Caleres Inc 10-Q for FY2023 Q2

Caleres Inc (CAL)

10-Q 2022-09-06 For: 2022-07-30

Added on April 09, 2026

About this 10-Q

Caleres Inc filed this 10-Q on September 6, 2022, covering the quarter ended July 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended July 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $738.33M; up 9.3% from $675.53M a year earlier
Net income: $51.18M; up 36.9% from net income of $37.4M a year earlier
Diluted EPS: $1.38; up 42.3% from $0.97 a year earlier

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☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 30, 2022

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to _____________


CALERES, INC.
(Exact name of registrant as specified in its charter)

New York	43-0197190
(State or other jurisdiction	(IRS Employer Identification Number)
of incorporation or organization)

8300 Maryland Avenue	63105
St. Louis, Missouri	(Zip Code)
(Address of principal executive offices)

(314) 854-4000
(Registrant’s telephone number, including area code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - par value of $0.01 per share	CAL	New York Stock Exchange


Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

INDEX

PART I		Page
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4	Controls and Procedures	37

PART II		38
Item 1	Legal Proceedings	38
Item 1A	Risk Factors	38
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3	Defaults Upon Senior Securities	38
Item 4	Mine Safety Disclosures	38
Item 5	Other Information	39
Item 6	Exhibits	40
	Signature	41



	(Unaudited)
($ thousands)	July 30, 2022		July 31, 2021		January 29, 2022
Assets
Current assets:
Cash and cash equivalents	$	45,955	$	54,684	$	30,115
Receivables, net		127,580		110,522		122,236
Inventories, net		770,652		565,512		596,807
Income taxes		12,129		35,026		33,073
Property and equipment, held for sale		16,777		—		5,455
Prepaid expenses and other current assets		45,698		41,619		48,790
Total current assets		1,018,791		807,363		836,476

Prepaid pension costs		104,214		94,083		99,139
Lease right-of-use assets		516,486		508,597		503,430
Property and equipment, net		137,007		161,066		150,238
Goodwill and intangible assets, net		221,447		233,777		227,503
Other assets		27,263		28,012		27,140
Total assets	$	2,025,208	$	1,832,898	$	1,843,926

Liabilities and Equity
Current liabilities:
Borrowings under revolving credit agreement	$	348,500	$	100,000	$	290,000
Current portion of long-term debt		—		99,540		—
Mandatory purchase obligation - Blowfish Malibu		—		52,639		—
Trade accounts payable		399,265		348,795		331,470
Income taxes		20,139		17,311		22,622
Lease obligations		131,601		126,820		128,495
Other accrued expenses		240,295		233,564		253,026
Total current liabilities		1,139,800		978,669		1,025,613

Other liabilities:
Noncurrent lease obligations		451,657		463,746		452,909
Long-term debt		—		99,540		—
Income taxes		7,786		2,464		2,464
Deferred income taxes		14,939		13,574		14,731
Other liabilities		26,149		29,614		24,822
Total other liabilities		500,531		608,938		494,926

Equity:
Common stock		364		383		376
Additional paid-in capital		173,246		162,122		168,830
Accumulated other comprehensive loss		(7,280)		(8,572)		(8,606)
Retained earnings		212,803		86,764		157,970
Total Caleres, Inc. shareholders’ equity		379,133		240,697		318,570
Noncontrolling interests		5,744		4,594		4,817
Total equity		384,877		245,291		323,387
Total liabilities and equity	$	2,025,208	$	1,832,898	$	1,843,926


	(Unaudited)
	Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands, except per share amounts)	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net sales	$	738,330	$	675,531	$	1,473,445	$	1,314,167
Cost of goods sold		401,515		353,238		809,636		716,987
Gross profit		336,815		322,293		663,809		597,180
Selling and administrative expenses		268,395		259,501		529,194		503,036
Restructuring and other special charges, net		—		—		—		13,482
Operating earnings		68,420		62,792		134,615		80,662
Interest expense, net		(2,584)		(11,941)		(4,883)		(23,734)
Other income, net		3,217		3,860		6,639		7,688
Earnings before income taxes		69,053		54,711		136,371		64,616
Income tax provision		(17,500)		(16,559)		(34,833)		(20,080)
Net earnings		51,553		38,152		101,538		44,536
Net earnings (loss) attributable to noncontrolling interests		375		756		(149)		993
Net earnings attributable to Caleres, Inc.	$	51,178	$	37,396	$	101,687	$	43,543

Basic earnings per common share attributable to Caleres, Inc. shareholders	$	1.40	$	0.98	$	2.74	$	1.14

