Despite a difficult retail environment slowed by unseasonably warm temperatures, Caleres pulled off a small increase in profits for third quarter 2015. Third quarter 2015 net earnings were $34 million, or $0.78 per diluted share, compared to third quarter 2014 net earnings of $33.1 million, or $0.75 per diluted share.
The company reported net sales of $728.6 million versus third quarter 2014 net sales of $729.3 million.
“With solid inventory planning and careful expense management, we delivered good performance in the third quarter, despite a challenging retail environment,” said Diane Sullivan, CEO, president and chairman of Caleres in a release.
Famous Footwear’s Q3 sales increase 4.8% to $456.2 million, excluding Shoes.com, which was sold in December 2014. For the quarter, same-store-sales were up 4.4%, with strong performance in athletic product, continued solid improvement in e-commerce sales, and good growth in women’s footwear. During the quarter, 13 new stores were opened and 13 stores were closed.
“Famous Footwear delivered same-store-sales growth of 4.4%, capping another successful back-to-school season, as athletic footwear continued to resonate with consumers.”
Unseasonably warm weather in the third quarter, which led to slower tall-shaft boot sales, drove Caleres’ brand portfolio sales down 2.8% to $272.5 million. The company’s Contemporary Fashion sales were down 2.5%, while Healthy Living sales declined 2.8%.
To compare, Caleres’ Brand Portfolio sales were up 2.7% for the first nine months of 2015. Contemporary Fashion sales were up 4.5%, with good growth from Sam Edelman and Vince. Healthy Living sales were up 1.4%, year-to-date, with contribution from Naturalizer wholesale, Dr. Scholl’s and LifeStride.
Consolidated gross profit of $288.4 million was down 0.8% in the third quarter, while gross margin of 39.6% was down approximately 30 basis points year-over-year. SG&A for the third quarter was $236.2 million, representing 32.4% of net sales – down approximately 20 basis points versus the prior year. For the quarter, operating margins declined by approximately 10 basis points year-over-year to 7.2%.
Inventory at the end of the third quarter was $544.3 million, down 4.1% from $567.8 million in the prior year. Famous Footwear inventory was down 5.6%, while Brand Portfolio inventory was down 0.6%.
“Our performance at both Famous Footwear and our Brand Portfolio is a reflection of the work we’ve done to manage inventory and expenses – while investing to grow our businesses – during a challenging third quarter,” said Ken Hannah, Caleres chief financial officer. “While we expect the retail environment will be promotional during the fourth quarter, we remain focused on delivering consistent, profitable and sustainable growth.”