Caleres Inc 8-K, filed May 30, 2024
Caleres Inc (CAL)
About this 8-K
Caleres Inc filed this 8-K on May 30, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
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WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On May 30, 2024, Caleres, Inc. (the "Company") issued a press release (the "Press Release") announcing, among other things, its results of operations for the quarter ended May 4, 2024. A copy of the Press Release is being furnished as Exhibit 99.1 hereto, and the statements contained therein are incorporated by reference herein.
In accordance with General Instruction B.2. of Form 8-K, the information contained in Item 2.02 and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits | |
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Exhibit Number | | Description | |
99.1 | | ||
104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| CALERES, INC. |
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| (Registrant) |
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Date: May 30, 2024 | | /s/ Thomas C. Burke |
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| Thomas C. Burke |
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| Senior Vice President, General Counsel and Secretary |
Exhibit 99.1
News
| Investor Contact: |
| Logan Bonacorsi |
| lbonacorsi@caleres.com |
Caleres Reports First Quarter Results
| ● | Achieved $0.88 in earnings per share, exceeding expectations |
| ● | Generated record first quarter consolidated gross margin of 47 percent |
| ● | Reiterates fiscal 2024 outlook of net sales flat to up 2 percent and earnings per share of $4.30 to $4.60 |
ST. LOUIS, May 30, 2024 - Caleres (NYSE: CAL), a market-leading portfolio of consumer-driven footwear brands, today reported financial results for first quarter 2024 and reaffirmed its guidance for fiscal 2024.
“Caleres began 2024 in strong fashion, achieving earnings per share ahead of expectations, generating record first quarter consolidated gross margin, and making significant progress on our key strategic initiatives, all while investing for the long-term,” said Jay Schmidt, president and chief executive officer. “While the consumer demand environment remained challenging, we achieved growth in sales and profitability from our Lead Brands and strong margin performance across the Brand Portfolio. Notably, the segment delivered more than half of the company’s operating earnings during the quarter, with a 13 percent operating margin, and is once again expected to lead the financial performance of Caleres this year. At the same time, Famous Footwear maintained total year-over-year sales levels and generated solid gross margins, with sales and market share up significantly in the strategically important Kids category.”
“Looking ahead, we are confident in our ability to deliver earnings per share in line with our guidance range in 2024,” said Schmidt. “Longer-term, we believe we are exceptionally well positioned to execute our clear and actionable strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders.”
First Quarter 2024 Results
(13-weeks ended May 4, 2024, compared to 13-weeks ended April 29, 2023)
| ● | Famous Footwear segment net sales increased 0.1 percent, with comparable sales down 2.3 percent |
| ● | Brand Portfolio segment net sales declined 2.6 percent |
| ● | Direct-to-consumer sales represented approximately 69 percent of total net sales |
| ● | Famous Footwear segment gross margin of 46.1 percent, up 50 basis points versus last year |
| ● | Brand Portfolio segment gross margin of 46.6 percent, up 240 basis points versus last year |
| ● | SG&A as a percentage of net sales was 40.4 percent, reflecting planned investment in marketing at certain Lead Brands, international expansion and the implementation of the integrated SAP platform; |
| ● | Net earnings of $30.9 million, or earnings per diluted share of $0.88, compared to net earnings of $34.7 million, or earnings per diluted share of $0.97 in the first quarter 2023. |
| ● | Earnings before interest, taxes, depreciation, and amortization (EBITDA) of $57.4 million, or 8.7 percent of sales; |
| ● | Inventory was down 5.2 percent from the first quarter 2023, due to strategic inventory management – primarily in the Brand Portfolio segment; and |
| ● | Borrowings under the asset-based revolving credit facility were $191.0 million at the end of the period, down about $100 million from the first quarter of 2023. |
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Capital Allocation Update
During the quarter, Caleres continued to invest in value-driving growth opportunities while at the same time returning cash to shareholders through share buybacks and dividends. More specifically, the company repurchased 416,000 shares of common stock, for $15.1 million and an average price of $36.23 per share. It also returned $2.4 million to shareholders through quarterly dividend payments.
In the near term, the company expects to continue to focus on reducing debt and still expects borrowings under its asset-based revolving credit facility will be less than $100 million by 2026. Caleres will continue to consider business performance and market conditions as it evaluates all opportunities for free cash flow as the year progresses.
