Caleres beat analyst expectations in the third quarter, achieving record quarterly sales and delivering another period of solid earnings.
Net sales rose 1.8 % to $798.3 million in Q3, driven by positive momentum in the company’s brand portfolio segment, which rose 7.6% in the period. The company attributes this growth to robust consumer demand for its fashion brands.
The company’s brands in this segment all had a stellar quarter. At Naturalizer, sales increased nearly 60% over 2021, with gains in dress, casual, and boots, especially tall shaft boots. Sam Edelman continued to deliver strong results, with sales increasing 26% year-over-year. And at Allen Edmonds, core styles, as well as sneakers and boots, showed continued improvement versus last year with higher average unit retail and margins.
But, in the company’s Famous Footwear segment, sales declined modestly by 2.6% in Q3, with comparable store sales down 0.8% in the segment. The segment’s kid’s business was a highlight in the quarter, though, with kid’s business up 3% in the 10-week back-to-school period versus 2021.
On the company’s earnings call on Tuesday, Caleres president – and incoming CEO – Jay Schmidt noted that Famous Footwear still continued to perform at a “high level” during the quarter, up against the “blockbuster” period last year. “Famous [Footwear] beat our expectations, delivering a modest year-over-year sales decline,” Schmidt told investors. “However, by limiting promotional activity, the business generated margins higher than pre-pandemic levels, which were also in line with our plan.”
Schmidt also noted that the curated assortment of national brands and styles continued to resonate with the Famous Footwear consumer target, the Millennial family. Famous Footwear’s top 25 brands, represented 89% of sales during the period. LifeStride, in particular, was a standout breaking into the top 10 of all selling brands at Famous Footwear for the quarter. The Dr. Scholl’s brand also experienced similar results, posting a double digit increase across both men’s and women’s segments.
“Overall, 2022 is progressing in line with our expectations,” Schmidt said. “In light of the more challenging macroeconomic environment, the entire team at Caleres will be focused on controlling what we can, managing expenses and reducing our overall debt levels.”
At the time of press, Caleres stock price was up nearly 1% on Tuesday.
Looking ahead, Diane Sullivan, chairman and CEO of Caleres, told investors on her last earnings call as CEO, that the company is “confident” that Caleres is well-positioned to close 2022 with record-setting earnings.
Given the strong execution to date and expectations for the fourth quarter, Caleres is tightening its fiscal year 2022 earnings outlook at the upper end of its previous guidance range.
Specifically, the company expects adjusted earnings per share to be in the range of $4.30 and $4.40, representing another year of record earnings for the organization. In addition, the company is reiterating its full year sales outlook, with the range still expected to be between 4 percent and 6 percent as compared to fiscal year 2021.
“We are extremely encouraged by our results year-to-date,” Sullivan, who will be inducted into the Hall of Fame at the 36th annual FN Achievement Awards on Nov. 30, said. “And even with the uncertainty in the macroeconomic environment, we’re very confident we’ll close the year in a record setting manner. Going forward, our portfolio is strong, our teams are aligned and we still have plenty of runway for growth. So we’re poised to generate significant value for all of our stakeholders.”
