Caleres(US:CAL)2024-09-12 19:18Financial Data and Key Metrics Changes - The company reported earnings per share of $0.85, down from $0.98 year-over-year [18] - Total sales for the second quarter were $683 million, a decline of 1.8% year-over-year [16] - Consolidated gross margin increased by 30 basis points to 45.5% [17] - Operating earnings were $42.5 million, with an operating margin of 6.2% [18] Business Line Data and Key Metrics Changes - Brand Portfolio sales declined by 5.1%, impacted by the ERP upgrade and weakness in seasonal categories [8] - Famous Footwear's total sales increased by 1.5%, but comparable sales were down 2.9% [11][16] - The Brand Portfolio's gross margin improved by 140 basis points to 42.7% [17] - Famous Footwear's gross margin decreased by 120 basis points to 45% [17] Market Data and Key Metrics Changes - The kids' category at Famous Footwear grew, capturing 21% of total sales and gaining 0.5 points of market share in shoe chains [11] - The international market, particularly in Asia, showed strong momentum for Sam Edelman [9] - The athletic segment represented over 50% of Famous Footwear's total business, indicating a strong trend [24] Company Strategy and Development Direction - The company is focused on cost reduction initiatives, including a restructuring expected to save approximately $7.5 million annually [7] - There is a commitment to align inventory with consumer demand, particularly in the trending sneaker category [10] - The company plans to close an additional 10 stores, ending the year with 850 stores [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the ERP upgrade caused execution issues but expressed confidence in the long-term vision [3][4] - The company expects to recover from the missed sales but does not anticipate full recovery in seasonal categories [7] - Management is optimistic about the back-to-school season and the overall consumer demand [42] Other Important Information - The company generated $80 million in cash flow from operations, aided by deferred vendor payments [19] - Inventory levels were flat compared to last year, with a reduction in aged inventory [9] Q&A Session Summary Question: Impact of ERP implementation on the back half of the year - Management indicated that the ERP issues should be considered immaterial moving forward, with systems now operational [22] Question: Drivers of August rebound in sales - The rebound was attributed to strong performance from key athletic brands, effective promotions, and targeted marketing efforts [24] Question: Concerns about wholesale partners' confidence - Management reported no significant loss of confidence from retail partners, with positive trends observed in key categories [28] Question: Comp assumptions for Q3 - A modest positive comp is expected for Famous Footwear in Q3, despite total sales being down mid-single digits due to calendar shifts [31] Question: Gross margin expectations for Q3 - Management anticipates a decline in Famous Footwear's gross margin for Q3, while expecting overall improvement at the consolidated level [32] Question: Full year sales guidance revision - The revision reflects lost sales from ERP issues and seasonal weaknesses, with management expressing satisfaction with back-to-school performance [34]