CAL - Earnings call transcript Q2 2019

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Operator

Good afternoon and welcome to the Caleres Second Quarter Earnings Conference Call. My name is Jessie and I will be your conference coordinator. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.

will President call and I Hannah, to time, Vice Senior Chief this turn over the Ken At Financial Officer. ahead. go Please

Kenneth Hannah

Good detailed at financial Caleres.com. thank to as well quarter and would are joining tables A I available slides webcast. with second call XXXX you release press as our earnings afternoon. for like

risk not may Please today's forward-looking contains a to discussion be due differ disclosed Company's to uncertainties. materially risks in but the Commission. of Form other and statements, Securities number factors, to the factors XX-K various aware, and Exchange limited filings Actual which results including U.S. are the subject with and

forward-looking press risk information these reports statements. Please today's release time. refer Company on our are available more factors online. SEC to no any factors, filings update at The obligation other to call any information impact Copies for and undertakes discussed of and could this in which

call I CEO, the Sullivan, today Diane like on call Diane. the now me turn would Joining to is Chairman. and President to

Diane Sullivan

and afternoon continued second your you call thank quarter good and for for our of joining and Caleres. support Ken Thanks,

have the our continue quarter, execute we successfully our consumers. to During strengthen connections emotional to strategies the on we with

deliver supporting total sales. industry-leading our capabilities, Our combined and quarter second same-store-sales Footwear deep record Portfolio, insights, with growth continued the positive allowed relevant us Brand footwear in to product, growth at Famous

improved profitability per quarter expense on earnings performance the also translate allowed for focus discipline into in top-line Our increase a the resulting share. in solid to

second Turning to details quarter. the of the

our novelty newness. The weather demand later in pleased noticeable there consumer across delivered this We spring sandal quarter. and multiple for was and the to in a that resonated resulted business increase have are that impacted product certainly segments

inventories which We also moderation in to led replenishment retailers orders. managing a experienced their

in across respond and made Brand development in Portfolio. allowed to market us these we speed design, to our timely-efficient profitable manage Fortunately, the way and and to have trends product investments a

our into freshness styles Footwear a injecting X.X% underperforming progress same-store to excellent a in made the through more increase key the contributing worked Famous athletic assortment also quarter. We way successfully certain at in and vendor from sales

have are brand this We back-to-school. returned growth to with heading to positive pleased into

our expect back-to-school and third as into are confident same-store experienced on that growth. a quarter to have we to Famous start the at continue solid sales underlying year are our consecutive deliver track We positive of momentum back-to-school we eighth to

to efforts. delivering marketing addition increased engagement products, our In compelling also loyalty we consumer through and

engagement loyalty YOU continued have by We and seen revamped results new existing and reactivated base. driving membership members our growth from of in Rewards program Famously engagement our among encouraging increased

Existing rewards and members important back-to-school are learning hearing frequently We and forward season. look more they shopping shopping occasion. our consumers spending throughout from to more more this are per

advertising to return TV We also experienced response a at new with the to marketing approach and our improvement during Famous performance to Footwear sequential contributing the solid the quarter.

began ensure the investments our are some consistent also order in-store test deliver across and in the have initial to We pleased and exceptional customers. that in we experience stores with from an response our environment to

Famous our limited operations. initiatives Footwear These types to of are not

have We New Square, to in our have that makers reaction Naturalizer seen York. newest collaborations a on and Herald State we launched positive local Street with Chicago’s recent stores in

stores that new Naturalizer consumers, shop assortment to sit a loyal ensuring our customers. exciting pop-up artisanal Naturalizer products while our revolving of stay merchandize These offer products our the experience introducing for alongside core that

Beard evolve quarter, Zodiac. partnership and the with diversity to our the Veronica a we relevance our continued during Also and establishing relaunching offering of enhancing new portfolio

you I fashion women. team and run to powerful partnership see in have in our dynamic We potential of great tell it brand Veronica the contemporary space growing most Beard, with exciting fastest by new exclusive is and and a the

segment be in really capitalize through able of a will of With we it launches more relaunch bohemian brand love new and on more but also consumers’ Both design casual will their these western effectively offerings trends. a today’s the Zodiac, of to brands. of in target newness

to are diversification This is products consistently we growth diverse from contracting positioned deliver markets. relevant we the well Looking of that forward expanding across business our second year, with of sales both can and the the our ensures half portfolio. foundation and in that earnings

us on environment model built which have flexibility where in either for an retailers We meet focused increasing also have into to newness inventory our discipline. is demand consumer become allowing more

market direct-to-consumer to preferences the improved these on changes positioned have and the consumer investments deliver given and to in well are fulfillment retail our capabilities. We in and speed we made

