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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents mixed signals. Despite a record gross margin and EPS beat, there are concerns about sales decline and ERP issues. The Q&A highlights confidence in resolving ERP challenges and positive trends in athletic brands, yet acknowledges competitive pressures and economic factors. Restructuring savings and store closures add complexity. The market cap suggests moderate sensitivity to news. Overall, the combination of positive and negative factors leads to a neutral prediction, expecting the stock price to remain within -2% to 2% over the next two weeks.
Earnings Per Share (EPS) $0.85, down from $0.98 year-over-year due to sales miss.
Sales $683 million, down 1.8% year-over-year, impacted by ERP upgrade, weak sandal demand, and late back-to-school lift.
Gross Margin 45.5%, a 30 basis point increase year-over-year, driven by higher margin in Brand Portfolio.
Brand Portfolio Sales Down 5.1% year-over-year, affected by ERP issues and weakness in seasonal categories.
Famous Footwear Sales Up 1.5% year-over-year, with comparable sales down 2.9% due to calendar shift.
Brand Portfolio Gross Margin 42.7%, up 140 basis points year-over-year due to higher initial margins and favorable channel mix.
Famous Gross Margin 45%, down 120 basis points year-over-year due to more days on promotion and higher clearance activity.
SG&A Expense $268 million, or 39.3% of sales, including planned investments in marketing and SAP upgrade.
Operating Earnings $42.5 million, with an operating margin of 6.2%.
Net Interest Expense $3.3 million, down about $2 million year-over-year due to lower borrowings.
EBITDA $57 million, or 8.4% of sales.
Inventory $661 million, flat to last year, with a reduction in aged inventory.
Cash Flow from Operations $80 million, including the favorable impact of deferred vendor payment.
Restructuring Savings Approximately $7.5 million on an annualized basis, with $2 million in this fiscal year.
New Product Initiatives: Strong growth in demand for new products, particularly in fashion sneakers, which represented 28% of retail selling for the quarter, up six points versus the prior year.
Inclusivity Campaigns: Naturalizer is moving forward with inclusivity ambassadors for sizing initiatives and wide shaft boots, showing strong early reactions to tall boots.
Expansion of Distribution Channels: Allen Edmonds' wholesale door count is up 30% year-over-year, indicating successful expansion in new channels.
Product Performance: Vionic's uptown moc franchise continues to attract new consumers with modern fashion.
Market Positioning in Kids Category: Famous Footwear's kids category grew in the quarter, outperforming the total business for 14 consecutive quarters, with a 21% penetration of total sales.
Market Share Gains: Famous Footwear gained 0.5 points of market share in shoe chains, indicating improved market positioning.
ERP System Upgrade: The upgrade to a new Cloud-based SAP system caused execution issues, impacting visibility and sales, but corrective actions have been implemented.
Cost Reduction Initiatives: A restructuring was announced to save approximately $7.5 million annually, with $2 million savings expected in the current fiscal year.
Inventory Management: Inventory is in good shape, flat to last year, with a reduction in aged inventory.
Strategic Focus on E-commerce: Famous.com business was solid, up 10% year-over-year, indicating a strategic focus on enhancing online sales.
Future Growth Plans: Confidence in long-term growth plans despite recent setbacks, with a focus on executing strategic initiatives.
ERP System Upgrade Issues: The upgrade to the SAP enterprise system caused significant operational disruptions, leading to execution issues and a lack of visibility that resulted in an estimated $10 million to $15 million in lost sales for the quarter.
Supply Chain Challenges: Late shipments and carrier failures contributed to the sales decline, compounding the issues caused by the ERP upgrade.
Seasonal Product Weakness: Sales of seasonal products, particularly sandals, were down high-single digits compared to the previous year, indicating a weakness in this category.
Competitive Pressures: Despite the challenges, the company noted strong growth in demand for new products, particularly in the sneakers category, which represented 28% of retail selling for the quarter.
Economic Factors: The company experienced a decline in sales and earnings due to various economic pressures, including a late back-to-school shopping season.
Restructuring Costs: The company announced a restructuring initiative expected to save approximately $7.5 million annually, with $2 million savings anticipated in the current fiscal year.
Cost Reduction Initiatives: The company announced a restructuring that will save approximately $7.5 million on an annualized basis and $2 million in the current fiscal year.
Inventory Management: The company is well positioned in sneakers and has aligned inventory with consumer demand for this trending category.
Expansion of Distribution Channels: Allen Edmonds' wholesale door count is up 30% year-over-year, indicating growth in new channels of distribution.
Inclusivity Initiatives: Naturalizer is moving forward with inclusivity ambassadors to enhance brand appeal and support sizing initiatives.
Consumer Experience Enhancement: Famous Footwear is on track to remodel 12 additional FLAIR stores in the back half of the year to enhance consumer experience.
Sales Guidance: The company expects full year 2024 sales to be down a low-single digit percent versus last year, with adjusted earnings per diluted share of $4 to $4.15.
Operating Margin Guidance: Consolidated operating margin is expected to be between 7% to 7.1% for the full year.
Capital Expenditures Guidance: Capital expenditures are projected to be between $50 million to $55 million for the year.
Q3 Earnings Guidance: For Q3, earnings per diluted share are expected to be between $1.24 to $1.34, with adjusted earnings per diluted share of $1.30 to $1.40.
Store Count Guidance: The company plans to close an additional 10 stores this year, ending with approximately 850 stores.
Restructuring Savings: The company announced a restructuring that will save approximately $7.5 million on an annualized basis and $2 million in this fiscal year.
Earnings Per Share Guidance: The revised earnings per diluted share guidance for the full year is between $3.94 to $2.09, with adjusted earnings per diluted share of $4 to $4.15.
Capital Expenditures: Expected capital expenditures for 2024 are between $50 million to $55 million.
Store Closures: The company plans to close an additional 10 stores this year, ending with 850 stores compared to 860 last year.
The earnings call reveals significant negative factors: a 75% drop in EPS, a 6.8% decline in sales, decreased gross margins, and suspended guidance. Despite some positive elements like strategic investments and supply chain evolution, these are overshadowed by financial setbacks and uncertainties. The Q&A section highlighted management's vague responses, indicating potential risks and lack of clarity. Given the company's small-cap status, these issues are likely to result in a strong negative stock price movement over the next two weeks.
The earnings call summary reveals weak financial performance with declining sales and margins, despite a slight EPS increase. The Q&A session highlighted concerns about tariffs, inventory, and cautious consumer spending. Guidance indicates further sales decline, with operational margin expected to be lowest in Q1. Despite shareholder returns through buybacks, the negative trends and economic uncertainties outweigh positives. Given the small market cap, the stock is likely to react negatively, aligning with the negative sentiment from financial results and guidance.
The earnings call highlights weak sales performance, declining EPS, and gross margin issues. The Q&A reveals management's cautious outlook, particularly in China, and a lack of clarity on margin impact. Despite share buybacks, the challenging footwear environment and markdowns are concerning. Given the company's small market cap, the negative sentiment is likely to lead to a stock price decline in the range of -2% to -8% over the next two weeks.
The earnings call summary presents mixed signals. Despite a record gross margin and EPS beat, there are concerns about sales decline and ERP issues. The Q&A highlights confidence in resolving ERP challenges and positive trends in athletic brands, yet acknowledges competitive pressures and economic factors. Restructuring savings and store closures add complexity. The market cap suggests moderate sensitivity to news. Overall, the combination of positive and negative factors leads to a neutral prediction, expecting the stock price to remain within -2% to 2% over the next two weeks.
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