Fiscal 2024 Outlook:
Caleres is reiterating its fiscal 2024 financial outlook and as previously noted, its fiscal 2024 is a 52-week year and compares to a 53-week year in fiscal 2023. Specifically, the company still expects consolidated net sales to be flat to up 2 percent, compared to 2023, and earnings per diluted share to be in the range of $4.30 to $4.60.
In addition, for fiscal 2024, the company still expects:
For second quarter 2024 the company expects:
| ● | Consolidated net sales to be up 3 percent to 4 percent. This includes an estimated $20 to $25 million benefit in Famous Footwear as a result of the calendar shift of an important back-to-school week into second quarter 2024 from third quarter 2023; and |
| ● | Earnings per diluted share of $1.20 to $1.25. |
Investor Conference Call
Caleres will host a conference call at 11:00 a.m. ET today, Thursday, May 30. The webcast and associated slides will be available at investor.caleres.com/news/events. A live conference call will be available at (877) 704-4453 for North America participants or (201) 389-0920 for international participants, no passcode necessary. A replay will be also available at investor.caleres.com/news/events/archive for a limited period. Investors may also access the replay by dialing (844) 512-2921 in North America or (412) 317-6671 internationally and using the conference pin 13746617.
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Definitions
All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to Caleres, Inc. and diluted earnings per common share attributable to Caleres, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.
Non-GAAP Financial Measures and Metrics
In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures and metrics. In particular, the company provides earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-GAAP financial measure, and the debt to EBITDA leverage ratio, which is a non-GAAP financial metric. These results are included as a complement to results provided in accordance with GAAP because management believes this non-GAAP financial measure and metric help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. This measure and metric should not be considered a substitute for or superior to GAAP results.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could
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cause actual results to differ materially. These risks include (i) changing consumer demands, which may be influenced by general economic conditions and other factors; (ii) inflationary pressures and supply chain disruptions (iii) rapidly changing consumer preferences and purchasing patterns and fashion trends; (iv) supplier concentration, customer concentration and increased consolidation in the retail industry; (v) intense competition within the footwear industry; (vi) foreign currency fluctuations; (vii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (viii) cybersecurity threats or other major disruption to the company’s information technology systems; (ix) the ability to accurately forecast sales and manage inventory levels; (x) a disruption in the company’s distribution centers; (xi) the ability to recruit and retain senior management and other key associates; (xii) the ability to secure/exit leases on favorable terms; (xiii) the ability to maintain relationships with current suppliers; (xiv) transitional challenges with acquisitions and divestitures; (xiv) changes to tax laws, policies and treaties; (xvi) our commitments and shareholder expectations related to environmental, social and governance considerations; (xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xvii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended February 3, 2024, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.
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SCHEDULE 1 |
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CALERES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
| | (Unaudited) | ||||
| | Thirteen Weeks Ended | ||||
($ thousands, except per share data) |
| May 4, 2024 |
| April 29, 2023 | ||
Net sales | | $ | 659,198 | | $ | 662,734 |
Cost of goods sold | |
| 350,103 | |
| 360,052 |
Gross profit | |
| 309,095 | |
| 302,682 |
Selling and administrative expenses | |
| 266,337 | |
| 253,095 |
Operating earnings | |
| 42,758 | |
| 49,587 |
Interest expense, net | |
| (3,778) | |
| (5,623) |
Other income, net | |
| 992 | |
| 1,492 |
Earnings before income taxes | |
| 39,972 | |
| 45,456 |
Income tax provision | |
| (9,174) | |
| (10,664) |
Net earnings | |
| 30,798 | |
| 34,792 |
Net (loss) earnings attributable to noncontrolling interests | |
| (141) | |
| 65 |