Portfolio this growth for in have half. second reflected our in continued expectations Brand We the in the

recognize tariffs This focus also right we quickly going impact creating us. increasing improve we moving the to fund fuel now, we included has long-term the efficiency must With what for in opportunities can see to of produced organization the need growth footwear to need We our on opportunities supply across the ahead China. we of that chain control. to continuously the identify mitigate adapt to everything

XX% than We source ago. outside China five and of XX% have approximately production from of years products China, actively away up our now diversified from less

selectively leverage our shifting they will disruptive We exploring least working to price continue sourcing China, our additional consumers. expertise production with partners to to costs while be increases reduce of out our also where

are with solutions confident remains right into real-time XXXX. the and working will the the year and minimize throughout that the the tariffs of situation to balance find risk we fluid, While this we are associated

for to the like turn I’d a that, review. with Ken call financial to over And

Kenneth Hannah

Thank and good afternoon, everyone. you, Diane

For the second of earnings $X.XX. we per share quarter, reported

at $X.XX to year Our $X.XX expense. adjusted earnings per and ahead last share Vionic integration-related excluding was expectations of

the the year, as Allen sales of sales to reduction X.X% and prior million the the were addition as Vionic Blowfish Edmonds over $XXX.X planned additional two up months of Our including well sales. for quarter in consolidated

reflecting were of Allen quarter significant X.X% second our Our or planned and impact delivered the the XX.X% on Footwear assortment a up initiatives. progress in Edmonds. marketing year-over-year the total reduction Brand sales strong product Portfolio excluding acquisitions quarter at Famous and

X.X% improvement fewer X.X% up up are prior operated sequential XXX million, quarter were as we total for versus Total reflecting year throughout the Same-store with doors sales quarter the Footwear and doors. quarter Famous for the ended second XX sales down at X.X% and first half. the $XXX.X the were

to consolidated and profit turn gross Let's margin.

the was our $XXX.X Portfolio. continued up profit X.X% second of came reflecting For consolidated Brand gross million XX at from points and quarter, the approximately basis margin reported prior gross down year in growth in XX.X%, the

approximately reported of retailer XX markdowns gross in quarter, on Our concessions. prior margin points replenishment, spring Brand primarily basis the driven and Portfolio year less second the from inventory, down XX.X% by

and our all retailers in there impacting later and for noticeable newness, the mentioned, businesses, impacted a sandal in novelty the Diane increase second As spring margin demand was managing were inventories quarter.

was second was of expected considerably team gross Footwear, quarter points Famous effectively better inventory in cleared XX.X% basis than as approximately XX advance had back-to-school. we For the year-over-year. margin of This down

second including basis Vionic SG&A the both addition quarter represented expense Blowfish. the points reduction prior was of consolidated year. from a for up XX.X% SG&A than and sales, more the XXX of X.X%, Our of

done teams control. can have a they managing great what job Our

to Our the $XX.X primarily depreciation of due for versus and prior amortization amortization trademark XX.X% the second to the Vionic acquisition. our related up million additional quarter year, was

operating quarter $XX.X of were million Our earnings sales. X% second or

of of earnings X.X% operating sales. Our up represented year-over-year $XX.X million XX.X% and adjusted were

up earnings quarter including of $XX.X adjusted of operating Brand for $XX.X X.X% first addition million than earnings Portfolio, our the half more sales adjusted For second the or were million the XX%, operating acquisitions. of with

margin season gross operating reflecting quarter down versus particularly sandal was in a points Vionic. Adjusted XXX ago same a mentioned earlier at the the selling and basis year declines selling margin tougher

earnings back-to-school. X.X% down was half first X.X% of the of products Famous for $XX.X certain reflected of At planned of year. last XX and quarter margin operating operating second sales ahead Adjusted the points represented from million basis clearance Footwear,

for quarter of was as finance XXXX $X.X of from Our net used a October up $X.X ago, revolving we million million credit acquisition interest the Vionic. facility year second expense our to the

