Q4 2023 Caleres Inc Earnings Call

Participants

Liz Dunn; SVP, Corporate Development and Strategic Communications; Caleres, Inc.

Jay Schmidt; President & CEO; Caleres, Inc.

Jack Calandra; SVP & CFO; Caleres, Inc.

Laura Champine; Analyst; Loop Capital Markets

Dana Telsey; Analyst; Telsey Advisory Group

Mitch Kummetz; Analyst; Seaport Research

Abbie Zvejnieks; Analyst; Piper Sandler

Ashley Owens; Analyst; KeyBanc Capital Markets

Presentation

Operator

Good morning, and welcome to Caleres fourth-quarter and fiscal-year 2023 earnings conference call. My name is Sherry, and I will be your conference coordinator. (Operator Instructions) As a reminder, this conference is being recorded.
At this time, I would like to turn the call over to Liz Dunn, Senior Vice President of Corporate Development and Strategic Communications. Please go ahead.

Liz Dunn

Good morning. Thank you for joining our fourth quarter and full year 2023 earnings call and webcast. A press release with detailed financial tables as well as our quarterly slide presentation are available at Claire's.com. Please be aware that today's discussion contains forward-looking statements which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors, including, but not limited to, the factors disclosed in the Company's Form 10 K and other filings with the US Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online.
In discussing these in discussing the results of our operations, we will be providing and referring to certain non-GAAP financial measures you can find additional information regarding these non-GAAP financial measures as well as others used in today's earnings release on our presentation on the Investors section of our website, the Company undertakes no obligation to update any information discussed in this call at any time.
Joining me today on the call are Jay Schmidt, President and CEO, and Jack Calandra, Chief Financial Officer. We will begin this morning's call with our prepared remarks. And thereafter, we will be happy to take your questions. I would now like to turn the call over to Jay. Jay?

