Caleres posted lower sales and a net loss in the fourth quarter, but thanks to strong cash generation it continued to significantly deleverage its balance sheet, pushing debt below pre-pandemic levels. In the fourth quarter alone, it reduced credit facility borrowings by $50 million to $250 million, or $25 million below last year’s levels.
In the three months ended on Jan. 30, revenues were $571.0 million, down by 18.3 percent from the year-ago period. Sales in the Brand Portfolio segment fell by more than 30 percent, while Famous Footwear recorded a small decline. E-commerce was a bright spot, jumping by around 25 percent across websites, and representing 30 percent of total sales.
The gross margin inched down by 0.4 percentage points to 39.5 percent. The company posted a net loss of $77.0 million, compared with earnings of $0.4 million for the year-ago quarter. Adjusted to exclude impairment charges, costs related to the Naturalizer brand retail exits, the mandatory purchase obligation for Blowfish Malibu and Vionic integration-related costs, adjusted net income reached $1.3 million, down from $13.9 million last year.
The management said that over the past months, it intensified its focus on driving down costs, streamlining the organization and rightsizing its expense base. Through these efforts, it expects to achieve $100 million in ongoing annual expense and capital savings beginning in 2021.
Famous Footwear’s sales were $346.7 million, down by 6.2 percent from the fourth quarter of fiscal 2019. There were strong athletic sales, with ongoing strength in e-commerce. Comparable store sales were down by 1.8 percent, with online sales up by around 51 percent. The brand’s gross margin contracted by 1.7 percentage points to 41 percent. For the full year, Famous Footwear sales dropped by 20.4 percent to $1.3 billion, weighed down by store closures.
In the Brand Portfolio, which includes Vionic, Sam Edelman, Allen Edmonds, Ryka, Blowfish and Vince, sales fell by 32.4 percent to $234 million in the quarter, and by 35.8 percent for the full year, reflecting steep declines in women’s fashion footwear, temporary closure of retail and wholesale partner stores and weak consumer demand for certain footwear categories, as more consumers became accustomed to a work-from-home lifestyle. The gross margin in the fourth quarter dipped by 0.2 percentage points to 39.9 percent.
Meanwhile, the group made the decision to wind down most of its Naturalizer retail brand stores in the U.S. and Canada to focus on growing the brand’s e-commerce through naturalizer.com and through retail partner sites. During 2020, it has closed 60 Naturalizer stores with 73 more stores slated to close by the end of the first quarter, leaving seven flagship locations in the U.S. and Asia and approximately 150 partner stores around the world.
Overall, for the full year, Caleres’ sales dropped by 27.5 percent to $2,117.1 million, with direct-to-consumer sales representing 73 percent of total turnover. The gross margin declined by 3.3 percentage points to 37.2 percent. Net loss for the year was $439.1 million, compared with earnings of $62.8 million last year. Cash generation from operations totaled $126.4 million in the full year, of which $24.6 million in the final quarter.
Given the ongoing disruption related to the Covid-19 virus, Caleres declined to provide guidance for its fiscal year 2021.