for compared period rate of tax was when first half flat the adjusted and year to same an of with our a margin quarter ago. second XX.X% X.X%, EBITDA million essentially $XXX.X was adjusted EBITDA XXXX Our the

completed ramping expectations. million new implementation million down Our our line capital automation facilities the our quarter expenditures is in and of in our second of capabilities were capacity $X.X approximately $X.X year-over-year. both the and with our We’ve for

the cash equivalents. balance with and sheet. Turning ended of quarter our to $XX.X million We

under the October to $XXX million quarter end, at million down of year from outstanding basis end, acquisition year-over-year revolving borrowings at $XXX were due our a XXXX credit facility but Our Vionic. up on

$XX of XXXX. returned We half bought and second to back shareholders million of first in common in to quarter stock the million $XX the close

$XXX.X end the the of was quarter second Our position million. consolidated at inventory

a our For well acquisition, in-transit and Vionic that primarily of year-over-year, down year Brand core by for as inventories fresh up be spring were related moderate core and to will to expect year-end. spring our increase in this inventory inventory in the basis months carryover to products, inventory our as We new on goods. sell-through Brand coming fully be Portfolio a over able our Portfolio,

At the X.X% Famous Footwear, quarter we with inventory ended year-over-year. down

operating the for company Footwear quarter. year. the again once delivered was cash XX% at half, flow $XXX.X cash and for Our solid Famous first million in the flow over last up consistent

which Brand to We including reiterating the as year, sales $X are Portfolio for total our will guidance I of be low-to-mid acquisitions million, up approximately revenue double-digits, remind everyone

flat of midpoint. $X.XX at X% low-single-digits share approximately share, Famous and up $X.XX to Footwear adjusted of per same-store and sales year-over-year per earnings between the

is at changing the the end account daily. what into This that of tariff last obviously takes about as we week situation knew

we before closing begin the Q&A, call Diane over remarks. back I to And turn to provide like would some to

Diane Sullivan

that questions, we to of to our which and the of changes our react and with people the wrap capabilities our model. we’ve quickly as an before just we Ken, seen in important to up validation ability environment, pleased the see Thanks, are

the we sustainable with long-term. creating remain focused operating growth over and consistent profitable a company, excellence, and on As

We long-term Caleres look vision Xnd. Day plans for our and our sharing with on more Investor to upcoming you at forward October about

that, Q&A. call to to with over operator the like the turn And I’d for

Operator

with Thank comes question from Your first you. [Operator Laurent Vasilescu Macquarie. Instructions]

open. is line Your

Laurent Vasilescu

with Good Congrats second first the afternoon. focus for I my taking Footwear. question. Famous to on wanted quarter. progress on the Thanks

remarks, the could as a more how quarter-to-date think little by months you well And comp out about PowerPoint you bit maybe the guys, maybe progressed? Presentation, trends? as talk I the your parse in the progress months. Maybe prepared

Diane Sullivan

quarter of Thank you execution great for are Laurent. pleased the combination the did second three it Hi, Famous, for the in was was we and a the that comments. very with It that factors. the team and question really

assortment and think With super were execution our customers I and brands were very terms they access in standpoint, high demand of giving assortments. across sure making to merchandizing sharp an great from we the categories, really styles their

We assortment at to improvement Nike. a in That growth also with return helps bit. our us our saw athletic

our that we response which the expecting enhancements that to return our generated it’s also, advertising programs were loyalty including and And the marketing really in TV to.

that things our allowed It wasn’t quarter. to thing. it in So, combination continuously sequentially of was all improve us those the any really a one really of performance

when said, the back-to-school And as of really eighth the we comp consecutive to season report. show very that feeling end are third at quarter I we going confident we for are positive

So, really has a feel like job in everybody hyper staying executing focused well at Famous. terrific done

Laurent Vasilescu

PowerPoint Ken, quarter the hear. $X.XX out to acquisitions I great Slide to presentation, And up exits. That’s expenses brand of possibly it by X related it brand parses think parse and maybe Could for then, us? maybe in by you and about

Kenneth Hannah

that Most acquisition associated Vionic. the is of all of with

of the the So that DVF. and was we have all announced at out that brand was had exits the the and Santana associated we with – markdown – expense called Carlos taken

out this and through that everyone So, us price the all through behind all the year. turned part, purchase of this we for that year purchase for most expense pretty integration which the remind amortization was of accounting the first back and the of of inventory, much the the is called half Vionic had that