Jay Schmidt

Thank you, and good morning, everyone. I'm pleased to report that Polaris delivered another strong performance during the fourth quarter of 2023, capping off the third straight year of adjusted earnings per share above our $4 baseline. These results continue to underscore the power of our portfolio of brands, the focus of our talented teams and the magnitude of our structural financial transformation. Overall, 2023 marked another year of significant accomplishment and disciplined financial execution at Caleres. In total, we delivered annual sales of $2.8 billion in line with our expectations.
We achieved adjusted operating earnings of $201 million and generated a strong consolidated adjusted operating margin of more than 7%. Our adjusted earnings per share of $4.18 was in line with the outlook we reaffirmed in January, and we generated approximately $260 million in adjusted EBITDA. We are particularly proud of these results, which were achieved while navigating a dynamic demand environment and making prudent investments in support of our future growth.
In addition to our financial accomplishments during 2023, we gained market share in both the brand portfolio in women's fashion footwear, and we gained market share in shoe chains for Famous Footwear as well as in kids. We leaned into our edit to win initiative and leading speed capabilities, which facilitated a nearly 7% reduction in inventory. We generated $200 million of cash from operations and strategically use that cash to invest in and accelerate value driving capabilities essential for our future growth.
This included enhancements to our marketing ecosystem, the expansion of our international presence, particularly at Sam Edelman involvement in consumer experience at Famous Footwear and the upcoming go-live of our financial and operating system into a new integrated SAP platform. We also deployed cash to further strengthen our balance sheet and enhance our financial flexibility by reducing borrowings by $126 million from 2022. Finally, we returned more than $27 billion to our shareholders through share repurchases and dividends.
Now let's move to some performance highlights from the fourth quarter. During the period, we delivered sales of $697 million, up slightly from the prior year we generated strong margins, and we achieved fourth quarter adjusted earnings per share of $0.86, which represented a 32% increase over the fourth quarter of 2022 Now let's turn to our operating segments. The brand portfolio delivered its best ever annual adjusted operating earnings, which topped $148 million, eclipsing its previous record of $112 million and was accompanied by a nearly 12% adjusted return on sales. Of particular note, the segment led the financial performance of the Company for the first time in nearly two decade.
Looking more closely at the quarter, strong demand for our lead brands and largest portfolio brands drove the company's performance. Notably, sales in this segment were 4.5% higher than fourth quarter of 2022. And segment gross margin increased significantly. And while we invested in key capabilities like our marketing network and international expansion, most of the margin strength flowed through to the bottom line, leading to a 570 basis point improvement in adjusted quarterly operating margin.
This strong upward momentum was broad-based with increases across both our wholesale and direct channels, primarily around e-commerce, which increased 5% year over year as the consumer continued to prioritize newness, including low first malaise, Mary Jane Slingbox and of course, fashion sneakers, our brands were well positioned to meet that versify needs and preferences of our consumers. We saw particular strength across our lead brands during the last quarter of the year with positive trends in year-over-year sales, operating earnings and market share.
In total, these four brands, which include Sam Edelman, Allen Edmonds, Naturalizer and Vionic, represented about 55% of the Brand Portfolio sales and more than half the segment's operating earnings during the fourth quarter.
Diving into the performance of our lead brands, Sam Edelman had a solid quarter with improving financial metrics. We announced some big news last week in case you missed it, Sam unveiled Kylie Jenner as the face of its spring marketing campaign. This is an exciting time for the Sam Edelman brand and team, which is celebrating its 20th anniversary this year.
But brand also continued to expand internationally, opening 10 new stores in 2023 with plans to grow that number significantly in 2024. We expect the 20th anniversary marketing plans and events, international expansion with our joint venture partner in Asia and the relaunch of the Sam & Libby brand. We'll be significant sales drivers in 2024 and beyond.
Next, at Allen Edmonds, they turned in their 12th positive quarter of growth, casual and sport styles continue to lead the way during the period with the consumer responding to newness and colorways of our iconic shoes and introduction of new styles.
During the quarter, we opened a new Port Washington studio concept store in Birmingham, Alabama. We now have eight Port Washington Studio Stores and continue to see the sales performance outpace the rest of the chain. We already have plans to introduce the Port Washington studio into four stores during 2024 and continue to look for more opportunities to add this concept to new and existing locations. Our Naturalizer brand had a standout quarter from both a sales and margin perspective, sales were up double digits and operating margin improved substantially.
The brand gained one point of market share during the quarter with a significant increase in new consumers. We are pleased with the rollout of the Naturalizer loyalty program named Naturalizer Insider and are seeing positive spending trends with loyalty members.
We are also seeing an increase in younger consumers driven by strong relevant fashion offerings and targeted marketing efforts, including new collaborations and partnerships. As you know, we've done a lot of work in recent years to transform and ready Naturalizer for even greater growth. We believe there is tremendous opportunity for the brand moving forward.
Finally, Bionix profitability improved significantly in the quarter despite a modest decline in sales with both our wholesale and e-commerce businesses making significant contribution loafers flats and sneakers drove the brand's fourth quarter business and the uptown market remains Bionix number one item. In addition, our rejuvenate recovery slide sold very well as did new styles in the walking category with more to come in 2024.