Diluted earnings per common share attributable to Caleres, Inc. shareholders	$	1.38	$	0.97	$	2.70	$	1.13


						Accumulated				Total
						Other				Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		Loss		Earnings		Equity		Interests		Total Equity
BALANCE APRIL 30, 2022	37,446,329	$	374	$	169,025	$	(8,328)	$	191,165	$	352,236	$	5,792	$	358,028
Net earnings									51,178		51,178		375		51,553
Foreign currency translation adjustment							465				465		(423)		42
Pension and other postretirement benefits adjustments, net of tax of $190							583				583				583
Comprehensive income (loss)							1,048		51,178		52,226		(48)		52,178
Dividends ($0.07 per share)									(2,552)		(2,552)				(2,552)
Acquisition of treasury stock	(1,083,496)		(11)						(26,988)		(26,999)				(26,999)
Issuance of common stock under share-based plans, net	87,947		1		(216)						(215)				(215)
Share-based compensation expense					4,437						4,437				4,437
BALANCE JULY 30, 2022	36,450,780	$	364	$	173,246	$	(7,280)	$	212,803	$	379,133	$	5,744	$	384,877

BALANCE MAY 1, 2021	38,293,472	$	383	$	159,381	$	(8,936)	$	52,041	$	202,869	$	3,787	$	206,656
Net earnings									37,396		37,396		756		38,152
Foreign currency translation adjustment							17				17		51		68
Pension and other postretirement benefits adjustments, net of tax of $85							347				347				347
Comprehensive income							364		37,396		37,760		807		38,567
Dividends ($0.07 per share)									(2,673)		(2,673)				(2,673)
Issuance of common stock under share-based plans, net	(25,408)		(0)		(251)						(251)				(251)
Share-based compensation expense					2,992						2,992				2,992
BALANCE JULY 31, 2021	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291


						Accumulated
						Other				Total Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		Loss		Earnings		Equity		Interests		Total Equity
BALANCE JANUARY 29, 2022	37,635,145	$	376	$	168,830	$	(8,606)	$	157,970	$	318,570	$	4,817	$	323,387
Net earnings (loss)									101,687		101,687		(149)		101,538
Foreign currency translation adjustment							303				303		(424)		(121)
Pension and other postretirement benefits adjustments, net of tax of $331							1,023				1,023		—		1,023
Comprehensive income (loss)							1,326		101,687		103,013		(573)		102,440
Contributions by noncontrolling interests											—		1,500		1,500
Dividends ($0.14 per share)									(5,200)		(5,200)				(5,200)
Acquisition of treasury stock	(1,784,820)		(18)						(41,654)		(41,672)				(41,672)
Issuance of common stock under share-based plans, net	600,455		6		(3,820)						(3,814)				(3,814)
Share-based compensation expense					8,236						8,236				8,236
BALANCE JULY 30, 2022	36,450,780	$	364	$	173,246	$	(7,280)	$	212,803	$	379,133	$	5,744	$	384,877

BALANCE JANUARY 30, 2021	37,966,204	$	380	$	160,446	$	(9,136)	$	48,557	$	200,247	$	3,607	$	203,854
Net earnings									43,543		43,543		993		44,536
Foreign currency translation adjustment							(149)				(149)		(6)		(155)
Pension and other postretirement benefits adjustments, net of tax of $182							713				713				713
Comprehensive income							564		43,543		44,107		987		45,094
Dividends ($0.14 per share)									(5,336)		(5,336)				(5,336)
Issuance of common stock under share-based plans, net	301,860		3		(3,755)						(3,752)				(3,752)
Share-based compensation expense					5,431						5,431				5,431
BALANCE JULY 31, 2021	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291


	Thirteen Weeks Ended July 31, 2021
					Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total

Retail stores	$	402,178	$	12,003	$	—	$	414,181
E-commerce - Company websites ⁽¹⁾		51,281		49,619		—		100,900
E-commerce - wholesale drop ship ⁽¹⁾		—		19,661		(439)		19,222
Total direct-to-consumer sales		453,459		81,283		(439)		534,303
Wholesale - e-commerce ⁽¹⁾		—		32,059		—		32,059
Wholesale - landed		—		99,437		(16,692)		82,745
Wholesale - first cost		—		23,618		—		23,618
Licensing and royalty		—		2,602		—		2,602
Other ⁽²⁾		190		14		—		204
Net sales	$	453,649	$	239,013	$	(17,131)	$	675,531


	Twenty-Six Weeks Ended July 31, 2021
					Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total