Laurent Vasilescu

XX% the from or XX% year? and of And secondly, see Does guidance can stand of you includes Okay. to end of by it’s day list helpful. you tariffs. the that to the are then, XA out, then, the reiterating in XB? we’ll That’s incremental of day the terms the very And hear it guidance, in parse revolver where encouraging should face tariffs fiscal the

Kenneth Hannah

will we the at $XXX what million the expected, year. Yes, and million $XXX so down of we at below be the end revolver, we’re had

Diane Sullivan

the to respect obviously the guidance this expect is in everything Laurent, tariffs, than of is then, certainly important and to it’s going do portfolio of in I athlete, subject tariffs it includes proposed And and business and XX% have up think through Friday by those our moment it’s the the tariffs. we impacted mind keep be we to less our that diverse and

are customer in to we have our the our outside steps our we call, we China. production. where sourcing last to the deliver quality And as make want taken continue to We to mentioned expertise. of the XX% products diversify sure We leverage

have, at going our sourcing to, increases a we think are are to continuing appropriate we impactful be where are the to right are is to of We because we they able what price look selectively that and taking pace an move consumer. we at of least powerhouse really

So, fluid. to be really the situation continues

with the working were the that know But We year. confident are going everybody, on tariffs in up real-time the went Tweet associated going what the risk here to on the – Monday to never I the latest we to are Friday now, we think, be. find you for it’s balance of are and right with minimize solutions eyes

So, and need to day doing do. working every we it we are everything

Laurent Vasilescu

the forward you guys Okay. Very Investor seeing look helpful at and to we Day.

Diane Sullivan

Laurent. Thanks,

Kenneth Hannah

Laurent. Thanks,

Operator

Capital. next with Your question Champine from comes Loop Laura

is open. line Your

Laura Champine

Really my taking follow-on. questions. for Thanks a

for executing your are if not presumed in unchanged. are well. guidance what from sales the tariffs? for margin, in seems is you the gross and So, What back So, of tariff? the half? putting like It downside I margin you gross is assumption impact

Kenneth Hannah

think, we had communicated take Yes, consideration as tried been do to Laura, into I was Friday. what what of

that And pushed the so, there XXth. really then December list out that athletic of products September was Xst into a and effect goes lot the to is

there Friday on tweets about potential to it go for was rhetoric and lots higher. And so, of

knew the XXth. talks were on on what altogether. This effective have list what December contemplated to what in morning to be be going list outlook Xst But there feel as that we we is being was effective we September that are on our the currently and Friday and was of canceled like,

Laura Champine

then growth. Brand the hurting Got that comp I Portfolio, am comp? it. seem the seeing But doesn’t to Is that that down. is cannibalization, be what on And in

Kenneth Hannah

Most is Edmonds. of the really that reduction comp Allen planned in

Laura Champine

you. Thank it. Got

Kenneth Hannah

took business up negative showing their really That’s down direct we Yes. comp. that that is in

Laura Champine

Understood. Great. Thanks.

Operator

Patel Needham. Your from with comes next question Rick

line is open. Your

Rick Patel

on afternoon guys add good execution my as congrats I’ll strong Hi, well. and the

on much follow-up versus is XXth the on December the by of a Any context Just tariff assortment affected one? the tranche how Xst questions. September

Diane Sullivan

it’s one, of our Xst of – for September the China products made us. on Yes, are that about XX% in

Rick Patel

can outlook Diane. And you guys you, for talk Thank about then, Portfolio. hoping just the Brand the

the and way. Brand XQ is us a and inventories they managing the you in obviously, challenged XQ? space put you this on you do store now So And in Portfolio? your how How are right tighter for touched the see growth department expectations could for affecting context

Kenneth Hannah

a also would the had was second the I level start the that Brand markdowns as Yes, tried saying Portfolio that had and required. on for sure allowances I think, to segment we appropriate quarter, in what by margin that and really we negative were discounts impact make for accounted of

of we So, in results. quarter quarter the outlook believe and a in have lot consideration that that the closed taken second have out that second reflecting into our we