As I mentioned, our largest portfolio brands also delivered outsized performances in the quarter, namely Dr. Shoals, Franco Sarto and LifeStride achieved year-over-year improvements in sales and earnings. As we've noted, these brands play an important role in our overall portfolio, reaching different customer segments while generating meaningful profit and cash flow.
This year, Dr. show celebrates its one hundredth year anniversary with sales-driving collaborations and partnerships from first will be a collaboration with apparel brand Free People, which is set to drop in early April. Overall, the brand portfolio performed at a high level during 2023, delivering its best performance in PORTFOLIO history. As we outlined at our Investor Day last October, we continue to expect the brand portfolio to contribute about half of total sales and 60% of operating profit within the three year period. We are confident the Brand Portfolio powered by its lead brands is positioned to lead the financial performance of Caleres over the long term.
Moving on to Famous Footwear, total sales declined 1.5% and comp sales declined 5.9%, representing a sequential improvement in trend from the prior quarter period. Both in-store and online traffic was down and seasonal products, namely boots, represented much of the sales decline. Famous once again though outperformed its competitive set, gaining market share in two chains during the holiday season. The consumer was motivated by highly demanded trendy items instead of promotions, robust selling on key athletic brands and styles and cozy products.
Slippers drove a modestly better sales trend during the seven week holiday period. In addition, we were particularly pleased with the performance of our kids business. Our sales increased 2% year over year, and we gained 1.4 points of market share in shoe chains. As you know, we view kids as our key differentiator and the entry point for them millennial family, our kids business has outpaced the rest of the chain for 12 consecutive quarters and 2023 marked our highest level of annual kids' sales ever.
We were also pleased with the relative outperformance of women's fashion and sales of key vertical brands. Naturalizer and Dr. Shoals were up year over year at Famous over the last year, we've worked to drive a more balanced athletic versus fashion assortment and we are making progress on that front.
Our vertical integration provides payments with greater access to fashion products, a key growth driver for the business as well as a greater ability to flex with trends and differentiate versus competitors, and vertical integration allows our own brands to reach new audiences. Our newest vertical brands Sam & Libby, launched in famous for spring with solid early reads, I will remind you at an enterprise level, colors captures a higher gross margin on brands sold vertically.
Finally, our efforts to enhance the consumer experience at Famous Footwear continues. We had 21 flare stores opened at the end of the quarter. The second wave of flare stores have proven highly successful and are outperforming the chain and delivered positive year-over-year comps in the fourth quarter. We plan to continue to refine our approach to improving consumer experience to ensure we are realizing the highest return on this investment.
We will transform an additional 23 stores to the flair concept in 2024 and will have 44 player stores by year end. All in Famous performed well in 2023 the structural changes we've made across the business have enabled the famous segment to maintain operating earnings and operating margin well above pre-pandemic levels, and we expect that to continue.
Looking ahead we believe Famous Footwear is exceptionally well positioned to compete and solidify its leadership position in the family channel.
Before I hand it over to Jack to walk through our financials in more detail, I would like to highlight a few key focus areas that will enable us to achieve our long-term strategic operating initiatives and financial targets. First, we are focused on expanding our direct-to-consumer business and expect our own e-commerce business to continue to outperform. We have launched loyalty programs across several of our lead brands that will allow us to engage more directly with our consumers and capture more share of wallet. We are utilizing our marketing and analytics capabilities to engage consumers efficiently and profitably.
Second, we will continue to focus on our enhanced speed programs to read and react in real time. During 2023, 20% of our brand portfolio receipts came through speed, and we expect that penetration to grow well above 20% moving forward.
Now, more than ever, our brands are positioned to capitalize on trend. Whether that trend is casual, dress or sneaker driven. Our speed programs create a virtuous circle aligning inventory with consumer demand to drive sales productivity and expand gross margin.
Third, we believe famous is well positioned to return to growth and growth drive greater market share in the family channel. This year, we will build on our leadership position in kids continue to focus on evolving our Claire's store format offer in and out elevated and curated assortment of key in-demand brands for the entire family, ensuring a more advantageous mix of athletic and fashion and leverage the consumer data platform or CDP to connect with and drive an even greater level of engagement with consumers through personalized communication and localized assortments work. As we outlined at our Investor Day, international is a significant growth area for Polaris.
In the fourth quarter, we hired Erica McCool as Senior Vice President of International to focus more intensely on that effort in 2024, we will continue to build the Sam Edelman business in China with 45 new DOORS. Naturalizer will reenter China with its newly created global flagship store design with 10 new stores in the fall of 2024, as well as a digital relaunch this is just the beginning. International is a big growth opportunity for Caleres. And finally, we are investing to fuel growth in 2024.
We will make outsized investments in international expansion, consumer experience, both in-store and online and across our marketing platform. These investments are an accelerator to unlock additional growth opportunities for the future. At the same time, we will remain disciplined and rigorous in managing our expense level to drive strong financial performance and shareholder value.
And with that, I will now hand it over to Jack for a more detailed view of our financial performance and outlook. Jack?

