was -- We in as -- promote she at the we we look business of of products and non-athletic make that with

around the men's is that fully expect I time. good men's relates in the flat no On to our into or the it a that, we as of with territory the our aspect really exception every comp on non-athletic and replace the business all really I think strongest on maybe basically So news and the was would across in time be quarter period, merchandise And two. side performance expectation to virtually back call, lost the Again, athletic as will women's the business, the on side. positive athletic any categories point and athletics, I big was mentioned of lifestyle business there. our but of was our able

speaking, couple we not that generally see. back if within will business on will a track, So, we we quarters of kids feel sooner, like certainly have

Rick Patel

in helpful. really June you That’s it believe in pick but Can count about buy 'XX, store. also until launched these talk earlier this year. Famous online abilities up I didn't

just As needle you this greater you make and see into this a a how focus, mover? as whether customers curious are I’m responding

Diane Sullivan

it Yes, we absolutely think it. Consumers do. We is. love

online, And are the that that really it's than the I then on back an we track today. this -- the and get which the is the actually how in to wanting them we think growth advantage us to items, had stores ultimately the opportunity We other servicing going be actually, half quarter, and to customer we the into a out of consumer. continue of the ecommerce even obviously our we’re currently in measure store close shipped this and and we script, think us. for and shoes sell actually think process shop people cost to in mentioned I figuring to in from just pairs million with gives better

you’re hear going it of like and it to we So see more us forward. from and going

Rick Patel

one about talk if the may, portfolio. for shipping. hoping the I more, brand outlook was drop And I on you could

of assortment in and And the touches you So, the curious does terms that that percentage I I’m portfolio? bigger, economics right brand now long-term that have get target? as a think what that’s just whether area of been performance. imply to a terrific what your the does pretty of

Diane Sullivan

Yes.

trying can. allow shop consumer whatever that whatever in find brands a make to our that think, they for general, do is way we are I sure what really way and brands we to in in

ship, So whole it's whether that, basket drop are our on selling others.com, whether we really in-store, of our it's mean a own.coms kind selling I opportunities. of brands

terms that We is of in business of drop quarter. almost Total business, this total for of us in have our seen XX% ship. just direct We XX% to now growth looked had tremendous what growth segment like last consumer quarter. that's the to our it in close

the know, XX% buy online to from to we do bigger we’re well, his that, the that wants heard in business me be serviced, as to so our are and flow they out I going Many service spoke today centers bigger need absolutely we're making the mention work way continue those want that shoes. remarks – to XX% our of think and going a business. to customer we're doing you that’s in So, distribution have have the figure to that to critical grow get seeing coming to going and the going continue total the piece we as get how capabilities if to retailers investments essential they’re we as only want way Ken upward and with as to of you to to are and to customer, all about and and to be their

a we position that, in So we’re think on good Rick.

Rick Patel

Thank you. All the for best back-to-school.

Diane Sullivan

Thanks.

Operator

with comes Associates. CLK the line Marotta question next Your of Steve from

Steve Marotta

good Ken, on comps? a to evening. you and little do third want to quarter the comment Diane Diane, bit date

Diane Sullivan

Sure.

seeing same quarter, in comps right in are range second the Steve. we the that We saw

Steve Marotta

Okay.

Diane Sullivan

So similar. very

Steve Marotta

you can outperforming, that’s two the are quarter about underperforming? a besides look, category well which the strengthened other which Okay. over I And categories and maybe is assume third bit into a little talk as spilled that, retro or

Diane Sullivan

on I we've would that some a have in also that back-to-school, all in booties, reads not so are quarter good seen news there. the way the trends through we the say say seeing early continued particular. second would whole new lot I of

heard, them categories. hopeful season be you -- anymore. the will many don't continued We and year-around ways way selling about call mean, categories. are booties what, that So sales good. Sandal I as boots fall in think that we into them seasonal typically, They those we’re really

So the us. of there’s sides opportunities equation that think on we for both

But Sandals good this continued. slowing So reads continue where boots. was to and are, weekend, a our know after you sandal now. but don't on I down sell, bit hot little -- sales and it

So -- much that, than and that other pretty seen, trends Steve. same the we’ve

Steve Marotta

Sure.

guidance on giving can be Given automation your and investment comments investments investments? XX next And year the guidance on CapEx? XX or you is be next over a this will remind next bit this automation, light Can year, CapEx where year mentioned so. spilling I those could not what that -- know in you’re for you but to talk months about little of you