Diane Sullivan

and managing the would the Yes, that I in last XX environment too, entered are our to would ever manage because view more happen add got and changing as keep we’ve knowing needs, they really the we it is are about about and to changed Ken, comes maybe doubt hasn’t no was to that more that days on we their eye the that going our volatile it be carefully. than how as didn’t consumers’ it year continue retailers really just that to there inventories it back

already and sure before. because time, newness We redouble urgency really had we in on of she products make She and It interested anything to all in this she products. newness. spring see our was wasn’t front making a all sense this could sure new because create that wasn’t interested of we that seen core we have about efforts the

thinking looking sure the about So quarter both third we second really business in the quarter responding the we front what making quarter. for our we’ve that. then had, that in and to efforts at And redoubled our really fourth quarter, on were that

is think we matter again I ultimately And to these we diversify this so really and trying and us sustainable think, this allows that what is. you’ve environment profitable to can say the growth consistent quickly we heard what model, kind environments our been business of drive adapt no us in

and team sure is really day-to-day agile our So, on incredibly consumer really paying wants. flexible is it the stay what and that we making attention

Rick Patel

Great. we year for know think XQ? provide expenses outlook acquisition lumpiness some versus color could operating was some for I in Famous year. on and you you just XQ as last the And about versus the Brand lastly, the in there Portfolio lapped Vionic the margins later

it’d So, have context to be great modeling. on

Kenneth Hannah

obviously, and piece think, shift, half of is there bit has third a in little Yes, big look I a the obviously, the the of year, year kind is as back-to-school. at actually of of quarter and earnings, XX% about of year, there back this we it’s the coming that been

profile could So, XXX that points as be margin XX. for down a QX we much had initially the up as down thought ended Famous basis

we is little job looks Brand which and business. of come I question areas what half nice get Portfolio a department our we of That QX to to managing different impact seen started our think and store bit through into teams piece Q$ are The big in of and space sandal start that did the see those less you and a results. you business a able the a first the from margin as through very we’ve with in with the favorable.

is add I you Diane, to that? anything know, if there don’t would

Diane Sullivan

here. penetration Famous really about the and Well, the the and lined again, headwind how we in fourth pretty is Portfolio we had assortments because into And going quarters. third terms I Brand the think we both do don't the we the to that good across feel high sandal penetration, really have pretty company the are of categories up sandal and back a

to and all have really still quarter. taken on a delivered decent we that of that We've the need take medicine

optimistic feeling, feeling can that. Ken positioned to you how – be well So we ourselves think against and your about to to us as I – where on it's are point, as execute continue we

Rick Patel

half. very Good much. back the Thanks luck in

Diane Sullivan

you. Thank

Kenneth Hannah

Thank you.

Operator

Your Svezia from next with Wedbush. Chris question comes

is Your open. line

Chris Svezia

afternoon, on Hey, everyone performance and good congrats there. the positive

Diane Sullivan

Chris. Thanks,

Kenneth Hannah

Chris. Thanks,

Chris Svezia

So, back But Famous June, couple what, trend by of Laurent's things I answered just the to what May, go you of it don't Diane. was comp period? here. Just month? July the I a what I to question, got Footwear throughout cadence the first guess, think was the

Diane Sullivan

I am give trend by by trend I didn't going month the to and the really month, Chris. give not

we was think, quarter. saw what that the I basically improvement sequential there throughout said we is

see can finish that believe showing year. will back-to-school positive you eighth power think we that consecutive I for the season we a that and the of portfolio as the comp the

go So improvement through the didn't with put the forward. really consumer I Famous team really foundation into everything but about it are and feeling nice sequential has month-by-month, place we that really good the going that very response pleased to

Chris Svezia

Okay.

ask it me let So, this way.

As that's the done of done everything that Famous, you've there. look kind forward, at team I

well. In better, kid's terms product, you refresh of Nike getting in brought some with as a brands incrementally

Diane Sullivan

Yes.

