Pic: ColleenMichaels - stock.adobe.com
Caleres achieved a gross profit of $309.1 million, with a gross margin of 46.9 per cent, an improvement of 120 basis points from the previous year. The Famous Footwear segment's gross margin increased by 50 basis points to 46.1 per cent, while the Brand Portfolio segment's gross margin rose by 240 basis points to 46.6 per cent. Selling, general, and administrative expenses represented 40.4 per cent of net sales, reflecting planned investments in marketing for certain Lead Brands, international expansion, and the implementation of an integrated SAP platform, the company said in a press release.
The company reported net earnings of $30.9 million, or earnings per diluted share of $0.88, compared to net earnings of $34.7 million, or earnings per diluted share of $0.97, in the first quarter of 2023. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $57.4 million, representing 8.7 per cent of sales. Inventory levels were down 5.2 per cent from the first quarter of 2023, primarily due to strategic inventory management in the Brand Portfolio segment. Borrowings under the asset-based revolving credit facility stood at $191.0 million at the end of the period, a reduction of about $100 million from the first quarter of 2023.
During the quarter, Caleres invested in growth opportunities while returning cash to shareholders through share buybacks and dividends. The company repurchased 416,000 shares of common stock for $15.1 million at an average price of $36.23 per share and returned $2.4 million to shareholders through quarterly dividend payments. In the near term, Caleres plans to focus on reducing debt, expecting borrowings under its asset-based revolving credit facility to be less than $100 million by 2026. The company will continue to evaluate all opportunities for free cash flow based on business performance and market conditions as the year progresses.
Caleres reiterated its fiscal 2024 financial outlook, anticipating consolidated net sales to be flat to up 2 per cent compared to 2023, with earnings per diluted share expected to be in the range of $4.30 to $4.60. The company also expects a consolidated operating margin of 7.3 per cent to 7.5 per cent, an effective tax rate of about 24 per cent, and capital expenditures of $60 million to $70 million. For the second quarter of 2024, Caleres projects consolidated net sales to increase by 3 per cent to 4 per cent, including a $20 to $25 million benefit in the Famous Footwear segment due to the calendar shift of an important back-to-school week from the third quarter of 2023. Earnings per diluted share for the second quarter are expected to be in the range of $1.20 to $1.25.
“Caleres began 2024 in strong fashion, achieving earnings per share ahead of expectations, generating record first quarter consolidated gross margin, and making significant progress on our key strategic initiatives, all while investing for the long-term,” said Jay Schmidt, president and chief executive officer. “While the consumer demand environment remained challenging, we achieved growth in sales and profitability from our Lead Brands and strong margin performance across the Brand Portfolio. Notably, the segment delivered more than half of the company’s operating earnings during the quarter, with a 13 per cent operating margin, and is once again expected to lead the financial performance of Caleres this year. At the same time, Famous Footwear maintained total year-over-year sales levels and generated solid gross margins, with sales and market share up significantly in the strategically important Kids category.”
Fibre2Fashion News Desk (KD)