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01/10 16:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Earnings Per Share (EPS) $0.22 EPS, down from $0.88 last year, a decrease of 75% due to lower sales and gross margins.
Sales $614.2 million, down 6.8% year-over-year, primarily due to weak February sales and lower gross margins.
Gross Margin 45.4%, down 150 basis points year-over-year, driven by lower margins in both segments.
Brand Portfolio Gross Margin 43.8%, down 280 basis points year-over-year, impacted by lower initial margins and costs associated with canceling and moving production.
Famous Gross Margin 45.3%, down 80 basis points year-over-year, due to more promotional days and higher shipping costs.
SG&A Expense $266.5 million, flat year-over-year, but as a percentage of sales, it increased by 300 basis points to 43.4%.
Operating Earnings $12.2 million, with an operating margin of 2%, down from previous levels due to lower sales and gross margins.
Net Interest Expense $3.8 million, flat year-over-year, as higher average borrowings were offset by a lower weighted average borrowing rate.
Inventory $573.6 million, up $43 million or 8.1% year-over-year, due to higher levels of inventory in both segments.
Cash Flow from Operations Negative $5.7 million, impacted by lower net income and higher inventory levels.
Debt to EBITDA Ratio 1.4 times, reflecting an increase in borrowings to $258.5 million, up $67.5 million year-over-year.
Trailing Twelve-Month EBITDA $187.9 million, representing 7% of sales.
New Product Launches: Vionic launched three new walking styles and announced Gabby Reif as the brand’s first wellness ambassador, with a consumer-facing campaign starting this fall.
Expansion of Product Offerings: Naturalizer invested in its first Shop in Shop at Macy’s Herald Square, which drove over a 50% sales increase in the first quarter.
Jordan Brand Launch: Famous Footwear launched the Jordan brand in 147 stores, with early selling results being encouraging.
Market Share Gains: Caleres' brand portfolio gained market share in women’s fashion footwear during the period.
Famous Footwear Market Positioning: Famous gained 0.5 points of market share in shoe chains in the kids’ category.
Cost Reduction Initiatives: Caleres expects to decrease SG&A by $15 million on an annualized basis through structural expense cuts.
Sourcing Strategy Optimization: The company is optimizing its sourcing strategy and has paused production in China due to tariff escalations.
Acquisition Plans: Caleres plans to acquire Stuart Weitzman, viewing it as a strategic fit due to its premium positioning and strong direct-to-consumer presence.
Future Growth Initiatives: Caleres is focused on executing its strategic plan to drive sustained value for shareholders.
Earnings Miss: Caleres, Inc. reported an EPS of $0.22, missing expectations of $0.37.
Sales Decline: First quarter sales declined 6.8% year over year, with brand portfolio sales down 6.9%.
Tariff Escalation: The company faced larger-than-planned impacts related to tariff escalation, which affected sourcing and gross margins.
Sourcing Disruption: Sourcing disruptions due to production pauses in China led to additional costs, impacting gross margin profit by nearly $1.9 million.
Inventory Challenges: Higher inventory levels required additional markdown reserves, impacting profits by about $2.3 million.
Customer Credit Issues: Expanding customer credit concerns resulted in bad debt write-downs, affecting profits by approximately $3.1 million.
SG&A Expenses: The company plans to decrease SG&A by $15 million annually through structural expense cuts.
Economic Environment: The operating environment has become more challenging, necessitating efforts to drive growth and profitability.
Suspended Guidance: Due to continued uncertainty in the sourcing environment, the company has suspended guidance.
Sourcing Strategy Optimization: Caleres is focused on optimizing its sourcing strategy to control costs and improve profitability.
SG&A Expense Reduction: The company expects to decrease SG&A by $15 million on an annualized basis through structural expense cuts.
Acquisition of Stuart Weitzman: Caleres plans to acquire Stuart Weitzman, viewing it as a strategic fit due to its premium positioning and strong direct-to-consumer presence.
Expansion of FLAIR Stores: Caleres is enhancing the consumer experience at Famous Footwear by adding more FLAIR stores, with plans to increase from 44 to 53 by July.
New Product Launches: Caleres is launching the Jordan brand in 147 stores and expanding assortments from other brands for back-to-school.
Q2 Sales Performance: For Q2, comparable sales for Famous are slightly better than Q1, down 4.6%.
Suspension of Guidance: Caleres has suspended guidance due to ongoing uncertainty in the operating environment.
Cost Savings Initiatives: The company is executing a structural cost initiative that will result in $15 million of SG&A savings on an annualized basis.
Inventory Management: Caleres is managing inventory levels carefully, with a focus on markdown reserves for slow-moving products.
Future Sourcing Strategy: Caleres expects about 10% of its dollars sourced to come from China in the back half of the year.
Share Repurchase Program: Caleres has not announced any share repurchase program during this earnings call.
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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