CAL - Earnings call transcript Q1 2024

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Operator

Good morning, welcome to the Caleres First Quarter 2023 Earnings Conference Call. My name is Sherry, and I will be your conference coordinator. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'll turn the conference over to Logan Bonacorsi, Vice President of Investor Relations. Please go ahead.

Logan Bonacorsi

Good morning. our XXXX joining webcast. call for you first earnings quarter and Thank aware, forward-looking press tables a are slide be financial with number available discussion well caleres.com. Please A uncertainties. detailed quarterly of as risks release subject which statements, are as and our at today's to contains presentation to differ filings company's including, Form and risk other but disclosed not Actual results various factors the may limited the in U.S. with materially due factors, to, the XX-K our refer which Securities for today's statements. to SEC and and factors factors, filings information release other Commission. Please could risk on Exchange more press forward-looking and impact Copies available these of reports are online. discussing to operations, certain our we results measures. referring financial and providing In non-GAAP the will of be

today's Section these to on information find You this earnings financial of can and in regarding any non-GAAP the information The any our call obligation our presentation no as at company undertakes time. well website. Investors measures in additional discussed release update as used others

CEO; Schmidt, on the me Joining and and call Calandra, are Jay Vice President CFO. President and today Jack

begin will over we our your prepared take to like call this would with thereafter, now happy be Jay? Jay. turn questions. I the will to to remarks, call and morning's We

John Schmidt

and you, morning, Thank everyone. good Logan,

quarter, earnings top at Profit Famous first our the the to environment operating brand offset at challenging our contribution end portfolio guidance Footwear. leveraged the deliver During structure from per diversified of we the share range. more than

several the productive, we have structural and said over we've in last organization. years As a last the more profitable quarter, resulted implemented much nimble, changes

portfolio. be different a enables power of of of operating in the We platform, curated strength the omnichannel the variety environments. our capabilities of value quarter's carefully structure successful and us believe this underscores Caleres performance This to our the

market the by share grew U.S. some X% key Caleres record and chains. our in Footwear's XXXX. brands improving below from We period a very brand of of rankings, XXXX. in to of market. Now shoe profit managed XX% driven $X.XX, portfolio We X.X% We inventory We more market the their year down Famous delivered levels footwear increased let's sustained approximately of quarter year-end share fiscal our prior total in the ending earnings share the we portfolio. than our with per period and share brand turn first many to compared highlights market well,

strategic $XX We We end quarterly growth. maintained continue borrowings XXXX. investment revolving dividend. reduction are flow fiscal to the reduce we asset-based debt future cash drive million prioritized that for from in our essential under longstanding our our our facility by And free to credit utilizing areas

believe this after we've funding reduction macroeconomic dividend, flow As near cash the our priority uncertain term we communicated, is in that top environment. continued debt for

consolidated to Now let's operating declined initial X.X%, expectations. falling our results. sales of our short first quarter move Overall

particularly demand Footwear expected, by consumer softer the this was hard the While shoe Famous was within some of chain channel. decline hit

the Fortunately, performance outsized the by weaker offset margin performance portfolio. brand of was by Famous the

represented period, we As consolidated quarter the delivered a EBITDA. million $XX margins strong solid result, achieved record of operating generated for we earnings which nearly XX%, and and in first a gross

initiated preserving expect our we analytics, and million We long-term experience, plus that these this consumer improvement the freight strategic of total, took quarter, to actions areas accelerate still In $XX additional better-than-expected growth cost-cutting an organization. these first initiatives the of namely vectors. in we costs. while in savings year, priority, marketing investments will and $XX beginning approximately addition, In SG&A of deliver profit million measures across

lead sneakers. and to number which, brands, $XX quarter delivered and inventory Despite casual of performance quarter. our modestly remember, and Sam sandals, which sales you segments, Now let's in difficult the on these compare, especially footwear, restock. wholesale of Retro-inspired with was We a chased including as in top-selling newness our to million turn Edelman gravitated casual, white fashion motivated to second only will our sales financial Win chain by capitalized delivered items. our led initiative. programs our ahead Allen products react starting of included maximize We Brand and the utilized this into expectations the new first by speed operating supply network XXXX, toward brands, dress, our Edit season leaning improvements. The Portfolio, Edmonds, of to to We quarterly consumer and all trends aggressively and

