Caleres' sales for the fourth quarter ended on Feb. 2 were boosted by its two newest acquisitions, Vionic and Blowfish. The U.S. group's consolidated sales for the quarter increased by 2.5 percent to $720.3 million, with a decline at its Famous Footwear retail chain offset by higher revenues from its growing portfolio of wholly-owned footwear brands including Allen Edmonds, Blowfish Malibu, Dr. Scholl, Franco Sarto, Naturalizer, Rykä and Via Spiga, among others.
In the Brand Portfolio segment, the group reported strong organic growth, aside from the contribution of Vionic and Blowfish. The segment's revenues jumped by 14.8 percent to $355.1 million including Vionic, the U.S.-based producer of supportive and orthopedic footwear and orthotics that Caleres agreed to take over for $360 million in October.
Regarding Allen Edmonds, the management said it decided to reduce the level of promotional activity in 2019, as proactive branding and direct response TV efforts launched in the third quarter didn't yield the expected results. It also lowered its 2019 sales expectations. Consequently, it was required to report a non-cash accounting impairment for the American men's footwear brand in the fourth quarter. The management said this does not reflect the change in its assessment of Allen Edmonds, its brand equity or consumer appeal. It added that it has already taken action around the cost structure and matched production capacity to new business expectations.
The wholesale segment's adjusted gross margin contracted by 1.1 percentage points to 37.1 percent for the quarter, reflecting increased levels of promotion at Allen Edmonds, and its operating income declined by 28.7 percent to $19.1 million.
Meanwhile, Famous Footwear saw same-store sales rise by 1.1 percent from the corresponding quarter of 2017. However, the chain's total sales of $365.2 million were down by 7.1 percent, as last year's quarter included an extra week and the total number of stores declined by 34 units so far this year, down to a total of 1,008 doors.
Famous Footwear's quarterly gross margin fell by 1.9 percentage points to 42.7 percent, as growth in e-commerce sales was compounded by a widening promotional environment across the footwear space. The segment's operating profit ended up 56 percent lower at $5.7 million.
Across the group, excluding acquisition-related inventories, amortization and brand exits, the adjusted gross margin of 39.9 percent was down by 1.8 percentage points. Caleres suffered a net loss of $75.4 million for the period, compared with a net income of $20.3 million for the year-ago quarter. They were weighed down by extraordinary charges related to the acquisition of Blowfish Malibu and Vionic and a non-cash impairment charge related to Allen Edmonds. On an adjusted basis, however, net income reached $16 million.
For the full year, consolidated sales gained 1.8 percent from the previous year to $2,834.8 million. Brand portfolio sales of $1,228.0 million were up by 7.0 percent, including Vionic and Blowfish. Famous Footwear's same-store sales were up by 1.5 percent, while total sales inched down by around 1.9 percent to $1,606.8 million. The adjusted gross margin declined by 0.9 percentage points to 41.2 percent. Adjusted net income increased by 2.1 percent to $95.1 million.
Caleres expects to report consolidated net sales for the new financial year of between $3.0 and $3.05 billion.