Margin improves and sales decrease for Caleres in Q2
Caleres on Wednesday reported its second quarter and first half results. The company improved its gross margin and maintained its SG&A expenses despite the challenging retail environment.
The challenging retail environment, however, impacted the company’s net sales, with second quarter net sales dropping 2.3% to $622.9 million and first half net sales decreasing 2.6% to $1,207.7 million.
“Our second quarter results show the benefit of good execution during a challenging environment, as we improved gross margin, maintained SG&A spend, and continued to invest for long-term growth” said Diane Sullivan, CEO, president and chairman of Caleres. “At 41.7%, gross margin was up nearly 50 basis points, with both Famous Footwear and Brand Portfolio contributing to this improvement.”
Famous Footwear gross margin was up 14 basis points to 45.5% in the second quarter and the brand portfolio gross margin was up 85 basis points to 35.3%. Same store sales decreased 1.1% for Famous Footwear and were down 3.8% for the brand portfolio with the strength of Contemporary Fashion unable to offset weakness at Healthy Living.
First half same store sales for Famous Footwear and the brand portfolio were down 0.1% and 6.5%, respectively. Gross margin was down 14 basis points for Famous Footwear and was up 180 basis points for the brand portfolio.
“While realistic about the retail environment for the second half of the year, we are maintaining our fiscal 2016 EPS guidance,” said Ken Hannah, chief financial officer of Caleres. “As we did in the second quarter, we will continue to expand our gross margin and to manage the areas within our control – such as our inventory and our SG&A – to deliver bottom-line results.”
Caleres expects its consolidated net sales to range from $2.57 billion to $2.6 billion, gross margin to range from up 25 basis points to 35 basis points and earnings per diluted share to range between $2.00 and $2.10. Famous Footwear same-store-sales are expected to be flat to up low-single digits and brand portfolio sales to be flat to down low-single digits.
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