Net earnings attributable to Caleres, Inc. | | $ | 30,939 | | $ | 34,727 |
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Basic earnings per common share attributable to Caleres, Inc. shareholders | | $ | 0.88 | | $ | 0.97 |
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Diluted earnings per common share attributable to Caleres, Inc. shareholders | | $ | 0.88 | | $ | 0.97 |
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SCHEDULE 2 |
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CALERES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
| | (Unaudited) | ||||
($ thousands) |
| May 4, 2024 |
| April 29, 2023 | ||
ASSETS |
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Cash and cash equivalents | | $ | 30,709 | | $ | 36,151 |
Receivables, net | |
| 164,865 | |
| 148,068 |
Inventories, net | |
| 530,570 | |
| 559,467 |
Property and equipment, held for sale | | | 16,777 | | | 16,777 |
Prepaid expenses and other current assets | |
| 62,415 | |
| 60,417 |
Total current assets | |
| 805,336 | |
| 820,880 |
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Lease right-of-use assets | |
| 565,822 | |
| 513,817 |
Property and equipment, net | |
| 168,154 | |
| 157,730 |
Goodwill and intangible assets, net | |
| 200,551 | |
| 212,353 |
Other assets | |
| 121,247 | |
| 113,303 |
Total assets | | $ | 1,861,110 | | $ | 1,818,083 |
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LIABILITIES AND EQUITY | |
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Borrowings under revolving credit agreement | | $ | 191,000 | | $ | 291,500 |
Trade accounts payable | |
| 267,388 | |
| 261,753 |
Lease obligations | |
| 120,872 | |
| 136,297 |
Other accrued expenses | |
| 185,105 | |
| 189,727 |
Total current liabilities | |
| 764,365 | |
| 879,277 |
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Noncurrent lease obligations | |
| 482,163 | |
| 437,171 |
Other liabilities | |
| 37,553 | |
| 49,754 |
Total other liabilities | |
| 519,716 | |
| 486,925 |
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Total Caleres, Inc. shareholders’ equity | |
| 570,304 | |
| 446,317 |
Noncontrolling interests | |
| 6,725 | |
| 5,564 |
Total equity | |
| 577,029 | |
| 451,881 |
Total liabilities and equity | | $ | 1,861,110 | | $ | 1,818,083 |
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SCHEDULE 3 |
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CALERES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | (Unaudited) | ||||
| | Thirteen Weeks Ended | ||||
($ thousands) |
| May 4, 2024 |
| April 29, 2023 | ||
OPERATING ACTIVITIES: |
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Net cash provided by operating activities | | $ | 36,074 | | $ | 37,497 |
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INVESTING ACTIVITIES: | |
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Purchases of property and equipment | |
| (9,802) | |
| (5,750) |
Capitalized software | |
| (524) | |
| (798) |
Net cash used for investing activities | |
| (10,326) | |
| (6,548) |
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FINANCING ACTIVITIES: | |
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Borrowings under revolving credit agreement | |
| 118,500 | |
| 126,000 |
Repayments under revolving credit agreement | |
| (109,500) | |
| (142,000) |
Dividends paid | |
| (2,442) | |
| (2,482) |
Acquisition of treasury stock | |
| (15,070) | |
| — |
Issuance of common stock under share-based plans, net | |
| (7,847) | |
| (10,006) |
Net cash used for financing activities | |
| (16,359) | |
| (28,488) |
Effect of exchange rate changes on cash and cash equivalents | |
| (38) | |
| (10) |
Increase in cash and cash equivalents | |
| 9,351 | |
| 2,451 |
Cash and cash equivalents at beginning of period | |
| 21,358 | |
| 33,700 |
Cash and cash equivalents at end of period | | $ | 30,709 | | $ | 36,151 |
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SCHEDULE 4 | ||||||||
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CALERES, INC. | ||||||||
SUMMARY FINANCIAL RESULTS BY SEGMENT | ||||||||
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SUMMARY FINANCIAL RESULTS |
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| | (Unaudited) |
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| | Thirteen Weeks Ended |
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| | Famous Footwear | | Brand Portfolio | | Eliminations and Other | | Consolidated |
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| May 4, | | April 29, | | May 4, | | April 29, |
| May 4, | | April 29, | | May 4, | | April 29, |
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($ thousands) | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