Retail stores	$	736,923	$	27,011	$	—	$	763,934
E-commerce - Company websites ⁽¹⁾		114,403		92,357		—		206,760
E-commerce - wholesale drop ship ⁽¹⁾		—		40,475		(833)		39,642
Total direct-to-consumer sales	$	851,326	$	159,843	$	(833)	$	1,010,336
Wholesale - e-commerce ⁽¹⁾		—		69,539		—		69,539
Wholesale - landed		—		214,784		(26,072)		188,712
Wholesale - first cost		—		40,336		—		40,336
Licensing and royalty		—		4,766		—		4,766
Other ⁽²⁾		428		50		—		478
Net sales	$	851,754	$	489,318	$	(26,905)	$	1,314,167


	Famous		Brand		Eliminations
($ thousands)	Footwear		Portfolio		and Other		Total
Thirteen Weeks Ended July 30, 2022
Net sales	$	436,375	$	324,060	$	(22,105)	$	738,330
Intersegment sales ⁽¹⁾		—		22,105		—		22,105
Operating earnings (loss)		62,496		29,410		(23,486)		68,420
Segment assets		882,303		992,238		150,667		2,025,208

Thirteen Weeks Ended July 31, 2021
Net sales	$	453,649	$	239,013	$	(17,131)	$	675,531
Intersegment sales⁽¹⁾		—		17,131		—		17,131
Operating earnings (loss)		85,498		16,554		(39,260)		62,792
Segment assets		799,324		838,236		195,338		1,832,898

Twenty-Six Weeks Ended July 30, 2022
Net sales	$	820,877	$	689,800	$	(37,232)	$	1,473,445
Intersegment sales ⁽¹⁾		—		37,232		—		37,232
Operating earnings (loss)		112,184		70,760		(48,329)		134,615

Twenty-Six Weeks Ended July 31, 2021
Net sales	$	851,754	$	489,318	$	(26,905)	$	1,314,167
Intersegment sales ⁽¹⁾		—		26,905		—		26,905
Operating earnings (loss)		133,371		13,733		(66,442)		80,662


($ thousands)	July 30, 2022
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	116,995	$	10,200	$	172,293
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		11,397		4,005		28,798
		$	451,088	$	128,392	$	106,205	$	216,491


	July 31, 2021
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	107,000	$	10,200	$	182,288
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		9,062		4,005		31,133
		$	451,088	$	116,062	$	106,205	$	228,821

	January 29, 2022
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	112,061	$	10,200	$	177,227
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		10,275		4,005		29,920
		$	451,088	$	122,336	$	106,205	$	222,547



			Pension and		Accumulated
	Foreign		Other		Other
	Currency		Postretirement		Comprehensive
($ thousands)	Translation		Transactions ⁽¹⁾		(Loss) Income
Balance at April 30, 2022	$	(950)	$	(7,378)	$	(8,328)
Other comprehensive income before reclassifications		465		—		465
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		773		773
Tax benefit		—		(190)		(190)
Net reclassifications		—		583		583
Other comprehensive income		465		583		1,048
Balance at July 30, 2022	$	(485)	$	(6,795)	$	(7,280)

Balance at May 1, 2021	$	(277)	$	(8,659)	$	(8,936)
Other comprehensive income before reclassifications		17		—		17
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		432		432
Tax benefit		—		(85)		(85)
Net reclassifications		—		347		347
Other comprehensive income		17		347		364
Balance at July 31, 2021	$	(260)	$	(8,312)	$	(8,572)

Balance at January 29, 2022	$	(788)	$	(7,818)	$	(8,606)
Other comprehensive income before reclassifications		303		—		303
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		1,354		1,354
Tax benefit		—		(331)		(331)
Net reclassifications		—		1,023		1,023
Other comprehensive income		303		1,023		1,326
Balance at July 30, 2022	$	(485)	$	(6,795)	$	(7,280)

Balance at January 30, 2021	$	(111)	$	(9,025)	$	(9,136)
Other comprehensive loss before reclassifications		(149)		—		(149)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		895		895
Tax benefit		—		(182)		(182)
Net reclassifications		—		713		713
Other comprehensive (loss) income		(149)		713		564
Balance at July 31, 2021	$	(260)	$	(8,312)	$	(8,572)


	Pension Benefits				Other Postretirement Benefits
	Thirteen Weeks Ended				Thirteen Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Service cost	$	1,810	$	1,801	$	—	$	—
Interest cost		3,026		2,806		8		10
Expected return on assets		(7,024)		(7,108)		—		—
Amortization of:
Actuarial loss (gain)		883		592		(27)		(28)
Prior service income		(83)		(132)		—		—
Total net periodic benefit income	$	(1,388)	$	(2,041)	$	(19)	$	(18)