Diane Sullivan

to you do manage Ken, …? sure. Yes,

Ken Hannah

CapEx was XXXX our for $XX yes, guidance million. approximately

be some that I contemplated investment had that will couple we the to investments next of store years, had into able we the And distribution we some with in so balance think as have historically. center numbers of initial the into that centers. the of the And distribution look opening

So, by much. to we expect differ that wouldn't too number

of were back number think If we up I XX had recall in taken you it taken I to XX and we that the XX. when doing traditional modernization think Lebanon,

at a was Famous. opening when And approximately we back so stores year that XX were

XX we’ve that guidance. opening this their the now number 'XX whole expect in number from that the -- -- a is and XX the to so wouldn’t year lot we differ So

Steve Marotta

a Famous. $XX quarter in Okay. that it calendar -- on associated That’s third basis. million can Was you the $XX $XX that mention with is there's to Famous expected headwind helpful. just absolute or $XX it is shift is an million million down for be question, at it Last million or that

Diane Sullivan

from into the third XX shift second. the Just with associated the the

Steve Marotta

you. so just you I [Indiscernible]. that. Thank Got the on clarity want much.

Ken Hannah

Thanks, Steve.

Diane Sullivan

Nice deal.

Operator

Your with question Chris comes Svezia from Wedbush. the next of line

Christopher Svezia

afternoon, Thanks everyone. taking for my questions. Good

maybe just played the -- Could that, just Famous. through of how that July? first quarter May, for second comp walk June, in cadence out Just you on

Diane Sullivan

single July mid and were -- digits. digits May Yes, Chris. and it low June Hi, single was

Christopher Svezia

any of July and they’re June two the different both Were or pretty Okay. between them, comfortable?

Diane Sullivan

lots pretty close. The pretty it's very close Actually week, in. of No, obviously, by all it was total but variations similar. weeks,

Christopher Svezia

up remind the Okay. September, what QX unfolds against you’re into cadence And can August, going us as you October? is

Diane Sullivan

Sure. I can.

Let's to in X.X in say, August, down and X September, October. in XX up down

Christopher Svezia

Okay.

Diane Sullivan

.X up in in, quarter. third all So the

Christopher Svezia

Okay.

you and What is the week point are it. like got the in. give gross and bells just That’s Footwear, that XXX about the to just Okay, what to looks maybe what margin underlying much some moving pressure, changes that how into go margin Famous I’m idea the at. And the can trying gross related [ph] basis of how you extra QX? as get

Ken Hannah

little the is XXX, -- a of is the XXX QX on QX. that it about out in growth Yes, incremental into million of the really that a then the shifts ecommerce over XXX to tied $XX just And rest sales. related

the think I up XX%. Famous footwear.com site almost sales were

back we margin made up there then, the and of is gross rate. margin. a through has obviously to in operating SG&A up shipping dollars the that impact actual coming an solid deliver pretty that with obviously, out So to And

Christopher Svezia

would you of recent the QX, with expect -- the on Footwear event you Famous margin would Would still some shipping that gross margin. or that is not Okay. so improve gross headwind in a pressure of

Ken Hannah

say QX, you to year-over-year. talking when -- improve, the year-over-year for you’re Well, QX QX about

Ken Hannah

year-over-year. we Yes, still be expect would that to up

As we the offsetting, third mix off the then second you the of like ecommerce in quarter, depends quarter pressure take really on the it don’t in you sales have the you’re did the from of and week

Christopher Svezia

for year, Okay. your XX%. guidance just to XX% back With go regard the to earnings overall -- up want on to

with a as we think first delivering up expenses on the maybe go be a of felt you the into half something in the some would, about of I center think should considering. ended pressure that that year, little you should XX% up back earnings related year, of hit we half growth, the You fulfillment initially, put the to stronger. you Anything the

maybe back initially of half in be year. fact the there I growth thought stronger the Given will

Diane Sullivan

Yes, Diane investments we elements had the mentioned I some think into brand. of do making have that we’re

of half. so a the back that is happening And in lot

costs, center not see is same what obviously business. we level distribution Edmonds Allen think I duplicative in to But make we’re So investments some the expecting you are planning the of

Christopher Svezia

Okay.

So you model whatever --- investments in [indiscernible] was turn the potentially now [indiscernible] to assuming the you’re the already that regards something model. cost let's new? is to I to that were With or with say going thought

Diane Sullivan

the in [Indiscernible] model.