Chris Svezia

loyalty got You've program, the marketing.

the half kind I for know singles So, It to momentum guess the of year, you low building. first flat I question guidance year. of is, for up flattish is seems the the the is like are

accelerate Any incrementally given I that trying down here more put you you've reason for levels? to a am about forth? these Just bit at positive little know least hold from it's wouldn't or but comps why back-to-school, a sustainability, I sure, turn everything

Diane Sullivan

feel Portfolio. about we Brand the I the Yes, also only we have good Famous, we business. But – it's very not just think

risks the the look company at the and running across opportunities we are brands. entire We and entire

you that into and given taking account our So, all we portfolio. of kind into calibrated our think insight brands guidance within we've

but on we guidance like so about it, we appropriate. be it feel could far until see our better, we So, feel Famous, seen we've what terrific really is the – current while

Chris Svezia

of about where portfolio, on curious – it stands Just to or of the today? Diane Famous into boot for sort back just the either about ago relative how thinking year? Okay. what half the three your or And business are branded that you just for the thoughts, your months it

Diane Sullivan

would a on it. point, bit optimistic more Yes, about I Chris, feel actually that we say,

we're kind early booties Famous – early seeing very were But in of been I right are really Doc kind to is terrific, booties well. what their been second wondering as great. have of the everybody on read kind going good was what short there at think now, days early Martin of of that quarter Sneaker happen. has

here that any look sales retailers of So, do summer the the we've some boots actually, good. preview our has really in of that shown seen,

a be. So and actually to them that I plus boots in continue. as will the where second would saw maybe think conservative little the about were quarter quarter going where say we We a in of momentum were kind

So that, crossed keep that great on whole. industry a the your way for as because that if works that'll fingers be

Chris Svezia

last then, thing here. Okay, thank And you. just

how Just, maybe it's the but of for Ken, people sense process always thinking. quarterly, just that quarter. don't third know a of have kind you thought I helpful are guide you

from third kind an think I indicated be perspective earnings single last you call to quarter of digits. up low-to-high

QX we thoughts what Obviously, a little little any to like. little bit comp third looks quarter healthier, bit into back in stronger. But a about fourth the refresh came margins given have quarter, better, bit

QX about helpful. would color an any Just from EPS be

Kenneth Hannah

we really Yes, sequentially conservatively, talking of pieces that we into slightly said, out when I think, the as see will Diane some uncertainties the literally momentum Famous. be good lots other business flat were think, back and up daily. of we to we we the look across I see changing And half, mentioned, of at that before thought when we is

segment, half the think was look and towards it timing that other continued to years want the So, that in that, that, a back weighted to make understand little at that I was the the the thing bit we've $XX million to of more million. I that I we sure $XX people expenses think, million is when one with coming It down three expense earnings. that, down, manage corporate to $XX ago through

it's on QX, bit earnings. shift of we're is between the of of based what just year there kind so $XX expecting shift little is and and QX this timing think million the I a

continue percent range of in somewhere points So, of probably think and when sales XX% XXX terms around I down that the at in and be look in the SG&A, QX we basis QX. will we'll year-over-year that we about were

pretty model. idea a that you so should And give of in terms how good to

Chris Svezia

All Okay. guys, soon. All to you the Thank Talk best. right. you.

Kenneth Hannah

Thanks, Chris.

Diane Sullivan

Thank you.

Operator

& Your with Steve Associates. next King Marotta question CL comes from

Your open. is line

Steve Marotta

Hello, quarter a Diane an comp was Famous? on at in current my me well. quarter-to-date say as Diane, let the and acceleration Ken, the standpoint from you quarter, that would from there offer the congrats period second

Diane Sullivan

quarter. been sequential throughout improvement has the Yes, has there There been.

Steve Marotta

I a you understand. of quarter framework how Could month around and by October? to August, sales much percent also the Trying of has bit little provide in determine September passed. the of historical

Diane Sullivan

say, me. I Oh, that Ken, would We I don't have you, can but... of Steve, that for in look front up

Steve Marotta

We that about talk could offline.

Diane Sullivan

be to. Yes, happy

Steve Marotta

Sure. in in second vice Ken, material was through shift quarter there quarter any SG&A the third the versa? or

Kenneth Hannah

No, make the have what people I that other we would to of be about the businesses, that discretionary being in they only mean but not talked cognizant were across the really – were segment trying anything the in particularly. prudent, obviously, sure expense the shift.

numbers of a and little – had some quarter we our where expense some so, casualty medical were associated in had increases bit quarter, are higher with year the year. we self-insured second those second last We ago the in and in

And would level really so, of more to a QX so, quarter in tied the there, through little in second there's and bit were those but sequentially, earnings that's the expense come in the favorable sales. that

QX. There pretty QX it's timing of wasn't straightforward. of a out So into lot pushes

Steve Marotta

just you can how Last associated the half the Okay, DC? that's cost year helpful. question, much second of there in duplicative with were last remind

Kenneth Hannah

then out expense. that the and non-recurring half, came settled half when first we the the a as second all across exit, really was in duplicative finally the on So

So coming in there our through very duplicative there. numbers, non-GAAP was little

Steve Marotta

again. thank Got of you. rest I'll Thank you offline. the Perfect, you. the take questions

Kenneth Hannah

right. Thanks, Steve. All

Diane Sullivan

Thanks.

