Caleres' revenues for its first quarter ended April 29, 2017 grew by 8.0 percent to $631.5 million, partly due to the acquisition last December of Allen Edmonds, which contributed $42.5 million to total sales. However, the parent company of Famous Footwear and various footwear brands, previously called Brown Shoe Co., saw earnings slide by 16.3 percent from the year-ago quarter to $14.9 million, weighed down by costs related to the $255 million purchase of the American men's shoe brand.
Looking back at the latest quarter, the company said it managed to respond to changing consumer shopping behaviors, and took proactive steps to continue the diversification of its portfolio through the acquisition of Allen Edmonds, which allowed it to rapidly increase its exposure in men's footwear.
As with many other footwear retailers, February was a poor selling month for the group's Famous Footwear retail chain due to a delay in tax refunds. However, the company's management said it saw an improvement as the quarter progressed, with a better conversion rate seen across both the brick-and-mortar and online retail channels. Lifestyle athletic trends remained strong, while sandals had “a tough quarter,” the management said, but Famous Footwear was able to reduce inventories in the category while delivering improved gross margin.
Famous Footwear, which accounted for 58.0 percent of Caleres' sales during the period, saw revenues inch up by 0.5 percent, but the chain's same-store sales dipped by 0.6 percent. Famous.com's sales increased by 25.7 percent, building up to 5.7 percent of the banner's turnover. The gross margin was down by 0.5 percentage points to 45.8 percent, primarily reflecting increased shipping expenses related to continued sales growth at famous.com. Diane Sullivan, the group's chief executive, said Famous Footwear had several initiatives in place to help reduce shipping costs, including continued refinement of its in-store fulfillment sourcing logistics and the launch of buy online and pick-up in-store.
In the Brand Portfolio segment - which comprises the group's wholesale business - sales jumped by 20.4 percent, lifted by the contribution from Allen Edmonds. Organic growth was limited to 1.1 percent. E-commerce sales for the Brand Portfolio segment jumped by 56.3 percent and represented 25.8 percent of sales. Top performing brands included Sam Edelman, Vince, LifeStride and Rykä, with the company highlighting the strong performances of sport inspired categories. The gross margin rose by 3.0 percentage points to 38.9 percent.
Excluding amortization related to the Allen Edmonds acquisition, the adjusted gross margin went up by one percentage point to 43.4 percent, but the operating margin was down by 0.8 percentage points to 4.1 percent.
Caleres maintained its full-year guidance, projecting sales in the $2,700 million to $2,800 million range. It also anticipates that the gross margin will go up by between 0.45 and 0.55 percentage points. The company remains cautious, with Sullivan warning that Famous Footwear will continue to see pressure on earnings throughout the first half, due to the expansion of its distribution center and increased rental costs. Famous expects to close a total of 70 doors this year, with the majority of them due to be shut down after the back-to-school selling season.