Caleres, Inc. (NYSE:CAL) Q3 2017 Earnings Conference Call Transcript

Nov 21, 2017 • 04:30 pm ET

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Caleres, Inc. (NYSE:CAL) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Ian and I will be your conference operator today. At this time, I'd like to welcome, everyone, to the third quarter 2017 Caleres Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn the call over to Ms. Peggy Reilly Tharp. Ma'am, you may begin.

Executive
Peggy Reilly Tharp

Thank you, good afternoon. I'm Peggy Reilly Tharp, VP, IR for Caleres and I'd like to thank you for joining our third quarter 2017 earnings call and webcast. A press release with detailed financial tables and slides are both available at caleres.com.

(Forward-Looking Cautionary Statements)

Joining the call today are Diane Sullivan, CEO, President and Chairman; Ken Hannah, CFO; and Rick Ausick, President, Famous Footwear.

And I would now like to turn the call over to Diane Sullivan.

Executive
Diane Sullivan

Thanks, Peggy, and good morning and thanks for joining us as we report results for what turned out to be a very fluid quarter. After a strong start in August with weekly positive comp sales at Famous Footwear, September, including back-to-school and Labor Day, was interrupted by hurricanes in Texas and Florida. These events were then followed by an unseasonably warm start to October. Even though the quarter became progressively more challenging, we delivered improvement in gross margin and generated strong cash flow while paying down our revolver borrowings. However, the weather-related events had a negative impact to top-line sales of approximately $35 million and resulted in third quarter earnings per share of $0.80. But as more seasonal weather has arrived in November, business has improved and sales are performing accordingly.

As a result, we are confirming our full-year adjusted EPS guidance of $2.10 to $2.20. With the fourth quarter still ahead of us, we are confident our strategy is working and that our teams are focused on the right short-term efforts and longer term initiatives. Now for a few specifics on Famous Footwear where comp sales were up 2.6% for the back-to-school selling season and up 0.9% in the third quarter. As in the second quarter, comp sales were up both in-store and online. We also saw an improvement in conversion rates in-store and online. And for the first nine months of the year, e-commerce sales represented nearly 10% of total sales. In the third quarter, we anniversaried another double-digit quarter of growth in lifestyle athletic sales with key brands driving the improvement. The brands that made up a significant share of our back-to-school sales last year were once again big contributors this year. In particular, women's and girl's athletic sales maintained their lead and were up high single and mid double-digits, respectively, as these consumers continue to respond to sports styles.

On the seasonal side of our business, sandals were, not surprisingly, up 3% overall in the third quarter. Women's sandal sales were up low single-digits and delivered significant margin improvement. As discussed, the third quarter was