On September 12, 2024, Caleres Inc (CAL, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. Caleres Inc, a leading footwear retailer in the United States, operates through two main segments: Famous Footwear and Brand Portfolio. The Famous Footwear segment includes retail stores and online platforms, while the Brand Portfolio segment encompasses wholesale operations and company-owned stores.
Performance Overview
Caleres Inc reported second-quarter results that fell short of expectations. The company cited system implementation issues and weak seasonal demand as primary factors for the underperformance. Despite these challenges, the company maintained strong gross margins, particularly in the Brand Portfolio segment, and saw a surge in back-to-school sales in August.
Financial Achievements and Challenges
Caleres Inc's net sales for the quarter were $683.3 million, down from $695.5 million in the same period last year. The company reported net earnings of $30.3 million, or $0.85 per diluted share, compared to $34.4 million, or $0.95 per diluted share, in the previous year. The gross profit margin remained robust at $310.9 million, driven by the Brand Portfolio segment.
“Caleres reported second quarter results that were below expectations. While our brands and products continue to resonate with consumers and we remain confident in our long-term vision, our second quarter results in both segments fell short of our potential. Our systems implementation led to lack of visibility that prevented us from delivering our expected results. We also experienced weak seasonal demand and back-to-school business came later than expected,” said Jay Schmidt, president and chief executive officer.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $683.3 million | $695.5 million |
| Gross Profit | $310.9 million | $314.2 million |
| Net Earnings | $30.3 million | $34.4 million |
| Diluted EPS | $0.85 | $0.95 |
Balance Sheet and Cash Flow
As of August 3, 2024, Caleres Inc reported total assets of $2.02 billion, up from $1.90 billion in the previous year. The company's cash and cash equivalents stood at $51.8 million, while total liabilities were $1.41 billion. The company also highlighted its focus on reducing debt, with borrowings under its revolving credit agreement decreasing to $146.5 million from $244.0 million last year.
Revised Fiscal 2024 Outlook
Caleres Inc has revised its fiscal 2024 guidance, now expecting GAAP EPS to range between $3.94 and $4.09, down from the previous estimate of $4.30 to $4.60. Adjusted EPS is projected to be between $4.00 and $4.15, excluding restructuring costs. The company also lowered its capital expenditure forecast to $50-$55 million from the prior range of $60-$70 million.
Analysis and Conclusion
Caleres Inc's second-quarter performance underscores the challenges faced by the company, including system implementation issues and weak seasonal demand. However, the company's strong gross margins and market share gains in the Kids category provide a silver lining. The revised fiscal 2024 guidance reflects a cautious outlook, but the company's strategic initiatives and focus on debt reduction could position it well for future growth.
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Explore the complete 8-K earnings release (here) from Caleres Inc for further details.
