Caleres' Q2 Earnings Miss, Famous Footwear Unit's Comps Decline 2.9%

Core Insights - Caleres, Inc. reported disappointing second-quarter results for fiscal 2024, with adjusted earnings of 85 cents per share, missing the Zacks Consensus Estimate of $1.21 and down from 98 cents per share year over year [1][2]. Financial Performance - Consolidated net sales were $683.3 million, a decline of 1.8% year over year, and below the Zacks Consensus Estimate of $716 million [3]. - The Famous Footwear segment saw a 1.5% increase in net sales, while the Brand Portfolio segment experienced a 5.1% drop in sales [3]. - Gross profit decreased by 1.1% to $310.9 million, with a gross margin increase of 30 basis points to 45.5% [4]. - Adjusted EBITDA fell 12.4% to $57.2 million, with an adjusted EBITDA margin contraction of 100 basis points to 8.4% [5]. Segment Performance - The Famous Footwear segment's gross margin decreased by 120 basis points to 45%, while the Brand Portfolio segment's gross margin increased by 140 basis points to 42.7% [4]. - Direct-to-consumer sales accounted for approximately 75% of total quarterly sales [3]. Balance Sheet and Cash Flow - At the end of the quarter, Caleres had cash and cash equivalents of $51.8 million and total shareholders' equity of $613.5 million [6]. - Cash generated from operating activities was $115.7 million for the 26 weeks ended August 3, 2024 [6]. - The company had borrowings of $146.5 million under its asset-based revolving credit facility [6]. Future Outlook - For Q3, Caleres expects sales to be flat to down 2% year over year, with adjusted EPS projected between $1.30 and $1.40 [7]. - For fiscal 2024, the company anticipates consolidated net sales to decline in the low single digits, down from previous guidance of flat to up 2% [8]. - The projected consolidated operating margin is now expected to be in the range of 7-7.1%, compared to earlier projections of 7.3-7.5% [8].