product includes progress improvement increase portfolio pleased quarter, first during capitalized elevating point of the due lower and approximately XX% improvements earnings to businesses. from a drop-ship, higher made, XXXX. delivered a inventory that sharpening and by messaging, Also We decline, a costs. believe margins of nearly of brand business brick-and-mortar overall the gross we've to our quarter $XX was basis drive our direct investment. the we operating and in initial compared reflection notable our are design, results product maximizing record to We owned DXC quarter with This sales expected are owned driven XXX first achieved operating increase brand capabilities and an freight strong our even in the on million performance year-over-year e-commerce, the these margin. This X% and trends margins

loafers that each lead across growth. brands, quarter driving positive on more are total portfolio with understand brand brands owned outperformed Going strategically investment the strong X performance Edelman the increased comps traffic. XX% delivered and Naturalizer, our the quarter Edelman, first call. drove an Edmonds our Allen Naturalizer than represented and on delivered of a respectively. the own believe we shoes first driven in lead response collectors. where XX% new to of provide total known program efforts power dress demand channels also consumer with XX% positive business these from the results by and its flat and in offerings. AE's what's improvement These and new Caleres Trends has focus all Sam last sneakers ahead, led in revenue each in improvement on loafers, want its of in and up will at to We color XX% brands both Edmonds investing of quarter. We as strong half website, we Sam fashion This forward, was sales we versus performance and business. to the the on robust earnings loyalty and significant encouraging slip-ons growth relaunched We of year. by to brands yielded Allen our consumer community for Vionic our

average grow finally, for growth. is branding, aesthetic brand In our reintroduction Vionic, our during non-collectors. and AE on reaction fact, our last we quarter, California direction collectors the Northern with a which solutioning. This of collectors the the we've website total largest the XX% from sandals new and higher casual September, combining And seen than in launched program successfully spend spurred catalog live and with a unique delivering went immediate the positive an new vionicshoes.com year-over-year dress scientific on since

We response offerings. are consumer new the its to encouraged by early

continued our In Dr. currently LifeStride, segments growing our brands, portfolio brands. lead serve Sarto addition, including key These strength saw Scholl's. served consumer important are we Franco in not by and assets that

We assets across succeed. to our one Caleres capabilities are our leveraging our portfolio are to ensure positioned all

the seen we will for the growth recent lead we've quickly the As newness, of we year. Longer for all of upon brands. are year, the term, focused laser maintain and to in building remain the amplify plans and nimble, quarter the momentum balance on our progress momentum rest have react the teams through of ambitious

strength the the company's our our margin diversity given ] that expect operating model, and flexible will portfolio, performance the our agile improved of brands, performance. substantially [ of continue to operating the the that contribute and BP We to

and of Even by outperformed sandal March in successive strength, several Turning the quarters Famous navigated difficult spending, it decelerating environment, markedly The as in competitive shoe of share was late-breaking exacerbated Famous backdrop macroeconomic increased Footwear. its this challenging set now market backdrop season. After challenging and among chains. to in contribution declined target month a Famous its consumer. particularly Footwear's a

to for chains, purchases In differentiator in This million Our the prioritize outpaced kid's families Famous have kid's steps in spot mid-July. To a ensure to back-to-school. taken category significantly leverages we Famous and the of footwear. and to our a of strength contribution back-to-school earnings. And quarter total, weather a Famous bright activity deliver warm consumer expect the seasonal of in shoe including accelerates generated important that business earnings end, business, kids delivers in operating that even beginning quarter. its typical in second Famous, for as weakness number due we stronger with again the as in was a once drivers, growing rest $XX key and

than will well-managed our on remember, you ideal inventory in despite ever delivered position inventory brands better have year, we've the to beginning reacted less in-stock to a This a that position. styles due and key we back-to-school As trending from XXXX our position. best we

of stores of drive new maximize a named all and strategy opportunities a head closely at merchant sale. We to have new our kid's point to

