Caleres(US:CAL)2021-09-01 03:15Financial Data and Key Metrics Changes - The company achieved record quarterly operating earnings of $62.8 million and adjusted earnings per share of $1.19, surpassing second quarter 2019 levels by $0.57 [8][9] - Consolidated revenue for the second quarter was $676 million, representing a nearly 6% improvement from the first quarter of 2021 [9] - Gross margins improved significantly, reaching 47.7%, up 705 basis points from the second quarter of 2019 [10][52] - The company reduced overall debt levels by $100 million, bringing total borrowings under the credit facility to $100 million [11] Business Line Data and Key Metrics Changes - Famous Footwear generated quarterly sales of approximately $454 million, an 8% improvement over the second quarter of 2019, with record margins exceeding 50% [19] - The Brand Portfolio reported operating earnings of approximately $16.6 million, improving 306 basis points over the second quarter of 2019 [30] - E-commerce sales for the Brand Portfolio's own dot-com sites were up 64% compared to the second quarter of 2019 [37] Market Data and Key Metrics Changes - The company experienced a 28% decline in inventory compared to the second quarter of 2019, with a 30% decline in the Brand Portfolio [55] - Brick-and-mortar sales increased more than 10% over the second quarter of 2019, while online sales were up more than 50% [21] Company Strategy and Development Direction - The company is focused on strengthening brand power, enhancing digital capabilities, and driving direct-to-consumer sales, which represented nearly 80% of total sales [15][16] - The company plans to continue leveraging its customer database as a strategic asset for growth [16] - The company is actively working to minimize supply chain disruptions and optimize inventory levels [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to control variables within their control and build upon recent strong results [42] - The company anticipates ongoing supply chain challenges but remains optimistic about consumer demand and engagement [41][58] - For the third quarter of 2021, the company expects adjusted earnings per share of between $1.10 and $1.25 [58] Other Important Information - The company announced its 394th uninterrupted quarterly dividend, reflecting a commitment to returning capital to shareholders [50][51] - The company is renegotiating terms of its revolving credit facility to extend the maturity date by five years and reduce annual interest expense by approximately $9 million [48] Q&A Session Summary Question: How normal is the back-to-school season tracking? - Management indicated that the back-to-school season is fairly normal, peaking slightly later than in previous years [61] Question: What has been the impact of air freight on inventory? - Management noted that there has been very little air freight in the first half, with significant inventory delays primarily due to transit times [62][63] Question: Are there any specific categories performing differently? - Management highlighted strong performance in iconic brands, with increased demand for dress shoes and sandals as consumers return to social occasions [71] Question: How is the company addressing pricing and input costs? - The company is raising prices in response to increased material costs, with average unit retail prices (AURs) expected to rise by about 10% [73][74] Question: What is the outlook for holiday sales? - Management expects holiday sales to be strong, with a consistent flow of inventory and fresh assortments to engage consumers [79]