Caleres(US:CAL)2023-06-01 17:15Financial Data and Key Metrics Changes - Consolidated sales for Q1 2023 were $663 million, a 9.8% decrease compared to the previous year, with Famous sales down 9.2% and comparable sales down 8.5% [48][76] - Consolidated gross margin increased by 120 basis points to 45.7%, driven by a significant increase in Brand Portfolio gross margin [48][49] - Diluted earnings per share were $0.97, at the high end of previous guidance, with EBITDA for the quarter at $64 million, representing 9.6% of sales [48][49] Business Line Data and Key Metrics Changes - Brand Portfolio sales were $326 million, down 11% year-over-year, but this was the second highest first quarter amount in its history [48][22] - Famous Footwear's operating margin was 4.9%, down from 11.5% the previous year, reflecting softer consumer demand [11][49] - Brand Portfolio achieved a gross margin of 44.2%, a more than 600 basis point increase from last year, due to higher initial margins and lower freight costs [49][70] Market Data and Key Metrics Changes - The company maintained a total market share of over 6% in the U.S. footwear market, with Famous Footwear increasing its market share in shoe chains [58] - The kids' footwear segment was a bright spot for Famous, outpacing the rest of the business as families prioritized purchases for children [77] Company Strategy and Development Direction - The company is focused on disciplined expense management while investing in capabilities that drive growth, particularly in consumer experience, analytics, and marketing [59][63] - Strategic initiatives include cost-cutting measures expected to deliver approximately $20 million in SG&A savings and an additional $10 million from better-than-expected freight costs [18][59] - The company aims to leverage its leadership position in the family footwear market and enhance its marketing strategy to target millennial families [43][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macro environment but expressed confidence in achieving full-year earnings per share of $4.10 to $4.30, offsetting top-line softness with cost savings [16][19] - The outlook for Famous Footwear includes expectations for improved sales in the second quarter, driven by seasonal factors and back-to-school shopping [74][33] - Management emphasized the importance of inventory management and the ability to react quickly to market trends to maintain momentum [39][40] Other Important Information - The company ended Q1 with $292 million in borrowings on its revolver and no long-term debt, with inventory down 13.1% year-over-year [50][51] - The company plans to continue share repurchases based on market conditions, with 6.4 million shares remaining under the current Board repurchase authorization [51][19] Q&A Session Summary Question: Can you provide guidance for the second quarter and fiscal year regarding Famous Footwear and the Brand Portfolio? - Management indicated that Famous sales are expected to improve versus Q1, but negative sales growth is still anticipated for the year, while the Brand Portfolio is expected to show improvement in the back half of the year [36][37] Question: What are the expectations for AUR and wholesale orders? - Management noted that AUR was up slightly, indicating a strong hold, and the wholesale order book is in line with guidance, reflecting a more dynamic approach [26][28] Question: How is the company managing inventory compared to peers? - Management stated that consolidated inventories are expected to remain down versus last year, and they are closely monitoring the competitive landscape to manage promotional strategies effectively [39][40]