($ thousands)	July 30, 2022		July 31, 2021		January 29, 2022
Customer allowances and discounts	$	19,357	$	15,867	$	20,328
Loyalty programs liability		17,492		17,782		18,814
Returns reserve		13,172		11,858		12,468
Gift card liability		5,987		5,372		6,804


	Twenty-Six Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021
Balance, beginning of period	$	9,601	$	14,928
Adjustment to expected credit losses		(1,004)		(2,543)
Uncollectible accounts written off, net of recoveries		(209)		(2,500)
Balance, end of period	$	8,388	$	9,885


	Fair Value Measurements
($ thousands)	Total		Level 1		Level 2		Level 3
Asset (Liability)
July 30, 2022:
Non-qualified deferred compensation plan assets	$	7,793	$	7,793	$	—	$	—
Non-qualified deferred compensation plan liabilities		(7,793)		(7,793)		—		—
Deferred compensation plan liabilities for non-employee directors		(1,756)		(1,756)		—		—
Restricted stock units for non-employee directors		(1,991)		(1,991)		—		—
July 31, 2021:
Cash equivalents – money market funds	$	4,000	$	4,000	$	—	$	—
Non-qualified deferred compensation plan assets		8,361		8,361		—		—
Non-qualified deferred compensation plan liabilities		(8,361)		(8,361)		—		—
Deferred compensation plan liabilities for non-employee directors		(1,991)		(1,991)		—		—
Restricted stock units for non-employee directors		(2,735)		(2,735)		—		—
Mandatory purchase obligation - Blowfish Malibu		(52,639)		—		—		(52,639)
January 29, 2022:
Non-qualified deferred compensation plan assets		7,463		7,463		—		—
Non-qualified deferred compensation plan liabilities		(7,463)		(7,463)		—		—
Deferred compensation plan liabilities for non-employee directors		(1,770)		(1,770)		—		—
Restricted stock units for non-employee directors		(2,568)		(2,568)		—		—


($ millions)	July 30, 2022		July 31, 2021		⁽¹⁾	January 29, 2022
Borrowings under revolving credit agreement	$	348.5	$	100.0		$	290.0
Current portion of long-term debt		—		99.5			—
Long-term debt		—		99.5			—
Total debt	$	348.5	$	299.0		$	290.0


				Total Number	Maximum Number
				Purchased as Part	of Shares that May
	Total Number of			of Publicly	Yet be Purchased
	Shares	Average Price Paid		Announced	Under the
Fiscal Period	Purchased⁽¹⁾		per Share ⁽¹⁾	Program ⁽²⁾	Program ⁽²⁾
May 1, 2022 - May 28, 2022	800,008	$	23.75	800,008	7,488,892

May 29, 2022 - July 2, 2022	291,003		28.22	283,488	7,205,404

July 3, 2022 - July 30, 2022	—		—	—	7,205,404

Total	1,091,011	$	24.94	1,083,496	7,205,404


Exhibit No.
3.1		Restated Certificate of Incorporation of Caleres, Inc. (the “Company”) incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed May 29, 2020.
3.2		Bylaws of the Company as amended through May 26, 2022, incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed May 27, 2022.
10.1		Caleres, Inc. Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit A to the Company’s Proxy Statement filed on April 14, 2022.
10.4a*		Form of Performance Award Agreement under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.4a the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
10.4b*		Form of Restricted Stock Award Agreement under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.4b the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
10.5a*		Form of Non-Employee Director Restricted Stock Unit Agreement between the Company and its Non-Employee Directors under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.5a the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
10.5b*		Form of Non-Employee Director Restricted Stock Award Agreement between the Company and its Non-Employee Directors under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.5b the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
31.1	†	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	†	iXBRL Instance Document
101.SCH	†	iXBRL Taxonomy Extension Schema Document
101.CAL	†	iXBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	†	iXBRL Taxonomy Extension Label Linkbase Document
101.PRE	†	iXBRL Taxonomy Presentation Linkbase Document
101.DEF	†	iXBRL Taxonomy Definition Linkbase Document
104	†	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.

		CALERES, INC.

Date: September 6, 2022		/s/ Kenneth H. Hannah
		Kenneth H. Hannah Senior Vice President and Chief Financial Officer on behalf of the Registrant and as the Principal Financial Officer