Caleres, the parent company behind Famous Footwear, Allen Edmonds and others, saw its net sales nearly cut in half in the first quarter.
In a Nutshell: After shuttering its fleet in mid-March due to the coronavirus pandemic, Caleres has reopened approximately 60 percent of its store base as of June 4, including 555 Famous Footwear stores and 70 from its brand portfolio.
Caleres expects 90 percent of Famous Footwear stores to be up and running by the end of the month.
“We shifted quickly taking a series of deliberate steps to reduce costs and preserve cash, while working to maximize e-commerce sales during the period of store closures,” Caleres senior vice president and chief financial officer Ken Hannah said.
To accomplish this, Hannah said Caleres cut 40 percent from its previous annual budget, boosted liquidity through its revolving credit facility and reduced future inventory receipts. By the end of the quarter, inventory reduction efforts helped streamline Caleres’ position by 9.7 percent over the comparable period.
Because Caleres kept nearly 95 percent of its workforce on payroll, those staffing levels have aided reopening efforts. It also implemented curbside store pickup prior to reopening.
“The Caleres team has risen to the occasion during the current crisis–adapting to the quickly moving market environment, serving our consumers consistently, providing security of supply to our retail partners and showing compassion to our communities,” Caleres CEO, president and chairman Diane Sullivan said. “While we are taking a realistic view of the broader economic recovery, we are encouraged by the reception we have seen in the regions where our stores are now open.”
Sales: With net sales of $397.2 million, Caleres fell short of the $488.5 million Wall Street estimate in Q1. Famous Footwear sales fell by 45.7 percent over the comparable period to $191.3 million and sales from Caleres’ brand portfolio tumbled 36.3 percent to $217.2 million.
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Same-store sales for Famous Footwear were up 12.8 percent through mid-March, the company said, dipping to 12.6 percent by the end of the quarter.
Earnings: An adjusted net loss of $50.4 million led to a loss of $1.30 per diluted share in the first quarter, excluding a $7.56 per share impact related to non-cash impairments caused by the pandemic. Wall Street expected of a loss of $1.17 per share.
CEO’s Take: “This past quarter represented a period of tremendous uncertainty and challenge for the global community, our consumers and our company,” Sullivan said. “After a strong start–with year-over-year sales at Famous Footwear up nearly 13 percent through mid-March–Caleres pivoted sharply to address the rapidly escalating global health crisis” by having the Allen Edmonds factory manufacture personal protective equipment.