Caleres Inc (CAL) Tightens EPS Guidance Amid Challenging Market Conditions
Caleres Inc (NYSE:CAL) reports a 19% increase in adjusted earnings per share for Q3 2023.
Company reduces debt by $22 million and maintains over $300 million in liquidity.
Full-year net sales expected to decline by 4.5% to 5.5%, with adjusted EPS guidance tightened to $4.10 to $4.20.
Caleres Inc (NYSE:CAL) released its 8-K filing on November 21, 2023.
On November 21, 2023, Caleres Inc (NYSE:CAL), a diversified portfolio of global footwear brands, announced its financial results for the third quarter of 2023. Despite a challenging macroeconomic environment, the company delivered a robust performance with a notable 19-percent increase in adjusted earnings per share, surpassing the upper end of its guidance range. Caleres Inc (NYSE:CAL) attributes this success to the strong operational execution of its Brand Portfolio, which achieved a sequential improvement in sales and recorded a record third quarter operating profit and margin.
Financial Performance Highlights
Caleres Inc (NYSE:CAL) reported net sales of $761.9 million for the third quarter, a decrease from $798.3 million in the same period last year. The company's gross profit remained stable at $340.4 million compared to $339.9 million in the prior year. Selling and administrative expenses saw a reduction to $273.7 million from $283.1 million, contributing to operating earnings of $64.4 million, up from $53.8 million in the third quarter of 2022.
The company's balance sheet reflects a disciplined approach to capital management. Caleres Inc (NYSE:CAL) reduced its borrowings under its asset-based revolving credit facility by $22.0 million during the quarter, resulting in a bank-defined leverage of approximately 0.9x on a debt/EBITDA trailing twelve-month basis. Total liquidity exceeded $300 million, showcasing the company's financial flexibility.
Operational and Segment Performance
Caleres Inc (NYSE:CAL)'s Brand Portfolio was a standout performer, contributing more than half of the total company operating profit for the first nine months of the fiscal year. Famous Footwear, another segment of the company, demonstrated resilience by delivering double-digit operating margin and gaining market share growth in shoe chains.
President and CEO Jay Schmidt commented on the company's strategic position,
Despite near-term macro challenges, we remain confident that Famous is well-situated to grow its leadership position with the Millennial family."
He also highlighted the company's ongoing investments in omni-channel experience, marketing technologies, analytics, and international expansion as key drivers for future growth.
Outlook and Future Expectations
Looking forward, Caleres Inc (NYSE:CAL) has updated its full-year 2023 outlook, now expecting consolidated net sales to decline by 4.5 to 5.5 percent, including the impact of the 53rd week. The company has also tightened its diluted earnings per share guidance range to $3.96 to $4.06 and adjusted diluted earnings per share range to $4.10 to $4.20. These adjustments reflect the soft consumer demand environment, particularly in the Famous Footwear segment.
Caleres Inc (NYSE:CAL) remains committed to its long-term strategies for value creation and growth, as outlined during its recent Investor Day. The company's strong balance sheet and brand assets are seen as key enablers for achieving a third consecutive year of adjusted earnings above the $4.00-per-share baseline.
Investor Relations and Conference Call
Caleres Inc (NYSE:CAL) will further discuss these results and provide additional insights during its conference call, accessible through the investor relations section of its website. The company has also made available a replay of the call for those unable to attend the live event.
In conclusion, Caleres Inc (NYSE:CAL) has demonstrated its ability to navigate a difficult economic landscape while maintaining a strong financial position. The company's strategic focus on brand strength, operational efficiency, and capital discipline positions it well for future success despite the current headwinds in consumer demand.
Explore the complete 8-K earnings release (here) from Caleres Inc for further details.
This article first appeared on GuruFocus.
