Caleres(US:CAL)2023-11-21 20:26Financial Data and Key Metrics Changes - The company reported consolidated sales of $762 million, a decline of 4.6% year-over-year, slightly below expectations [31][63] - Adjusted earnings per share were $1.37, exceeding the high end of the guidance range and representing a nearly 20% increase over the same quarter last year [51] - Consolidated gross margin increased by 210 basis points to 44.7%, driven by record gross margin in the brand portfolio [52][63] - Operating earnings were $67 million, with an operating margin of 8.8% [43] Business Line Data and Key Metrics Changes - The brand portfolio achieved record third-quarter adjusted operating earnings of $39 million and a record operating margin of 12.2% [55] - Famous Footwear sales were $450 million, down 6.7%, with comparable sales down 6.9% due to softness in seasonal categories, particularly boots [63][40] - Brand portfolio sales were $321 million, down 0.8%, reflecting sequential improvement [63] Market Data and Key Metrics Changes - The company saw strong performance in its kids' business, which increased by 4% year-over-year, capturing 27% of the kids' market share in shoe chains [61][83] - The direct-to-consumer business, particularly e-commerce, was a bright spot, up nearly 5% year-over-year [36] Company Strategy and Development Direction - The company is focused on leveraging competitive advantages and core competencies to drive growth, particularly through its lead brands [30][62] - A commitment to sustainability was highlighted with the introduction of the One Planet Standard, emphasizing eco-friendly styles [33] - The company plans to continue enhancing its marketing ecosystem and expanding its global presence [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing softness in consumer demand and inflationary pressures impacting families, particularly in the Famous Footwear segment [40][41] - The company expects a return to growth in 2024, driven by strong brand performance and strategic initiatives [62][84] - Management remains confident in closing 2023 on a strong note, poised to execute long-term strategies [81] Other Important Information - The company reduced borrowings under its asset-based revolving credit facility by $22 million, representing a $143 million year-over-year decline [54] - Inventory management was highlighted as a key strength, with inventory down more than 14% year-over-year [32][4] Q&A Session Summary Question: How does the company plan to merchandise and promote Famous Footwear moving into 2024? - Management emphasized a careful balance of sales and profit management, avoiding a return to pre-pandemic promotional levels [47] Question: Can you provide insights on trends at Famous and the Brand Portfolio since the last Analyst Day? - Management noted that comp sales at Famous declined each month in Q3, but improvements were seen in early November [92] Question: What gives confidence in the growth of the Brand Portfolio in 2024? - Management highlighted sequential improvement in sales trends and the ability to capture market share as key drivers for growth [73][94] Question: How is Nike performing within Famous Footwear? - Management indicated that Nike's performance was similar to the overall performance of Famous, with strength in retro and court-inspired shoes [22]