Jack Calandra

Thanks, Jay, and good morning, everyone. During today's call, I'll provide additional details on our fourth quarter and full year 2023 performance update you on our capital allocation activities and plans and share our outlook for 2024. Today's comparisons will include the 14th week for Q4 and the 53rd week for the full year unless otherwise indicated, we've included a table in the release outlining the sales impact of the extra week for each segment and for total company. As a reminder, my comments will be on an adjusted basis. Please see today's press release for a reconciliation of adjusted results.
Before I turn to the adjusted results, I wanted to give you some detail on the factors leading to the large one-time item included in our GAAP results. Our GAAP results include a release of deferred tax valuation allowances of $0.76 in the fourth quarter and $0.75 for the year, which had primarily been established in 2020 after incurring a significant pretax loss associated with the pandemic impact to the business.
As a result of our strong earnings performance in 2021, 2022 and 2023. We are no longer in a cumulative three year loss position and were able to release most of these valuation allowances. Additionally, the adjusted results include a benefit of $0.05 in Q4 and $0.13 for the full year from our cost reduction initiatives.
Now turning to sales. Fourth quarter sales were $697 million, up slightly to last year. As Jay mentioned, this performance was driven by a 4.5% increase in brand portfolio. Famous Footwear sales were down 1.5%, slightly better than our initial expectations. Comparable sales were down 5.9%. Consolidated annual sales were $2.82 billion in line with our expectations and down 5.1% versus fiscal 2022. Fourth quarter consolidated gross margin was 43.9%, a 348 basis point increase versus last year and a record for the third for the fourth quarter.
Brand portfolios, fourth quarter gross margin was 42.6%, a 660 basis point increase versus last year due to lower freight costs, higher initial margins and fewer markdowns and allowances. Famous Footwear's fourth quarter gross margin was 42.9%, a 54 basis point improvement versus last year. For fiscal 2023, consolidated gross margin was 44.8%, 100, 54 basis points above last year, reflecting a 537 basis point increase in brand portfolio and a 156 basis point decline at Famous SG&A expense for the fourth quarter was $273 million or 39.1% of sales.
Annual SG&A expense as a percent of sales was 37.7%. Annual SG&A expense was $5 million lower than 2022, despite absorbing an extra week reflecting our expense management initiatives and lower incentive compensation costs. Fourth quarter operating earnings were $33 million and operating margin was 4.7%. Operating margin was 11.9% at brand portfolio and 4.9% at Famous annual operating earnings were $201 million or 7.1% of sales. It's worth noting that this consolidated annual operating margin is 270 basis points higher than pre-pandemic levels.
It was achieved while navigating consumer demand headwinds of things. Brand portfolio achieved a record annual operating margin of 11.7%, a 316 basis point improvement versus last year, famous delivered a 7.8% operating margin, maintaining a margin level above pre-pandemic averages. Fourth quarter net interest expense was $4 million, down about $1 billion from last year and annual net interest expense was $19 million.
Fourth-quarter earnings per diluted share were $0.86, a 32% improvement versus last year, and annual earnings per diluted share were $4.18, marking our third consecutive year of EPS above our $4 baseline EBITDA for the trailing 12 months was $260 million or 9.2% of sales. Inventory at year end was $541 million, down 6.8% versus last year, primarily in brand portfolio, reflecting a more normalized supply chain and disciplined inventory management across the business.
By segment, inventories payments was up 2.5% versus last year, but down 4% when adjusted for the 53rd week at brand portfolio, inventory was down 13.6% versus last year. We feel good about the amount and composition of inventory with aged inventory down in both businesses in dollars and as a percent of total regarding cash flow from operations, we generated $200 million during the year and deployed cash for strategic investments in the business paid our quarterly dividend repurchased shares to offset dilution and lowered borrowings on our revolver.
Specifically, during the year, we spent $50 million on capital expenditures, $10 million on our quarterly dividend and $17 million on share repurchases. And with the $40 million paydown in Q4, borrowings are more than $125 million below fiscal year end 2022 debt to trailing 12-month EBITDA, it was 0.7 times.
Looking ahead, our capital allocation priorities remain consistent with what we've communicated previously. First, invest for organic growth, focusing on our lead brands and key capabilities, second, maintain the dividend. Third, given still elevated interest rates, we will continue to focus on reducing debt in the near term. As we said at Investor Day by 2026, we expect borrowings to be less than $100 million and less than half a turn of EBITDA.
Fourth, share repurchases, given our debt reduction progress and expectation for free cash flow in 2024, we have the opportunity to both reduce leverage and buy back shares. We will evaluate these alternatives in light of business performance and market conditions as we proceed through the year, we had 5.6 million shares remaining under our current board authorization at year-end.
Now turning to our outlook. As we mentioned, when we outlined our three year plan last October, we don't expect our growth to be linear and embedded in that outlook with more modest growth in year one. In addition, our plan assume that the overall footwear market would grow at 1% in 2020 for Circadin now expects a decline of 1%, including this adjustment as well as balancing the strong momentum in our brand portfolio against anticipated headwinds like inflationary pressures and higher freight costs.
For 2024, we expect sales to be flat to up 2%, which includes the impact of the 53rd week in 2023. Excluding the 53rd week, we expect sales to be up 1% to 3% and earnings per diluted share of $4.30 to $4.60. We anticipate earnings to be up more in the first half than the second half. However, due to the timing of expenditures, including marketing for the Sam Edelman campaign and expense for the common platform implementation.
We expect EPS down in Q1 and up in Q2. Additionally, we are providing guidance on the following metrics for the full year consolidated operating margin of 7.3% to 7.5%, an effective tax rate of about 24% and capital expenditures of $60 million to $70 million. We are also providing the following guidance. For Q1, we expect consolidated net sales to be flat to up 1% and earnings per diluted share in line with Q4 2020 2023 on an adjusted basis.
With that, I'd like to turn the call over to the operator for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Laura Champine, Loop Capital Markets.

