Sales Are Going to Be Slow at Famous Footwear For a While — Here’s Why

Parent company Caleres slashed its earnings growth rate for the fiscal year.

Shares for Caleres Inc. are slipping in after-hours trading after the St. Louis-based firm reported better-than-expected first-quarter sales but warned of slow days ahead for Famous Footwear.

As of 4:20 p.m. ET, the stock was in the hole more than 3% to $18.80.

Caleres — also parent to Sam Edelman, Naturalizer and Vionic, among other shoe labels — said its consolidated sales for the period advanced more than 7% to $677.8 million, besting the $673.2 million market watchers predicted.

But revenues at Famous Footwear dipped 3% year over year to $352.2 million, while same-store-sales were down 1% as the retailer saw a slow start to February — likely a side effect of delayed tax refunds and lower returns for many Americans.

Although she noted the quarter had ended on an “encouraging note” for Famous Footwear — with positive same-store-sales for both March and April — Caleres CEO Diane Sullivan warned that she expects some short-term pressures at the division.

“Going forward, we expect to see softness at Famous Footwear through at least the second quarter, as we continue to prepare for back-to-school by aggressively clearing underperforming inventory,” Sullivan said. “While new additions to our elevated and refreshed product assortment are gaining traction, we expect to see more evidence of this during back-to-school, as we’ve previously discussed.”

Nevertheless, the firm is paring down its outlook for the year, bringing the mid-point for earnings growth down to 9%, from the prior adjusted EPS guidance range of 13%.

“While we still expect to see year-over-year gains, we believe this new rate more accurately reflects industry challenges to date and gradual improvement over the balance of the year,” Sullivan noted.

Sales at Caleres’ Brand Portfolio — comprising about a dozen shoe names— meanwhile, were a bright spot in the most recent quarter, jumping more than 20% to $341.1 million.

Overall, the firm’s Q1 adjusted net income totaled $15 million, or 36 cents per share, and in line with analysts’ expectations.

Caleres continues to expected full-year consolidated net sales of $3 billion and adjusted EPS in the range of $2.35 to $2.45.

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