Jim Steele

Yes.

made in expect the in are So they the second into we half. those higher plan in having our when of than brand. duplicate operating we’ve the Allen put got together up first costs the Edmond the margins the -- we is brand had And where not plans that were portfolio where then benefit and the additional and half picking we growth investments some fully to we make

Christopher Svezia

say And you of I you point that branded it's happen. Well, about portfolio because sequentially, just the just margins. Are year-over-year, you talking not talk year-over-year. classification. I’m higher that operating curious on obvious about a always When mean,

Diane Sullivan

Yes.

Christopher Svezia

And but Okay. yes. sequentially,

Christopher Svezia

Okay. Final little little a the growth what wholesale walk Diane just on just specifically, market the -- gaining Talk more just brands? about grew, thing, highlights, give color maybe through didn't about portfolio. share, and what can in the on grow just those a just branded more I Maybe why? wonder

Diane Sullivan

two news good know grew. that virtually Yes. Chris you was The all but

and the Sam very both about the quarter. Naturalizer. the let I in grew They And grew and grew ones they nicely market mentioned that they share quarter. talk So in met did.

business Franco highlighted in I so of Sarto, And shift which strategy we've in has had the two meant the did the follow so that well of brand negative In that we to, of business what we're Vince to around, and that’s with so the I been the distribution brand challenged that as a the the impact only that's quarter. almost some -- bit addition, as LifeStride, did to as the in quarter. had spoke other are did every a really beginning portfolio little exception so that the only our Scholl's,

rest -- it what strong meaningful, have right. things five I the that try are For been lead most are our of brands pretty those has They’re right. the is do standouts. essence assets. is not to all too top equal, created And -- mentioned we in There the

that get we sure to there. want growth the we So drive and ones are continue really the that to those make

really and that we to on So were happy to that we're see very able deliver focused that.

Christopher Svezia

Okay.

fall the the All best season. good. Sounds selling into

Diane Sullivan

Chris. Thanks,

Operator

Champine Your comes Capital. of the from Laura next question with Loop line

Laura Champine

taking of you half It of looks my gross to part for the move year. about like color expectation be driving add Hi. an that? Famous really margin It's will some there's the what as through business. Thanks reversal the Could for question. back the we

Ken Hannah

total. Yes, I half for than same that's mean, first having most most its expense higher is of the eliminating duplicative the typically that segment in the part, the year-over-year just half of is and of the in what is. There the not back in it back margins most distribution But levels half expense. seasonal are that center

Laura Champine

to the on issues there generally shifts secondly, facing with long Vince, then, happening And you that you’re would distribution persist? the expect sales with and how

Diane Sullivan

and that is the well partnership basically there Nordstrom stores as they’re their Well, that, it's selling own in. some Neiman as other the apparel and independents really

And so a two or I then quarter level would and will it expect that be off. it will

it's So outside really that. expanded distribution we’ve of had that

felt really improve lead the following on profitability to their that overall set consumer. focused a to the that, specific and of way They brand So was that. on stay of the we're kind

with that. them on following along we’re So

So see. we will

Laura Champine

you. Thank it. Got

Diane Sullivan

Yes.

Operator

question comes the of line Macquarie. Your Laurent from from next Vasilescu

Laurent Vasilescu

color the contributions questions. think Thanks it's little bit you a lead if earnings Malibu. to we afternoon. my give can Good year a for of for about this around business? this taking should how sandal around decision-making the And next year? unnegotiable for Blowfish Could since larger acquisition was rationale, more possibly the I wondering

Diane Sullivan

only we Diane. portfolio obviously Laurent. channels, casual with to -- normal our had was respect a how again Hi, in we had folks. the Sure, it, of good that one California as but the little Yes. well lifestyle more its about really brand a in not through consumer. of really the again [ph] With performing, the Footwear all around was decision hand our millennial more Famous as gaps Sneaker And of first kind visibility

infrastructure, for thought nicely a need we talented some little been their more help more that strategies the was it again, there an So with with plan. growth for opportunity And of and has little us. growth growing and a pretty obvious people

bit a we to our we as to wanted of was a that now tuck a making expect license, the like we additional nice as the the half, continue if double. versus at not be next mention on skew in portfolio, reaching much could really years so seem that little does how really of But a to in near-term, really and in help is so was manage it in portfolio very And it business. something that a spring look return nice that the the back and towards the it So what we the the brand, relatively be margin to and own opportunity a operating to decision to. towards of fall, certainly we would we that right small fact couple some evolve that brands bit new skews little brand consumer it

some pretty of speak you near-term. the Ken of rationale will that expect in So much the its should impact in to of was what kind terms and earnings