our consumer high-impact launching We marketing points, target is in aimed the recent much about Famous. touch but family. the to great improve outlook all have that years very especially planned be sales. And to during in our for expand. still in and the technology, lot continue at our during delivered a Famous. In at conversion investments confidence better continue results are CDP quarter, should a drive and excited in back-to-school messaging a Clearly, and specifically fact we have summary, in stellar place there across campaign millennial to strength The long-term same

approach, actions across we our strategy be assortment, As leverage in this effort team, parallel, digital we move position the leadership earnings marketing will to maximize with to will forward, our continue our immediate product In year. we our our potential taking family. our an

consumer stores at and nationwide of consistent accelerate assortment brands, retail for mall, of leading our opportunities in national online experience Famous. footprint, Our and to mostly growth all

segment of our to are forward earnings and ability as overall, much strength and to for the look the set Brand Portfolio we we at stronger we a and contribution balance to advantages, optimistic in inherent kids, beyond. in relative year, about XXXX have the the competitive And Famous, up believe its to deliver the its of year as strength progresses. improve avenues that while work us growth we its do So

highlight hand to of from model. contribution Jack made recent strong of operating the the like our segments walk in coupled generating Caleres view financials and through financial strong in power Before it will remind both annual cash it I to changes you financials. enable of more share structure of believe detailed to earnings us and will long-term I for we levels I'd the We over that, our detail, more structural free basis, per diversified shareholders. And over to with Jack? and our flow a with consistent while more value our now creating on to Jack of for $X a than hand deliver years,

Jack Calandra

for in end upper environment, strong in maintain financial brand and down interest reduce year. rates. down million, our last we our performance, Famous, year growth QX. higher on us everyone. second comments in gross My taking and and our XX% still income discipline moderate margin will and while Consolidated our flow, inflation call, plan additional more per adjusted details this good in debt million, the of more outlook an were of customer XXXX. share conditions discuss at portfolio earnings on enabled Brand Thanks, X.X% to full I'll first Comparable to are expectations. to grapple X.X% we operating with the last This on on and were were quarter on actions a expenses the continue investing which in versus reconciliation achieved better-than-expected sales for $XXX allocation light provide results. Starting priorities Famous and at today's market capital Jay, across a as of basis. with critical press and were resulted morning, be Portfolio and sales our Please challenging initiatives. In In company. share with sales guidance release quarter see cash healthy line $XXX profitability outlook you down sales adjusted our our year and fiscal its the update X.X%. decrease difficult today's

and lapping quarter last for a decline, and were Net high Famous. weighted basis last SG&A lower $XX lower gross year You $X.X or at due clean was the this margin Brand sales quarter end the and increase margin versus will Brand XX.X% interest factored was or basis X.X% per inventory consolidated into for pricing last expense earnings quarter in position. year than given XX.X%, consumer sales. Portfolio's million gross versus incentive margins million Operating second expense a EBITDA was XX.X%, initial Brand of decline average versus This compensation gross below that this The about call given reflects decline accounts XX.X%, with rate share at Portfolio higher interest guidance. restocking above margin gross our and $XXX clearance a normalized margin points rate. or our airfreight costs. Famous previous first $X.XX, sales and expenses compare, margin. the expense were demand borrowing last last margin and year's of gross operating million XXX Portfolio million more to amount softer and increased result costs. Operating XXX that a Diluted guidance. Even Brand and X.X%. in Despite sales. the in in reflecting in was X.X% this last Famous was $X.X basis a X.X% was year. wholesale million $X year history. at Brand the a the earnings Portfolio SG&A quarter's was remember ocean point higher was more the was decrease to year. X.X% QX volume of difficult last XXX highlighted highest Portfolio of the as of was $XX margin level significant million activity year was at point and was XX.X% increase variable