Laura Champine

Taking my question. I wanted a little bit more about what's behind your expectation that the footwear industry will decline this year? And maybe if we could start with where do you think last year likely fell out as an industry, knowing that it's fragmented? And then what behind the expectation that we'll have another rough year this year?

Jack Calandra

Yes, Laura, this is Jack. Thank you for your question. So we get as part of our planning process each year, the expectations from store Kona and what they're projecting is the market to be down about 1% with units down a little bit more than that and some favorability on the AUR side. And then when we look at it by by segments. It looks like fashion is expected to be the weakest with Sport leisure and performance stronger than that.
And so we look at that and we apply those categories and those growth rates to our portfolio to come up with what we think it would look like for us to basically hold market share in 2024. And as you know, we've been very successful in growing market share. And this plan assumes that we will grow market share in both famous and in brand portfolio.

Laura Champine

Got it. Thank you.

Operator

Dana Telsey, Telsey Advisory Group.

Dana Telsey

Hi, good morning and good morning, everyone. As you think about the cadence of the year first quarter second quarter, how you thinking about brand portfolio and famous.
And did you notice any deterioration or stabilization in the core Famous Footwear consumer in the fourth quarter? What are you seeing in order trends for brand portfolio from the wholesale channel? Thank you.

Jay Schmidt

Hi, Dana. It's Jay here. I can, you know, overall and custom thinking about the and the consumer, we are seeing them. I think the demand environment remains mixed. As I would say, as we lead Q4 and into Q1, we see our brand portfolio consumer continually trend driven and responding very well to newness right now which is driving demand. And at our famous consumer during the fourth quarter and into early first, we did see the market environment remains choppy at our target consumer, the millennial family continues to prioritize kids.
And however, I will say that we're seeing some very strong, a reaction from both segments on really these highly demanded items. So that's really our goal is to continue to get in front of them and go there. We are seeing a slightly better trend as we move from February into March and done. That gives us some sign for optimism, but obviously very early on in the quarter.
And then finally, in terms of order trends, very consistent to where they've been in previous quarters right now, as you know, our business is highly demand driven and dynamic on our brand portfolio. And we continue to react in real time with our speed program, our drop-ship program and also our replenishment program to continue to meet that consumer demand.

