Caleres Q3 net sales decline marginally

Caleres third quarter 2015 financial results, with net sales of 728.6 million dollars versus third quarter 2014 net sales of 729.3 million dollars. Excluding sales from Shoes.com, which was sold in December of 2014, sales were up 1.8 percent.

“With solid inventory planning and careful expense management, we delivered good performance in the third quarter, despite a challenging retail environment,” said Diane Sullivan, CEO, President and Chairman of Caleres, adding, “Famous Footwear delivered same-store-sales growth of 4.4 percent, capping another successful back-to-school season, as athletic footwear continued to resonate with consumers.”

Third quarter and year-to-date highlights

Net earnings were 34 million dollars, or 0.78 dollar per diluted share, and included 1.2 million dollars of after-tax expense related to the company’s debt extinguishment in the second quarter. Excluding this expense, net earnings were 35.2 million dollars, or 0.80 dollar per diluted share, up 6.2 percent versus third quarter 2014 Gross margin was 39.6 percent, while operating margin was 7.2 percent.

Famous Footwear sales of 456.2 million dollars were up 4.8 percent year-over-year, excluding Shoes.com, which was sold in December of 2014. For the quarter, same-store-sales were up 4.4 percent, with strong performance in athletic product, continued solid improvement in ecommerce sales, and good growth in women’s footwear. During the quarter, 13 new stores were opened and 13 stores were closed.

For the first nine months, Famous Footwear sales were up 2.4 percent, excluding Shoes.com, while same-store-sales were up 2.6 percent. Year-to-date, the company has opened 38 new stores, including one in Canada, and closed 32 stores.

Brand Portfolio sales of 272.5 million dollars were down 2.8 percent and reflect the unseasonably warm weather in the third quarter, which led to slower tall-shaft boot sales. The company’s Contemporary Fashion sales were down 2.5 percent, while Healthy Living sales declined 2.8 percent.

Brand Portfolio sales were up 2.7 percent for the first nine months and Contemporary Fashion sales were up 4.5 percent, with good growth from Sam Edelman and Vince. Healthy Living sales were up 1.4 percent, year-to-date, with contribution from Naturalizer wholesale, Dr. Scholl’s and LifeStride. Consolidated gross profit of 288.4 million dollars was down 0.8 percent in the third quarter, while gross margin of 39.6 percent was down approximately 30 basis points year-over-year. For the quarter, operating margins declined by approximately 10 basis points year-over-year to 7.2 percent. Year-to-date, consolidated gross profit of 799.8 million dollars was up 0.9 percent, with gross margin of 40.6 percent up 10 basis points.

Financial review and 2015 outlook

“Our performance at both Famous Footwear and our Brand Portfolio is a reflection of the work we’ve done to manage inventory and expenses – while investing to grow our businesses – during a challenging third quarter,” said Ken Hannah, Chief Financial Officer of Caleres, adding, “While we expect the retail environment will be promotional during the fourth quarter, we remain focused on delivering consistent, profitable and sustainable growth.”