debt. we primarily balance and the million, sheet was about last in $XX and approximately XX% quantity XX% down Famous versus or in the Portfolio, year, level. million Famous' versus the up of on-hand QX We constraints first quality chain long-term inventory XXXX. $XXX below flow. and first ended last XX.X% XXXX. In year the Inventory end to now X%, was inventory. versus both segments. quarter million inventory At $XXX in was supply revolver and down on Notably, general, borrowings cash reductions Brand which with of segments, inventory transit feel quarter the limited quarter the our at Turning reflecting result By both first in of at a was inventory last good year, down inventory and no XX% of

we quarter cash business, operations, the from and flow $XX investments generated for the million during dividend borrowings. cash quarterly in our Regarding strategic outstanding and deployed paid reduced

on $X.X borrowings. million million $X.X dividend, reduce $XX million spent and we capital our Specifically, expenditures, quarterly on to

the maintaining our ongoing the and we after Given to trailing a free liquidity. cash market anticipate with continue ended uncertainty, use and million XX-month flow X.Xx, believe the our we of the reduce X.X On on debt-to-EBITDA best below remaining debt-to-EBITDA is said, third borrowings we of authorization, to basis the getting to That a quarter. share quarter to basis, below under shares based that have ratio revolver current we and a overall dividend repurchase on consider macroeconomic Xx to increase Xx conditions. in board we'll continue repurchases

continue offsetting gross share our per with Now of as outlook. expect to macro environment, $X.XX in full to softness more line turning a and anticipate we we SG&A. challenging year earnings top Despite and savings $X.XX to cost Famous margin

generate guidance specific X%, margin X.X%. The week. additional and better-than-expected costs expense. actions to X.X% of including The procurement the consolidated as and actions original on realizing basis. million X.X% and being of are positions, of synergies million improved original our now of an taking margin are lowering including open savings to year ocean XXrd will of reducing Portfolio X% versus outlook are is costs, overhead by about follows: corporate be to transportation cost million and expenses, non-merchandise driven we taking We guidance annualized $XX our We depreciation in-year domestic on flat Brand the expect specific metrics to eliminating on consolidated $XX we $XX impact full expect operating guidance down X.X% Additional sales X% operating to versus now to up

$X the realized realized remaining in $X million be and QX, QX the For million these We approximately anticipate million with will associated savings, of half. in-year $X actions. in in second onetime charge was the QX $XX million a cash in

$X million second $XX million expect expect We million. expect million net million our $XX the of interest of also of we guidance. about guidance We versus freight to QX, to half. our remaining realized $XX expense additional $XX the now was versus original and savings in $XX million in million original $X

expect We an continue tax to rate about of XX%. effective

This of offset dilution versus to now We expenditures million XX.X $XX no expect our million. additional we continue but repurchases stock-based expect original guidance of shares capital of $XX share compensation, assumes to outstanding approximately any share repurchases. to of $XX million $XX to million And million.

addition, In are the for quarter. providing following we second the guidance

of We $X.XX expect to net per X% sales share earnings down to to X% and $X.XX. be

the now call to I take Jay. Before questions, over will turn back we

John Schmidt

EPS upper maintain Thanks, In we portfolio, the year. for demonstrate quarter EPS our for range our power strength Jack. the and of team. the the the dedication closing, our to delivered company and of These guidance pleased our are results have the of of at first end

committed management are capabilities talented continue commitment strategic year. And confident questions. to with We for as to drive operator the approach us results with the in the team, coupled invest to we growth. incredibly help balance the that, over to the am deliver Operator? expense nimble disciplined to strong will I and call our like of our for I'd that of turn

Operator

[Operator Instructions] question Our with Sandler. from first is Piper Zvejnieks Abi

Abigail Zvejnieks

X. have I

mainly So dynamic? expect tough year compares quarter? second second in can first, quarter for Brand guidance you and specifically I Famous on that on for guess with color both was and give Portfolio. the the between you just Footwear the the your Or Portfolio, continue any Brand is fiscal quarter that will fill do expectations you to the the there first face

John Schmidt

in segment. fill Brand just let get lapped most second Portfolio, I'll we by on by the the half. that we of And I that have we the of will into time the in then Jack think color terms believe do

Jack Calandra

your Yes, for Abi, thanks question.

