Caleres is lowering its yearly guidance following a reported sales below its expectations in the second quarter.
According to the St. Louis-based footwear company, net sales in the second quarter of 2024 were $683.3 million, down 1.8 percent from $695.5 million in the second quarter of 2023. Net earnings in the period were 30.0 million, or earnings per diluted share of 85 cents, compared to net earnings of $33.9 million, or earnings per diluted share of 95 cents in the same time last year.
By business segment, Caleres reported that net sales at Famous Footwear increased 1.5 percent in Q2, with comparable sales down 2.9 percent. The company’s brand portfolio segment saw net sales decline 5.1 percent in the quarter.
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These results missed the company’s Q2 guidance, which were expected to see net sales to be up 3 percent to 4 percent with earnings per diluted share in Q2 expected to be between $1.20 to $1.25.
The miss led to the company’s stock dipping nearly 19 percent in pre-market trading on Thursday.
Jay Schmidt, president and chief executive officer of Caleres, said in a statement on Thursday that both of the company’s business segments “fell short” of their potential in the period.
“Our systems implementation led to lack of visibility that prevented us from delivering our expected results,” Schmidt said. “We also experienced weak seasonal demand and back-to-school business came later than expected.”
But despite the sales miss, the CEO added that the company’s gross margin remained strong in Q2, driven by the brand portfolio. At the same time, Famous Footwear gained market share in the strategically important kids’ category. Furthermore, back-to-school sales surged in August bringing the season in total in-line with expectations, he noted.
“We are confident in our ability to get back on track and have addressed the issues from the ERP implementation that temporarily impacted visibility,” Schmidt added. “We are also accelerating certain restructuring actions to improve the efficiency and effectiveness of our teams.”
The company noted in its earnings release that these restructuring actions will result in $7.5 million in annualized SG&A savings and $2 million in SG&A savings in fiscal 2024. No specifics of the restructure were stated in the release.
Following these results, Caleres is lowering its guidance for the fiscal year 2024. The company now expects net sales for the year to be down low-single-digits percent versus previous guidance of flat to up 2 percent.
Caleres is also lowering its fiscal 2024 outlook for earnings per diluted share in the range of $3.94 to $4.09 versus prior guidance of $4.30 to $4.60 and provides guidance for adjusted earnings per diluted share of $4.00 to $4.15, which excludes $3 million in restructuring costs expected to occur in the third quarter.
“Looking ahead, we are confident in our ability to deliver earnings per share in line with our revised guidance,” said Schmidt. “Longer-term, we believe we are exceptionally well positioned to execute our strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders.”
