“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 (…). 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 our expectations”, commented Jay Schmidt, President and Chief Executive Officer at Caleres.

Second Quarter Results

Caleres’ net sales in the second quarter of fiscal 2024, which ended on the 3^rd of August, were 683.3 million US dollars, a decrease of 1.8% compared to the same period of fiscal 2023. 

While the Famous Footwear segment saw a 1.5% increase in net sales, its comparable sales fell by 2.9% year-over-year. The Brand Portfolio segment experienced a 5.1% decline in net sales due to operational reporting challenges in connection with its SAP ERP implementation, and pockets of weak seasonal demand. Direct-to-consumer sales played a significant role in the second quarter, accounting for approximately 75% of total net sales.

The company delivered a gross profit of 310.9 million US dollars, with a gross margin of 45.5%, an increase of 30 basis points compared to the previous year. President and Chief Executive Officer Jay Schmidt noted that despite the sales miss, the company's gross margin remained strong, primarily driven by the Brand Portfolio segment. Indeed, the Brand Portfolio achieved a gross margin of 42.7%, up by 140 basis points year-over-year. In contrast, the Famous Footwear division posted a gross margin of 45%, down by 120 basis points from last year.

Overall, Caleres reported net earnings of 30 million US dollars, or 0.85 US dollars per diluted share, reflecting a decrease from the previous year’s net earnings of 33.9 million US dollars, or 0.95 US dollars per diluted share. On an adjusted basis, net earnings in the second quarter of 2023 were 35.2 million US dollars, with adjusted earnings per diluted share of 0.98 US dollars.

Fiscal 2024 Outlook

Caleres is adjusting its fiscal 2024 financial outlook, considering that fiscal 2024 is a 52-week year, compared to the 53-week year in fiscal 2023. The company has updated several of its financial assumptions while maintaining its tax rate expectation at 24%, unchanged from prior guidance. The revised guidance includes lower sales expectations and a weaker operating margin for fiscal 2024.