Caleres (NYSE:CAL) Reports Sales Below Analyst Estimates In Q4 Earnings

Caleres (NYSE:CAL) has reported its fourth-quarter earnings, and the results are not what analysts were expecting. The footwear retailer and wholesaler saw a significant decline in sales, falling short of analyst estimates. This news comes as a surprise to many, given the company's strong performance in previous quarters. Let's dive into the details and explore what this means for Caleres and its investors.



The fourth quarter of 2024 was a challenging one for Caleres. Net sales for the quarter were $639.2 million, down 8.3% year-over-year. When excluding the impact of the 53rd week, net sales decreased by 4.0%. This decline is significant when compared to the fourth quarter of 2023, where net sales were $697.1 million, up 0.1% from the fourth quarter of 2022. Several factors contributed to this decline in sales. One key factor was the softening of Famous Footwear's business during the quarter. Famous Footwear segment net sales decreased by 9.6%, with comparable sales down 2.9%. This segment has historically been a significant contributor to Caleres' overall sales, and its decline had a notable impact on the company's performance.

Additionally, the Brand Portfolio segment, which includes lead brands like Sam Edelman, Allen Edmonds, Naturalizer, and Vionic, also experienced a decrease in net sales by 7.2%. This segment had previously shown strong performance, with a 4.5% increase in year-over-year net sales in the fourth quarter of 2023. The decline in 2024 indicates a shift in consumer demand or market conditions that affected these brands.

The company also faced challenges related to the macroeconomic environment, including persistent inflation and newer tariffs. These factors likely influenced consumer spending habits and supply chain operations, contributing to the overall decline in sales. Jay Schmidt, the president and chief executive officer, noted that the company took a conservative view of the year ahead due to these persistent challenges.



So, what does this mean for Caleres and its investors? The company's decision to take a conservative view for the year ahead aligns with its long-term growth strategy by prioritizing financial stability and risk mitigation in the face of persistent inflation and newer tariffs. This approach is evident in the company's guidance for fiscal 2024, where it expects net sales to be flat to up 2 percent compared to fiscal 2023 and earnings per share of $4.30 to $4.60. This conservative outlook is further supported by the company's actions, such as reducing revolver borrowings by $40 million compared to the third quarter of 2023 and more than $125 million from fiscal 2022. By taking a conservative stance, Caleres aims to ensure that it has the financial flexibility to navigate potential economic headwinds and continue investing in its strategic priorities.

The potential risks associated with this approach include the possibility of missing out on growth opportunities if the market conditions improve faster than expected. However, the opportunities lie in the company's ability to strengthen its financial position, optimize its supply chain, and invest in value-driving growth opportunities. For instance, Caleres has continued to invest in value-driving growth opportunities while at the same time returning $74.7 million in cash to shareholders through its dividend and share repurchases. Additionally, the company's planned acquisition of Stuart Weitzman for $105 million, subject to customary adjustments, positions it well to drive significant value in 2025 and beyond. By taking a conservative view, Caleres can focus on executing its growth strategy, delivering on its long-term financial targets, and creating sustained value for its shareholders.