you color. be guidance give helpful, let by segment, little me bit don't specific but a of give to we So

first improve the expecting sales So to quarter. Famous' certainly we versus are

are our to We forecast tracking quarter-to-date.

in feel sales assumes more then So In initiatives BP, and QX. But we in that. what we we Famous in growth sales say in Jay I the expect QX give year. guidance back about negative we a negative on expecting from support of deterioration are this. really, that anywhere of our a both for -- improvement for the for good what would the And in an some color anywhere still bit Famous, will expect cases, little half, to

restock no of that wholesale longer BP Again, to feel on as We are really and the well part some expecting about some in as good half. lead improvement got this we the initiatives we've back brands. is our lapping talked show of about that

John Schmidt

say, will that And the exponentially, I the of Vionic. we opportunities, business whole our we back and and Abi, market part And fit category into would company, sneaker and really our Naturalizer, growing now that of brands talked and really drive too. power about, the second includes, Sam Allen late as then those Edmonds lead as obviously, help get we're investments the really this we well, maximizing see really that well to and modeling are that sourcing of think specifically, lead our and our fashion of in brands all product us be And on position portfolio. that, through we'll further right quarter Edelman, showing able model

Abigail Zvejnieks

to space have really your said management promotional. strong. compared to And they'll that then the need especially continue has just inventory mean, to been peers in I be

of the impact strategy how promotional through quantity the the you the year? of good do but and your said peer's inventory, about your feel you promotional quality remainder So strategy

John Schmidt

the way we're the at through. think not competitive closely model believe brand our us of in-store helps we're same I really giving digital forward. the watching as of And really closely where in watching the we business. is -- we that the going and inventories brick-and-mortar way be driving really they inventory. think that obviously, kind I that's to those it manage we it's we it look and control really maximizing key our need thing we'll our what model going But that and of on -- go Well, And all opportunities continually, quality it as to side and that, same be the landscape the keep managing them very

Jack Calandra

And I down inventories mean versus and continue just QX comment, QX. to we Yes. add consolidated to Jay's in that Abi, our to be will last believe year

our continue be will that take tightly we any making clear to So don't sure to manage to we inventory. own actions have and

Operator

Our next Loop with Laura question Champine is Capital. from

Laura Champine

what Are just Brand brands. investments key the I'd in do more they need those marketing are making like little you're investments? that Are a do to color those Portfolio you infrastructure? on What there?

John Schmidt

and in customers, some continue we continue marketing brands develop they of feeding then growth category develop our more we terms And while as they're own within Well, also different product, to distribution that off of vectors and are to to will business see different we those drive. of points drive and both continue that. expansion digital

things. combination a we that It's that, and do get to of not is just it us will continue one through. but feel maximize So thing, there

Operator

Kummetz with next Our Mitch Seaport question is Research. from

Mitchel Kummetz

few. than had to refunds Or starting than you are planned. some a income that Or was? speak Tax got bigger ended planning? being going that, what the you thought in? I've Jay, maybe you just softer consumer a mentioned quarter, it other up with was impact weather Can thought? than you reason? worse there worse maybe moderate just your Famous than was Was had why it in that

John Schmidt

of bit little Mitch, you that the think things I mentioned, a Actually, accurate. Yes. all was

April. did improvement early First Famous. factor. we as month first the And And that our of all, weather in on months, X see a that into March was in a worst coming we nice saw

the purchases really some have it. know are actually want. something believe focusing I out headwinds to So had to that coming their general, are on key and do there, with in items weather the we they But there people

they improved sizes the and the items things is they continue fuel that which can and control, colors Famous in what really our we and position so need. has come want that all back the to really we've And inventory that's that on done mostly

little bit strength our really be of that. think you described. would it's all what that But So for we a of do

and then where really -- can focus put on we our As we and controlling control what we efforts. that's usual,

Mitchel Kummetz

was guided based than around And uptick April the about that seeing May? better particularly more quarter-to-date? some XQ, is back-to-school your March. about you've combination Famous that Has of is continued so the again, for kind what Or as you're X? as you're on trends or into thinking piece, maybe optimism of it And from QX the