Operator

[Operator next Instructions] Sam with from Your comes question Susquehanna. Poser

is open. Your line

Sam Poser

taking and for my you Good questions. afternoon thank

– the existing the put business Edmonds you the just all, on you down the was – if when on into or that Portfolio total put number? -- including – of what Brand First revenue up Allen if

Kenneth Hannah

had X.X%. up. Yes, we was planned Portfolio so, had Allen And it out was Brand and comp for – comp you had showed on Edmonds the Allen Edmonds, down as the we taken it saw retail we because down,

Sam Poser

Brand the Portfolio wholesale in was there, what But number the...

Diane Sullivan

Up X.X%.

Sam Poser

It was up…

Diane Sullivan

X.X%. Up Right?

Kenneth Hannah

Up wanting He plan. X.X%. include Allen Edmonds, is to the

Sam Poser

number? did to – and about total in Vionic Right. this And then get to the you plus million Portfolio other so Brand $XXX

Kenneth Hannah

That's right.

Sam Poser

Okay.

be to Secondly, when Allen around you turns of when will of you where be? it sort to this will plan and and complete gets – back of Edmonds want down sort

Diane Sullivan

Well, I on that. good think, we're making Sam, progress

reposition we we of you those What and we of that move relevance things activity. assortment. is business reduce don't product and seeing to last kinds make of know, the are the sure amount made promotional that our late year As happen overnight improved

have promotional We of level good. the reduced That's been activity.

think – time, there – Over obvious in ever. been moving there definitely see faster out we certainly is but the right of and we shoes think place, I have plan and to the very no men we of sneakers than out dress that has move

part to the continue assortment of to introduced there. need our back growing a really we assortments get So in right We've balance. now the sneakers. It's

some that we've even to think accelerate more. got We

happen and business to have the that plan place we know in that our better. improve connect profitability right even believe it consumers and with the that But overnight. So, doesn't we of

that but the we right we we're feel of course, of enough we like fast – feel making progress. had progress are are hoped. we Never So like we making kind the

Sam Poser

think think we some exposure, kids a prices it's about, China. not when the but business, business going get to you movable I business. because that's rumblings you again, up of in start to And hard are when big about might mean go hearing think a when out am go that's that to of China the I So, you I'm – chunk children's to of I sorry, mean, the China, China a

working at it? things it. about average – is at – us to it? approaching very all going the how are to item-for-item? of or on to it give I if But with look work? you When fluid thinking the about the with Famous? going trying you are it can some things changes the forward pricing you brands are you year, I you How mean, are end potential they even they color you doing it's the put are on... how How that where as think across tariffs, be mean, the do pushed margins kid's may Are Are business this you pricing I know

Diane Sullivan

Yes, it that there are things, really risk really and might side don't we us. the athletic and be really for a sport of we'd – kids assortments areas. see couple at of Without our bulk be is as on a at of the The Famous in pressure obviously Famous. where other big it affected

I So, of kids we in see liking kind are what think now, business. we right the

assess see teams the through, increases brands we vendors right again now, that their to coming for sourcing a big because of a and diversified most and at for think, will that the are don't I look factor have key And while. that as done significant have being athletic take a have we'll at their And if time. But Famous. that base

So, we're paying reasonably there, I good think though. attention always shape in

at I wants it and one-size-fits-all keep the said when Brand there other then there news can right. where to perceived – looking the where evolving and And on or we do. – we where products in we is value add do each to we're the the Portfolio, newness, a whatever good thing we – we is because the consumer the either exactly There we do as are not it trying really style-by-style brand-by-brand, at not and think look you the value styles, is think of – is have

one-size-fits-all. is there no So

best I think to our is. job approach out what great day-to-day teams trying figure are doing a the

really are easy. Some

it Some and are so depends. easy, not really

Sam Poser

then on And Vionic. you. lastly Thank

about very you -- a are it? premium you how or like it's brand. assume fair it's statement? think a I that's Is that a it, how bought you when that positioning comfort Vionic, would Now, to

Diane Sullivan

fair a statement. That's Sure.

