US' Caleres sets sights on FY25 value creation through brand expansion

For the first quarter (Q1) of FY25, net sales are projected to decline by 5 to 6 per cent, with GAAP EPS anticipated in the range of $0.35 to $0.40.

By the second half of FY25, the company is expecting 75 per cent of its Brand Portfolio sourcing—and an even higher proportion for its Lead Brands—to be outside of China. The guidance does not include the impact of the previously announced acquisition of Stuart Weitzman, which is anticipated to close in the summer of 2025, Caleres said in a press release.

“As we look forward to 2025 and the macroeconomic environment with persistent inflation and newer tariffs, we believe it is prudent to take a conservative view for the year. Despite this posture, I am optimistic about what we have in store for 2025. Our Lead Brands remain strong and are collectively gaining market share, and we have expanded our customer reach with greater focus on the significant opportunity we see in contemporary,” said Jay Schmidt, president and chief executive officer (CEO) at Caleres. “The hard work of our talented teams and the impact of new leadership across several areas of our business, along with strategic brand partnerships and the planned acquisition of Stuart Weitzman, position us well to drive significant value in 2025 and beyond.”

Full fiscal 2024 (FY24) financial overview

Caleres has reported net sales of $2.72 billion in fiscal 2024 (FY24), ended February 1, 2025, reflecting a 3.4 per cent decline from FY23. Net sales in the Famous Footwear segment dropped by 3.3 per cent, while the Brand Portfolio segment saw a 3.5 per cent decline.

Direct-to-consumer (DTC) sales accounted for approximately 72 per cent of total net sales. The gross profit of the company reached $1.22 billion, with a gross margin of 44.9 per cent, up 10 basis points (bps) from FY23. The Famous Footwear segment posted a gross margin of 44.1 per cent, down 60 basis points, whereas the Brand Portfolio segment improved to 43.7 per cent, up 80 bps.

SG&A expenses stood at 39.1 per cent of net sales, rising 140 bps year-over-year (YoY) due to inflationary pressures and strategic investments. The net earnings of the company totalled $107.3 million, with adjusted net earnings of $114.6 million, down $34.7 million.

EPS share came in at $3.09, and adjusted EPS was $3.30. EBITDA stood at $206.7 million, or 7.6 per cent of sales, with adjusted EBITDA of $216.6 million, or 8.0 per cent of sales. Inventory levels rose 4.5 per cent from FY23, and borrowings under the asset-based revolving credit facility stood at $219.5 million at the end of the period.

Fourth quarter (Q4) financial

In Q4 FY24, the company reported net sales of $639.2 million, reflecting an 8.3 per cent YoY decline, net sales were down 4.0 per cent YoY. The Famous Footwear segment saw a 9.6 per cent decrease in net sales, with comparable sales down 2.9 per cent, while the Brand Portfolio segment experienced a 7.2 per cent decline. DTC sales accounted for approximately 73 per cent of total net sales.

The gross profit of the company stood at $275.1 million, with a gross margin of 43.0 per cent. The Famous Footwear segment posted a gross margin of 42.5 per cent, down 40 bps, and the Brand Portfolio segment recorded a gross margin of 41.6 per cent, down 100 bps.

SG&A expenses represented 40.9 per cent of net sales, up 180 bps YoY, driven by expense deleverage resulting from lower sales. Net earnings were $4.9 million, or $0.15 per diluted share. The adjusted net earnings were $11.1 million, or $0.33 per diluted share.

“Our fourth quarter earnings were at the high end of our most recent guidance. We gained market share in women’s fashion footwear, our Lead Brands outperformed, and we grew our sneaker penetration. Famous Footwear’s business softened in the quarter, but we maximized key selling periods. We invested to support our long-term growth while continuing to evolve our supply chain and further mitigate the impact of additional tariffs,” said Schmidt. “While 2024 overall was disappointing relative to our initial expectations, we made meaningful progress in advancing our strategic priorities and positioning our brands for sustainable growth. We also returned $75 million to shareholders in the form of dividends and share repurchases.”

ALCHEMPro News Desk (SG)