John Schmidt

a it's of bit X. of little a I combination think

than April said, markedly was I better March us. for As

So we think place in put that, the to better through. our a back-to-school. in We going that's where that closer with that then actions taken really little into do And think comes ourselves we've combination to a will it. modeling things those X do

consumer prioritize, purchases As to we continue kids. believe, their particularly the for the will family,

Mitchel Kummetz

on was Famous but And in for down was, think, so -- then was the BP profitability, 'XX better both. than I and QX better year-over-year,

BP do thinking be be you going be think? are as could land Famous for the expect expect those of down. Do you it up BP sort assume you think I to levels? well. how year-over-year, still EBIT up then 'XX margins, you year? So mean over I margin's And to about margin do where you to

John Schmidt

have continued And there, of obviously, there. us, side, is things with too. think, piece. I'll other in savings the Famous much we then the those believe on jump it's Jack on all really better. do our continue pieces mix BP will able the let freight of that working the our And a help margin X been -- things initial And there. we will favor Well, about to that up in do, based we've that lot margins to some on be I

Jack Calandra

in business. famous Yes. to XX.X% We had year last signaled was piece, going Mitch, that, that down operating posted margin come we on this year. that the

term. just on the target given structure business but to in will get that we cost softer for And we of but at hit not margin of long sales, like this likely changes XX%. that appropriate year, other back also Famous, of still that's think the why I parts operating sort in feel sort we're the margin that's fuel expectations target that making provide the these to XX%

Operator

question Telsey with Our final from Group. is Telsey Dana Advisory

Dana Telsey

now, complexions what store of or we uptick the did a Footwear, terms are the were AUR? the As particularly comps, you you with that what you And meaningful improvement, margin wholesale the seeing the at about ticket seen Portfolio think And also of saw in that the on Brand is Famous sales, are improvement? range? traffic? and then comp orders you've what in How seeing

John Schmidt

Okay.

As usual, the all, of us. Dana, question backwards. we up last with for was way and of first part actually your AUR But did I'll my start move see,

So slightly. up it's

nice through that and a there has we where So our means really XX really strategy came we do came through feel as that hold really nicely. really space worked

But it's going of quarter-to-quarter. Obviously, be with what our I very more last bit. and buying reflect a inventory lot see coming our of it's book, our quite does really to book that. year pretty line order been has dynamic, I going we've in should when In terms were there. wholesale say, really model more feel pivots as we or confident much order everything versus it more there's seen than more through would wholesale accomplish reorders that meets else a And guidance ship people say, where we through, our to just out drop

a on quarter. we Famous the mix then see of kind So to pointing Footwear did QX, in overall,

was was then traffic And we but where conversion for a pretty had our of e-com conversion brick-and-mortar that in actually Our actually good, the -- the side, in was a quarter. little -- down was QX down. on different in bit but dynamic

roughly traffic flat. Our was

it. much improve we I we're working So obviously on would things a season. slower say saw to just And start to whole the overall,

Dana Telsey

as or costs and for the the on a and Freight you that? this year, we second through benefits back of? be what are puts commodity operating should other go other it's year, we whether half any just margin. then gross seeing And And mindful for margin unpacking is the of takes any raw there materials

Jack Calandra

benefit that $XX half and for that this what benefit, planned for is back expecting first question. Dana, the would we the back I And of the coming terms actually through more both the XX% XX% freight About say includes in million we're half. about. we then versus benefit Jack. the had freight incremental the talked it's Yes, in in about freight No, half. Thanks of

obviously of So nice margin a there. in gross tailwind terms the that's

Operator

our remarks. the We to reached to question-and-answer for management of like end turn have the closing conference I back would over session.

John Schmidt

Well, partners as and also any many Famous for couldn't partners Okay. thanking Caleres, forward joining thanking seeing great to just again there. our to We everyone, you, team the them. of thank at without them market look you close And and in of retail us. our both many our want I vendor of accomplish at this out by well.

thank So you again.

Operator

This will conclude today's conference.

thank for at and this your disconnect time, You lines participation. may you your

Caleres (CAL) 1 Jun 232024 Q1 Earnings call transcript