Jack Calandra

And then Dean, I'll just add a couple of things on the cadence for Famous. So I'm just in terms of our overall guidance we are assuming that famous will be some sort of a modest negative to modest positive comp in our guidance range, low and high. And we are anticipating the first half to be stronger than the second half, and a lot of that is just due to the calendar shifts.
So as you know, with the calendar shift from the first week of August, which is a critical back-to-school week for Famous, is now falling into fiscal Q2 versus fiscal Q3 last year. And then obviously we have the impact of the 53rd week on Q4 this year. And so there's just some shifts with those with the calendar that's moving numbers between the quarters. And then I would just say, look, we expect the promotional activity in Famous to be broadly in line with 2023 and with that would come sort of a flattish gross margin.

Dana Telsey

Got it. And then if you unpack SG&A., Jack, anything that we should be thinking about as we go through the year, any quarterly ups or downs in terms of the SG&A impact? And then, Jay, as you think about your own brands in the Famous Footwear store, where are you along that path? And what could that add to the margin opportunity there? Thank you.

Jack Calandra

Sure, Dan. I'll start with the SG&A. So part of the reason our run we're guiding to earnings down in Q. one is there are some investments we're making in SG&A in Q1, particularly the Sam Edelman marketing campaign and then expenses related to our common platform implementation, the first phase of which goes live at the end of May. And so there are some some expenses associated with that.
And then as we go through the year, obviously, Q4, we don't have that 53rd week of expense in Q4. But what I will say is that we talked about last year, taking some some actions on costs. And I'm pleased to say that we delivered those cost reductions both in 2023, and those are built into our 2024 plan.
Okay. And then as far as our own brands, we're seeing some really nice results, some coming out of Q4 and then moving into first quarter, particularly with our DR Shoals brand at Famous our Naturalizer brand. And we're pleased with the early launch of Sam & Libby. And so we from you know, we feel that we are well on our track of how we can lead to our three year goal there and we are planning those brands up significantly. And obviously, Jack, the profit on vertical brands is significantly higher than where we go as a company, right.

Dana Telsey

That's correct. So we're very excited for what we're seeing there. And again, that was a concerted effort, and we looked like we're well on track.

Operator

Mitch Kummetz, Seaport Research.

Mitch Kummetz

Yes, thanks for taking my questions. I got a few I want to start just on the guide and want to clarify a couple of things on because I think I think you guys said that you expect to take share in the same U.S. and brand portfolio. Com and your as far as kind of a market outlook, you're basing that on sort of Kona down 1% suggests you're saying and famous same-store sales, you know, maybe down a little to up a little. Is that correct?

Jay Schmidt

Yes, our guide, Mitch, assumes on the low end would be down a little bit and on the upper end would be up a little bit. And again, the the the market numbers that I shared, our total that would include wholesale and retail. And obviously what we've seen is the retail business has been a little bit more or at least the retail channel that we compete in and measure market share against, which is the shoe chain channel has been a little bit more challenged and so on brand portfolio, what kind of sales growth are you looking for there for the year you're looking at?
Yes, we're looking to continue basically the of the trend that we came out of two four with adjusting for that 53rd week. So there was a little bit of a benefit for the 53rd week. So I would say so we're looking for low single digit positive numbers from brand portfolio in 2020 for obviously lead brands being stronger than that. And the other brands being a little bit a little bit below.

Mitch Kummetz

And then Jack, I think you said on the famous you expect promotions to be in line with last year. I think you made a comment of flat gross margin was that a a famous comp comment comment or is the op margin guidance you gave assume a flat gross margin on a consolidated basis for the year?