Ken Hannah

our And $XX the we more be Yes, a the a bit as are We our we lot business little mentioned, next business. earnings. be would very are what it's a a it to to for lay you'll that. as is we fall spring But that see happy first about Q, year. round grow the it And year pennies couple year guidance and detail and bit in into would business we excited will more than business teams next and less this quarter. coming it year, a out can doing paid accretive to that for little there's out give big a around cash a Diane will that expect see make share their around going million little in on detail you accretive it a a but majority flow statement

Laurent Vasilescu

don’t can bit under call very on on consumer but Molly engagement, much. leadership channel the you a initiatives Thank about productivity you drive And helpful. then, little Famous Very at talk maybe is I vision her Footwear? today, think, the the store to

Diane Sullivan

Laurent. our looking selling foundation. and so to and a weaknesses And strength meeting vendors, she made rather come of good really is Yes. would with had when opportunities she our spent -- it's back-to-school she say stores, where, such -- her in at is consumer, sure bias was peak in to looking have terrific visiting well making what much here make about the is good our mean, the her with or time, do was the XX sense -- sure out in her got that our first it I a because of sort But Well, for she she shot, engagement. see consumer so the of would time at has landscape, days I a sure those understanding during action. her as one that spent really I all she it a teams that very terrific of peak our her great things marketplace,

from coming can and everything from imagine Looking it's at a lens you the as Disney consumer about experience.

like going what moment be in we Investor the that the in to that hoping next is years. business think certainly is to -- the to of the have another a the would what out within we’re of -- that's that to look wonderful next lay Day, six So would we have of love to couple sort And months opportunity next do have perspective her her time.

seems together, really sure works And we’re that to thrilled making so the which about the cultural well always she's team is The far. be happy. team's working that it, are you indications well. and early the So about, fit, worry everything excited happy

our to plans. to going start we're accelerate So

Laurent Vasilescu

would I’m last August did Footwear? the helpful. the any -- around two helpful. if And and category this, then, Very I could the but Okay. sorry, boot Famous maybe, missed -- the at thoughts half you then how for then, second short-term And be quantify more questions.

Diane Sullivan

mentioned We that roughly comping August, as did. second sure. our I same Yes, quarter the -- what

we weather boot last of a warm early sandal We to on a be -- are off for to it but clearly, the very much year bit start. been great, than actually, is we that -- through did what sort category did and September typical to very nice selling a and planned our been very had little boots glad So that kickoff, later reads the is. because in good. has has And

very better we're in particular, it flat. think reads brand getting sure with on we this I our year. pretty I'm than planned category, do early bootie at portfolio. The that actually that nice we and Famous both that will

we're be should it So, great season. crossed, keeping we -- should fall a our fingers think

Laurent Vasilescu

hear luck. to and best Great of

Diane Sullivan

Thanks.

Ken Hannah

Thanks, Laurent.

Operator

comes Your Poser the from last line with Susquehanna. Sam of question

Sam Poser

you had this question everybody. A for questions. are few Thanks year closing now? how and said opened How taking you you are XX. at And How afternoon. -- Good my Famous many many stores closing? you

Ken Hannah

closing XX. Yes, and XX opening

Sam Poser

tell flowing -- in happened of that that year? you does balance you can us how the the and how And quarter the see for what

Ken Hannah

plan. we're deals down don't back-to-school XX the that accelerate and year-over-year get -- think assuming any anything, but the stores down are after or year-over-year see we improvements rent Yes, we that’s any we in I then

Sam Poser

then Let QX me did and open you in now? -- stores and look how rephrase. And How in that many does right closed QX? QX

Ken Hannah

we opened closed half quarter opened XX. first X. the and X In we In and the X closed

Sam Poser

QX? in then And

Ken Hannah

to So think then would back-to-school openings close post -- I at like QX, XX that got it be we’ve in and the plan remaining stores.

Sam Poser

quarter You third, the the that however? fourth than foresee more happening in

Ken Hannah

now. way evenly the between planned the That’s is and fourth we right split It third it.

Sam Poser

take. a XX or around give quarter, Well

Okay.

enough Let of this or more. me there through ask to footbed couple would get where an forward? going something sandals this a opportunity -- have you you sandal be Did is you

Diane Sullivan

Definitely going forward, an opportunity Sam.

Sam Poser

And The didn't we direct. your what want that of ship. about was I understand then said -- XX% about or said just what you mean there direct …? clarify the to drop Does you XX% business

Diane Sullivan

Yes, portfolio business some ecommerce XX% was of our form brand through business. or of .com

Sam Poser

or your yours Yours and -- partners?

Diane Sullivan

Total.

our and Ours partners.

