Caleres, Inc. (NYSE:CAL) Q4 2017 Earnings Conference Call - Final Transcript
Mar 13, 2018 • 04:30 pm ET
Kenneth H. Hannah
a reversal from the first half of the year. For 2017, Famous Footwear gross margin of 44.2% was up slightly over 2016. Brand portfolio fourth quarter gross margin was up 173 basis points, as reported and up 71 basis points on an adjusted basis. For 2017, the brand portfolio team delivered full year gross margin of 38.7% on a reported basis and adjusted gross margin of 39.1%, with both metrics up more than 200 basis points.
SG&A expense for the fourth quarter of 2017 was up 7.9% year-over-year, primarily due to the addition of a full fourth quarter of Allen Edmonds expense and brand portfolio and the addition of a 53rd week at Famous Footwear. Despite these increases, we leveraged SG&A expense in the fourth quarter, coming in at 37.3% of sales, down 68 basis points versus the prior year fourth quarter. For the full year, SG&A expense was up 10.4%, mainly reflecting the addition of Allen Edmonds. Our depreciation and amortization of $15.9 million was up 1.4% in the fourth quarter versus the same period in 2016, primarily due to our acquisition of Allen Edmonds and the expansion of our Lebanon distribution center. For the full year, depreciation and amortization of $64.1 million was up 14.1% versus the prior year.
Net interest expense for the fourth quarter was $4.1 million, which was flat versus the fourth quarter of last year. For the full year, net interest expense was $17.3 million and up from $13.7 million, as we re-borrowed against our revolving credit facility for most of 2017 to finance the December 2016 acquisition of Allen Edmonds. Our tax rate for fiscal 2017 was 28.9% on a GAAP basis and 29.8% on an adjusted basis. Of note, our reported tax rate over the past four years has averaged approximately 28%, while our average adjusted tax rate for the same timeframe was slightly higher at approximately 29% and we expect that rate to come down to between 25% to 26% in 2018. Our capital expenditures were $51.2 million for 2017, down 14.1% year-over-year, reflecting the completion of our Lebanon distribution center and as we opened fewer retail stores during the year.
Now turning to our balance sheet. We ended the year with cash and equivalents of $64 million, up 15.8%, and paid down the remaining borrowings against our revolving credit facility, which were used to finance the December 2016 acquisition of Allen Edmonds. Our consolidated inventory position at the end of the year was $569.4 million. For our brand portfolio, inventory was down more than 5% year-over-year, excluding Allen Edmonds. At Famous Footwear, we ended the year with inventory down 2.4% year-over-year. We ended 2017 with 1,026 Famous Footwear doors after opening 34 and closing 63 doors. For our brand portfolio, we opened 15 doors in 2017 and closed 13, leaving us with 236 stores at year end.
Before we begin Q&A, I'd like to provide our initial fiscal 2018 guidance, which was presented in today's earnings release. Consolidated net sales