Jack Calandra

Yes, the comment that I made was a famous specific on the flat gross margin in terms of the 20 to 40 basis points of and operating margin improvement in 2024. We're looking for more of that actually to come from gross margin and particularly on brand portfolio.
As you remember, Mitch, when we talked about our Investor Day model, we talked about all of the different headwinds and tailwinds in gross margin over three years and said that gross margin at the consolidated level would be relatively flat and we would get operating margin improvement from SG&A leverage in 2024. Again, we're looking for a little bit more on the gross margin side because of some of these critical investments we're making in international in some of our lead brand marketings and in the common platform.

Mitch Kummetz

And then, Jay, you mentioned that March was better than February. I would guess it's more of a famous comment. Is that on is that you think that's that's to do with weather? Or do you think there's some change in consumer shopping behavior or strengthening of the consumers or anything you can attribute that to yes, while it's early in March, I think there's so I think it's all of those things.

Jay Schmidt

And then one more on, I think the weather in early spring is always good. And it's we've had a much better weather pattern than we've had last year, particularly when you think about famous being across the country. And so that's the first thing. And the I think the second thing that just really stood out was the one that we really are in much better position in some of these key demanding items from the key brands at Famous. And that has really on propelled It grew as the consumers really pointing very specifically, we've seen our top brands and famous come back quite a bit.
And then to just answer your question on the brand portfolio, we are seeing and some nice trends that are similar to that. And again, focused on just really, I think some of our brands opening up and reacting to a warmer cycle. So some early signs on sandals and some of our brands have been positive. And as you well know, we did not see that last March.
So there's some there's reason to be optimistic optimistic, but it is early still commit to the last question for you, Jay home, there's a lot of talk in the back half of last year, how the consumer was shopping events, be it back to school or holiday? And then kind of disappearing in between how do you think that continues this year.

Mitch Kummetz

And and how do you see the impact of events in the first half? Is there much going on from an event standpoint before we get back to school like to what extent you think like Easter and Memorial Day Mother's Day, Father's Day, things like that, it could drive the business?

Jay Schmidt

Yes, I think they've been actually not as important as they might have been in past some times and we're really seeing weather as an impact, you know, spring break and vacations kind of stimulating some things, but not not as much as some bigger buildups. But really we are consistently on our best product in our best them place. And then as Jack pointed out, there is some discussion of the tax refunds. So I don't know if you want to fill in on that.

Jack Calandra

Yes, we for the famous business, we look very carefully at where tax refunds are coming in. And right now, it looks like through data last week, the number of refunds was down about 13%. The average refund was up about 6%. So the total dollars refunded again through through the end of last week was down 7%. And we do know that that there is some impact of that certainly to our famous consumer.

Mitch Kummetz

Okay. Thanks, guys.

Operator

Abbie Zvejnieks, Piper Sandler

Abbie Zvejnieks

Great. Thanks for taking my question. Just you talked a little bit about the consumer being more selective buying the product that they want and promotions not moving other inventory as much as one. Are you seeing that same dynamic in both men's and women's versus kids? And then two, are you changing your your merchandising efforts at Famous Footwear in any capacity in order to and we need some more of that key style demand?

Jay Schmidt

Yes, we are seeing it in both segments, right now as to continue, the consumer continues to prioritize spend in different ways. We've said in Famous that the consumer continues to prioritize kids purchasing. So that is done continued. And then also very much demanded on the styles and the items that they do, like the brands that they really favor, which fortunately we have over on the brand portfolio side, we're seeing the same thing in terms of newness and trend delivering it. And so I think what you'll see is on our websites and our continued messaging and communications, we're continuing to focus on new item launches, new styles and new drops.
And we're seeing that both in men's and women's and then over to Famous some one of the things we will be adding to all stores this year is some as we go into back to school, it's really the focus on two trend tables as you walk into the stores to really call out these key messages. So we can continue to make that impact. And then as we continue to build the flair store concept will continue to bring that to full to its fullest extent.
So you'll see a lot more from us on that. But for sure, it's it's consumer reacting and in both segments, some very specifically by style, by skew and then the last thing I'll say is that our speed program really allows us to really meet that demand much better as we continue to bring in more product earlier on particularly online and then get back into it on exactly how the consumer is demanding. So it's been a good done, a very good approach for the timing right now.

