Caleres, the American group that owns the Famous Footwear retail chain and brands such as Naturalizer, Sam Edelman and Franco Sarto, had a mixed start to its financial year. Although revenues remained stable and earnings improved, they both missed analysts' expectations. Consolidated sales were practically stable at $632.1 million for the quarter ended May 5, representing a slight increase of 0.1 percent from the year-ago period.
Across the group, the gross margin gained 0.6 percentage points to 43.5 percent. Net income jumped by 15.5 percent to $17.2 million.
Caleres said that the late start to the spring season delayed sales. However, it highlighted recent e-commerce initiatives, arguing that its “shift to digital” is driving demand across the company's brand portfolio and Famous Footwear. Internet-related sales represented 10 percent of the shoe retail chain's total turnover, and they increased by 12 percent in the brand portfolio division.
The management boasted about its new content management system, which it said provides flexibility and has empowered the team to create more digital experiences. Other digital initiatives include adding more content and landing pages for some of Caleres' mid-sized brands, which has resulted in a conversion rate that was 36 percent higher than the previous year. Improved connectivity with consumers is also the goal of Famous Footwear's “buy online and pick-up in store” program that was launched last June.
Famous Footwear's total sales were down by 0.8 percent to $363.4 million, which the company blamed on the unseasonably cold weather in March and April. On a same-store basis, the retail chain's sales also decreased by 0.8 percent. The division's gross margin declined by 0.3 percentage points to 45.5 percent. Operating income improved by 7.8 percent to $21.9 million. The chain ended the quarter with 1,013 stores, 39 fewer than at the end of the year-ago quarter.
In the Brand Portfolio segment, which covers the group's wholesale business and 235 stores operated by some of its brands, sales of $268.7 million were up by 1.4 percent, driven by e-commerce. The gross margin rose by 1.9 percentage points to 40.8 percent. The segment's operating profits declined by 6.2 percent to $12.5 million. The division counts two more stores than at the same period in 2017.
For the current financial year, consolidated sales are expected to reach a level of about $2.8 billion, with a low single-digit increase at Famous Footwear as well as in the group's Brand Portfolio.