Sam Poser

not shoes -- I reason Why Sam like in I mean would it or Famous. Footwear? in put Edelman the in is mean, Famous I for if, it same

have Vionic Famous, Sam. not Famous? they in subs in Circus Why but So some is

Diane Sullivan

team the with think not would to resonate some see entry the or Famous whether in I price consumer. wanted Vionic product with the – Well, of would and resonate our

portion so, as was make look the It total a what teams think – or not of the that's whether I any taking sense, buy. And small would a being did. that at very

against, number I It lots would test a different I Famous things say, test to they we stores. and groupings household Footwear high really test was income have of a continue and store of think in

have kids. of think, I stores higher that penetration

always testing on going So of there things. some is

into much Sam. too read wouldn't that one, I So

will I the works all and if consumer because do really right thing, think the could... it's teams it the we how

Sam Poser

mean, tested tested But I you Edelman too sell could stores. you in shoes Famous but, Sam probably understand, the haven't I some Well, if you that. at Sam Edelman

So...

Diane Sullivan

we Well, a business Circus that great we Edelman. Sam with Circus – have to are continuing by

Sam Poser

just But itself a sub-brand for a pure. stays brand that's not the sub-brand why just and that, create – that from a Vionic mean way like I of

Diane Sullivan

something and early. flip one are things Beach. – as and sneakers actually Vionic that and called an it's it that what interesting primarily And talking flops. And about sort it's we're it's Vionic on been the is has again about sandals positioning working Well exactly is mention of you kind idea -- is of you because, of that that actually,

We haven't done came a selling. lot of Vegas for I – think Las just in it fact, our in

are we - as your hopeful to right, different well. But that being that Famous at others point and consumer get would be really channel, avenue once that an that like for and and a distribution we looking opportunity channels reach stores of that the we as are if to different

So we growth getting Vionic. where in are are the for still aligned the at everybody around – opportunities

on the that Sam. right things confident be we'll I'm doing So that,

Sam Poser

All right. success. to very much. Thanks Continue

Diane Sullivan

Thank you.

Kenneth Hannah

Sam. Thanks,

Operator

Chris Your Wedbush. next question from with Svezia comes

Your line is open.

Chris Svezia

follow-up for appreciate Thank them that. question. of you actually. I taking my Two

your movement renminbi you think How move seen to the relative dollar, August, since the how what, and the that. does Just how we've X% purchasing? mid-May. does that since X% curious about Just, affect

leverage you when Ken, with, basis just points. question, XXX second the a And mentioned

last So XX%, XX.X%. think did for I that and you I of QX SG&A would think year continue rate

trying that or sure got am something? make I I missing I maybe to So am

Kenneth Hannah

go so taking with we Yes, time. factories, that the the what for into place at we is. the RMB is orders That that are the as factory consideration the – and RMB, what on is cost

with to So, any changes placed tied new orders come RMB. would specifically through

share these to obviously, mean, partners we're help them any that with working those so, impacts I But the are offset with to pure We're try and is... us savings. to mitigate there they're getting tariff. to working of we tariffs with –

Chris Svezia

does – that that And quickly with turnaround that? just the quickly Ken, on how happen

Kenneth Hannah

On get benefit I any orders what placed the are. costs today the of

traditional with So quicker we that roll through than obviously, order. speed model, our a

Chris Svezia

question? on Okay. the right. SG&A All And

Kenneth Hannah

on closely other be said second in of we the which the XX%, more when basis the up tied - midpoint back SG&A, between half. to split is the a earnings would said points XXX the the leveraged you contribution in second half, range that what out and first the where you we that that the take was quarter we XX% our guidance the actuals our through and and half in the half was first

Chris Svezia

at I'll look Okay. offline. get on that and back that. you back to I'll to back circle Yes, and go Thanks. I'll later you

Kenneth Hannah

Thanks.

Operator

turn are no back call time. questions further the presenters. this There to I the at

Diane Sullivan

October quarter very you much Thank us very Investor look our to on much. on joining second seeing you and Day. forward call at Xnd we for Thanks earnings

Operator

call. conference This today's concludes

You may disconnect. now

Caleres (CAL) 26 Aug 192019 Q2 Earnings call transcript