Abbie Zvejnieks

Got it. That's helpful. And just one more on specifically on the brand portfolio. And restocking has been a big topic of conversation with brands with exposure to the wholesale channel. So just in terms of brand portfolio wholesale exposure? And have you seen any of that, like quote restocking yet?

Jack Calandra

Or is that something we should look for as a tailwind, you know, maybe 2025 and I don't think we've seen an effort on that become retailers are continually monitoring their on their inventories well, and they're just reordering more and it's less upfront, but that's something that we're used to and actually our model allows us to fill into. So we haven't seen the effect on that as of yet. So but right now, I would say that that's where we are. And yes, I don't see any change in that right now.

Abbie Zvejnieks

And sorry, just one quick on dropship. Can you just talk about that business and how you're utilizing it? And has that changed at all as the retailers have gotten into a better inventory position? Just anything there?

Jay Schmidt

Yes, it continues to model in a very dynamic moment as we get more into position and stores, we'll see some of that shift into other places where we do slightly more business in the stores and less of that drop-ship need. We are looking at our wholesale business really as a complete ecosystem. And and so we're continuing to manage the total and down in a really Omni way. So we'll see variations of that I think start to ebb and flow. And then again, as demand did items continue to be more built, the consumer will continue to find them in whatever way we choose to fill them. So but right now, I don't have any major swings on that to report.

Abbie Zvejnieks

Okay, great. Thank you very much.
Ashley Owens, KeyBanc Capital Markets.

Ashley Owens

Okay, thank you. So just some statements mentioned kids grew in the quarter. Could you just provide some color on the performance between athletic casual and dress and just maybe where they are and stands today.
And then secondly, just given the customer preference for newness right now, as you're thinking about the cadence of product launches throughout the year, within the brand portfolio, how does that compare to years prior? And then would you say that you're coming to market with more products? Or would you say it's better products that are kind of going to be helping driving up growth this year.

Jack Calandra

Okay. So first on and Famous, the kids business is we have about a 50% penetration in total athletic on our payments business. That position skews much higher in kids as they continue to focus on athletic shoes there. But we are also seeing a lot of our big brands work very well there, just to name a few. You know, we have a of Crocs business. It's continually strong in kids, hey, do business. It's turned out nicely. And then on Skechers. And then obviously Nike is some is the biggest one there.
We're also seeing, you know, newer brands like Bergen stock, continue to go win and then new offerings from brands like indeed has worked very well in kids. So So anyway, I would say it is the brands have worked very well at Famous, continue to work. It totally worked very well in kids, but we do see a distortion on athletic.
And then finally, with your brand portfolio question, I hope it's everything that you said. And as the consumer continues to respond to it. We're doing more new launches of products. We'll see more limited drops as we go through. We're seeing more collaborations. As we mentioned, there were two in Dr. Shoals. You'll see more on that from Allen Edmonds.
And then obviously, Sam Edelman, some anniversary campaign has been events that go throughout the entire year. So we're going to continue. And then we have two new collaborations coming up with Naturalizer, but you'll see more and more of this coming through from us all the way through the year. So And stay tuned. We'll have much more to report.

Ashley Owens

Great. Thanks so much.

Operator

We have reached the end of our question-and-answer session. I would like to turn the call back over to Jay for closing comments.

Jay Schmidt

Okay. Thank you. Before we close today, I would like to thank the talented Caleres team for their focus, hard work and dedication. We're confident in our plans for 2024 and beyond. As we execute on our long-term strategies, we believe Polaris is well positioned to continue to build our powerful brands, create exceptional products that exceed our consumers' expectations and deliver financial results that drive significant value for our shareholders. Thank you all for joining us this morning, and thank you for your interest in Caleres, and have a great day.

Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.