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Net sales | | $ | 349,553 | | $ | 349,158 | | $ | 317,211 | | $ | 325,516 | | $ | (7,566) | | $ | (11,940) | | $ | 659,198 | | $ | 662,734 | |
Gross profit | |
| 161,005 | |
| 159,133 | |
| 147,812 | |
| 143,858 | |
| 278 | |
| (309) | |
| 309,095 | |
| 302,682 | |
Gross margin | |
| 46.1 | % |
| 45.6 | % |
| 46.6 | % |
| 44.2 | % |
| (3.7) | % |
| 2.6 | % |
| 46.9 | % |
| 45.7 | % |
Operating earnings (loss) | |
| 16,855 | |
| 17,056 | |
| 41,425 | |
| 42,669 | |
| (15,522) | |
| (10,138) | |
| 42,758 | |
| 49,587 | |
Operating margin |
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| 4.8 | % |
| 4.9 | % |
| 13.1 | % |
| 13.1 | % |
| n/m | % |
| n/m | % |
| 6.5 | % |
| 7.5 | % |
Comparable sales % (on a 13-week basis) | |
| (2.3) | % |
| (8.5) | % |
| 0.1 | % |
| 9.4 | % |
| — | % |
| — | % |
| — | % |
| — | % |
Number of stores | |
| 855 | |
| 866 | |
| 99 | |
| 93 | |
| — | |
| — | |
| 954 | |
| 959 | |
n/m – Not meaningful
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SCHEDULE 5 |
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CALERES, INC. |
BASIC AND DILUTED EARNINGS PER SHARE RECONCILIATION |
| | (Unaudited) | ||||
| | Thirteen Weeks Ended | ||||
| | May 4, 2024 | | April 29, 2023 | ||
($ thousands, except per share data) | | | | | | |
Net earnings attributable to Caleres, Inc.: |
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Net earnings | | $ | 30,798 | | $ | 34,792 |
Net loss (earnings) attributable to noncontrolling interests | |
| 141 | |
| (65) |
Net earnings attributable to Caleres, Inc. | |
| 30,939 | |
| 34,727 |
Net earnings allocated to participating securities | |
| (1,208) | |
| (1,478) |
Net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities | | $ | 29,731 | | $ | 33,249 |
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Basic and diluted common shares attributable to Caleres, Inc.: | |
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Basic common shares | |
| 33,793 | |
| 34,407 |
Dilutive effect of share-based awards | |
| 106 | |
| — |
Diluted common shares attributable to Caleres, Inc. | |
| 33,899 | |
| 34,407 |
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Basic earnings per common share attributable to Caleres, Inc. shareholders | | $ | 0.88 | | $ | 0.97 |
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Diluted earnings per common share attributable to Caleres, Inc. shareholders | | $ | 0.88 | | $ | 0.97 |
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SCHEDULE 6 |
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CALERES, INC. |
CALCULATION OF EBITDA AND DEBT/EBITDA LEVERAGE RATIO (NON-GAAP METRICS) |
| | (Unaudited) | ||||||
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| Thirteen Weeks Ended | ||||||
($ thousands) | | May 4, 2024 | | April 29, 2023 | ||||
EBITDA: | | | | | | | | |
Net earnings attributable to Caleres, Inc. | | $ | 30,939 | | | $ | 34,727 | |
Income tax provision | |
| 9,174 | | |
| 10,664 | |
Interest expense, net | |
| 3,778 | | |
| 5,623 | |
Depreciation and amortization (1) | |
| 13,490 | | |
| 12,714 | |
EBITDA | | $ | 57,381 | | | $ | 63,728 | |
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EBITDA margin | |
| 8.7 | % | |
| 9.6 | % |
| | (Unaudited) | ||||||
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| Trailing Twelve Months Ended | ||||||
($ thousands) | | May 4, 2024 | | April 29, 2023 | ||||
EBITDA: | | | | | | | | |
Net earnings attributable to Caleres, Inc. | | $ | 167,603 | | | $ | 165,960 | |
Income tax provision | |
| 8,000 | | |
| 26,670 | |
Interest expense, net | |
| 17,498 | | |
| 17,588 | |
Depreciation and amortization (1) | |
| 54,056 | | |
| 49,368 | |
EBITDA | | $ | 247,157 | | | $ | 259,586 | |
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EBITDA margin | |
| 8.8 | % | |
| 9.0 | % |
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| | (Unaudited) | ||||||
($ thousands) | | May 4, 2024 | | April 29, 2023 | ||||
Debt/EBITDA leverage ratio: | | | | | | | | |
Borrowings under revolving credit agreement (2) | | $ | 191,000 | | | $ | 291,500 | |
EBITDA (trailing twelve months) | | | 247,157 | | | | 259,586 | |
Debt/EBITDA | | | 0.8 | | | | 1.1 | |
| (1) | Includes depreciation and amortization of capitalized software and intangible assets. |
| (2) | Total availability under the revolving credit agreement was $299.6 million and $197.9 million as of May 4, 2024 and April 29, 2023, respectively. Total liquidity, which includes cash and cash equivalents and availability under the revolving credit agreement, was $330.3 million and $234.0 million for the respective periods. |
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