Caleres president and CEO Jay Schmidt doubled down on the success of the company’s owned brand portfolio on Tuesday, telling analysts on its third quarter earnings call that the business segment performed well in the period and is planned to close 2023 strong.
Schmidt told market watchers on Tuesday that each of the company’s leading brands in the portfolio are “transformed” and “readied” for accelerated growth with clear strategies to optimize ongoing investments. The news seemed to have been a hit on Wall Street, with stock prices up 8.84 percent on Tuesday evening.
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“We expect ongoing improvement in segment sales trends and a more meaningful contribution to the company’s operating performance this year,” the CEO said. “We are confident the brand portfolio fueled by its lead brands is positioned to lead the financial performance of Caleres over the long term.”
Looking closer at each of them, Schmidt noted that Allen Edmonds achieved its 11th consecutive quarter of growth in the period. “The brand’s third quarter year-over-year increase was broad-based, with improvements across all channels and major categories, including casual, dress and sport,” he said. “The customer continued to respond to newness in footwear with our new casual hybrids and sports sneakers leading the way.”
Turning to Vionic, the CEO said the brand delivered a strong third quarter with sales increasing low single digits over the last year, driven primarily by its international and retail segments. Gross profit climbed significantly increasing across all channels.
“Our consumers and our wholesale partners are embracing our Nor-Cal rebranding and product newness,” Schmidt said. “In line with the overall market trend, the brand’s loafers and flats were the main drivers of the positive performance in the period. The Uptown moc continues to be a consumer favorite and is gaining traction as the most perfectly packable shoe in the marketplace.”
At Naturalizer, Schmidt noted that the label grew market share during the quarter, climbing on spot to number 11 in women’s fashion footwear. The brand continued to make progress on its consumer-focused strategies and attract younger consumers. In September, the brand launched its inaugural loyalty program, Naturalizer Insider to further engage and connect with consumers. Since that launch, more than half of our owned e-commerce sales have been generated by insiders.
And at Sam Edelman, the brand saw strength in feminine styles, including ballet flats, Mary Janes and lower heels, as consumers shifted away from heavier boots and lug soles. “While the shift put some pressure on average unit retails, the brand’s trend-right assortment, including their core styles resonated with their consumer and sneakers continue to build momentum. Profitability remains strong for the brand and the team is busy on a number of fronts,” Schmidt said.
“We were also pleased with the sales trend improvement and strong profitability across our portfolio brands,” Schmidt added. “In particular, Dr. Scholl’s, Franco Sarto and LifeStride grew both sales and operating profit by maximizing styles in line with their consumer preferences.”
This comes as the St. Louis-based company reported net sales in the third quarter were $761.9 million, down 4.6 percent from $798.3 million in the same period last year. Net earnings in Q3 were $46.9 million, or $1.32 a share, compared with $39.2 million, or $1.08 in the third quarter of 2022.
By business segment, Famous Footwear saw sales decline 6.7 percent, with comparable sales down 6.9 percent. Caleres’ brand portfolio reported net sales decreased 0.8 percent in the period.
“In 2024, Caleres will return to growth by leveraging our competitive advantages, powerful brands, innovative products and compelling experiences across channels and geographies,” Schmidt added to analysts. “Our successful execution of these operational initiatives will deliver strong financial performance and generate significant value for our shareholders over the long term.”
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