Caleres Inc ((CAL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Caleres, Inc. Earnings Call Reflects Mixed Sentiment Amid Strong Brand Performance and Market Challenges
The recent earnings call for Caleres, Inc. presented a mixed outlook for the company. While there were notable achievements such as strong performance from Lead Brands and recognition for excellence, these were tempered by challenges including sales declines, issues at Famous Footwear, and gross margin pressures influenced by tariffs. The overall sentiment was balanced, reflecting both positive achievements and significant hurdles.
Recognition for Excellence
Caleres was honored with the Nordstrom Vendor Partner and Excellence Award for Footwear in 2024, showcasing the strength of its brands and the dedication of its team. This recognition underscores the company’s commitment to quality and excellence in the footwear industry.
Lead Brands Performance
The company’s Lead Brands, including Sam Edelman, Allen Edmonds, Naturalizer, and Vionic, performed exceptionally well, representing over 50% of the segment’s sales and profit. This strong performance highlights the enduring appeal and market strength of Caleres’ key brands.
Strategic Supply Chain Shift
Caleres is making strategic moves in its supply chain, expecting about 75% of its direct product sourcing to be outside of China by mid-2025. This shift is ahead of previous goals and is aimed at mitigating risks associated with tariffs and geopolitical uncertainties.
Full-Year Adjusted Earnings Per Share
For the full year, Caleres delivered adjusted earnings per share of $3.30, which was at the high end of its most recent guidance. This achievement reflects the company’s ability to manage its operations effectively despite market challenges.
Vionic’s Strong Performance
Vionic had a robust quarter, with sales driven by hybrid and casual sports styles. The brand also expanded its product innovation with new sneaker launches, contributing positively to the company’s overall performance.
Sales Decline
The fourth quarter saw a sales decline of approximately 4% compared to the previous year, with Brand Portfolio sales declining by 7.2%. This downturn highlights the challenges Caleres faces in maintaining its sales momentum.
Challenges in Famous Footwear
Famous Footwear experienced a 2.9% decline in comp-store sales, with brick-and-mortar sales down 4.1%. These figures indicate significant challenges in the retail environment, particularly for physical store locations.
Gross Margin Pressure
Caleres faced gross margin pressure in the fourth quarter, with an 80 basis point decrease compared to the previous year. This was impacted by higher discounts and markdown allowances, reflecting competitive pressures in the market.
Disappointing Year Relative to Expectations
Overall, 2024 was disappointing relative to initial expectations, with the company acknowledging the need for meaningful progress in its strategic priorities. This candid assessment points to areas where Caleres must focus its efforts moving forward.
Impact of Tariffs
Tariffs continue to pose a challenge for Caleres, with an anticipated 30-40 basis point impact on the Brand Portfolio’s gross margin. The company is working to mitigate these effects through strategic sourcing adjustments.
Forward-Looking Guidance
Looking ahead to fiscal year 2025, Caleres anticipates consolidated sales to range from a 1% decrease to a 1% increase. Famous Footwear sales are expected to decrease in the low-single digits, while Brand Portfolio sales are projected to grow by 1% to 2%. The operating margin is forecasted to be between 5.1% and 5.6%, with earnings per diluted share ranging from $2.80 to $3.20. The company plans significant capital expenditures and aims to shift a substantial portion of its product sourcing outside of China by mid-2025.
In conclusion, the earnings call for Caleres, Inc. highlighted a balanced view of the company’s current position. While there are significant achievements, particularly in brand performance and strategic initiatives, challenges such as sales declines and margin pressures remain. The forward-looking guidance suggests cautious optimism as Caleres navigates these complex market dynamics.