Sam Poser

Allen lastly then was year-over-year? in -- the quarter And you. Got up What Edmonds on was Edmonds.

Diane Sullivan

six were the up in comps. They to look. me Let

they’re the been in of on for happening cleaning little down categories wholesale, and little pulling me. non-shoe a think XX And I that were our spent business. stores brick-and-mortar, for over a a the flat a certainly which has one down while. then out that's ecommerce they -- in -- of numbers up of We roughly been lot

the that So third all as -- we we for moving store. new into the launch getting here our for ready products were were coming in through quarter in

So, so not great wholesale. comps, great shipping in

Sam Poser

seasonal going lot -- Web and stuff. I was banner footwear So, I noticed on on, some of promotions for your regular mean, I mean, there site, we

Diane Sullivan

Right. Yes.

Sam Poser

I there products new some to clearance. the cleanup were mean, Is that or on

you’re So to very been some how when average promotional selling you’ve How going for of prices sort do you balance your here? time? relaunch quite

Diane Sullivan

have and been our talked to to that about to along been trying earnings drive certainly to to way make with that but clean way clutch you’re line work goods, delivering all the the out, of some had this. how right, continue out was -- We know something how of -- Yes. don’t and the I we've gas, going you’re I and through figure you that sure I some your top

been for We a some of amount the a been it's our promotional of partners. for doing to wholesale reduce also activity bit our little and it's -- needed online, of not bit own that. of sure, challenge only a little So a stores but for

different that accessories through XX collection they that it's which all that different we -- the across of really that Malcolm in to it's our offer enough this we for make XX next rebranding different U.S X channels freedom going only that, here entire got also like will be like work making really, on and non-promotional make sure addition from great needed And products new mapped footwear pricing be on to from not to new that but of group in it. that’s collaborations sure products going the We has collections, So really around pull new American-made men's -- are effort, to experience kinds product to continue to stores, that’s looks is to different together, focused certain artisans have That the months. And to X we be categories. that going new new that companies of has interesting. of is products something is distribution.

to the franchise that to be new that's in to base begin consumers be allow will have, I which tell ad, to and us a a had to driving spots chance one bringing think last consumer. the keep keep American to our we Baker was making broaden customer the customers to the it guy better as Mayfield that to the -- into to and bring core really in actually out can and surprised some to so really brand. see I and how same interesting mentioned, we broaden TV and way on be fresh late we relying figure story week, it'll on then, not out but so going one named little luxury appearance I customer those nice of -- continue really to as of new become a figure And think focusing see the we see consumer, So directly a

fall this rebuild work build in promotions a and those reduce and our -- be think to our will it's So really to start I progress the ability wholesale of business. begin

Sam Poser

I What’s be foresee wholesale have two in more of direct up. for, questions. One and to going Ken, earnings for the of the because secondly down split Allen you do And just you for the shift? earnings up Edmonds? follow QX being or

Diane Sullivan

Ken's is small And of looking Sam. direct XX% our The wholesale portion at up. business, total about fairly Allen Edmonds. It's a

Ken Hannah

you specifically? are talking Yes, about Famous,

Sam Poser

No, I’m of because in the to good quarter down, anyway. is I overall. Famous them a you be Do expect overall chunk or talking up earnings mean, about earnings

… So

Ken Hannah

company down total will we’re to million earnings Famous quarter respect out, They to the Yes, we the up. but $XX be be total. expecting be in shifting with the in up in

Sam Poser

that’s expect not? revenue the And Famous's you with be I … -- million $XX up store mean, do total with to in those net closings store or closings

Ken Hannah

Yes, it's Slightly. …

Sam Poser

though, down correct? company slightly. -- up corp be Total revenue Famous's revenue to is be going likely

Ken Hannah

Famous will be down, yes.

Sam Poser

you Thank guys and very Thanks. luck. much Okay. All right. good

Ken Hannah

Thanks, Sam.

Diane Sullivan

Sam. Thanks,

Operator

this like to time. there over Diane. turn the no I call back And questions further to would are at

Diane Sullivan

sales, we a drive Thanks as to in Thanks positive would to a And like again, record-setting look our lot joining market again. growth. portfolio, of There's adjusted deliver us comp to delivered forward Talk EPS back-to-school much. we second double-digit quarter. share consecutive seventh of our brand year we and as we towards to as another continue soon. year take everyone look for as to very I thank

Operator

Ladies conference this and concludes call. today’s gentlemen,

disconnect. now may You

Caleres (CAL) 4 Sep 182018 Q2 Earnings call transcript