Caleres lifts profit outlook as luxury brands rebound
The footwear company raised its full-year adjusted EPS guidance to $1.40-$1.65 after first-quarter earnings topped expectations.
The footwear retailer Caleres (CAL) reported first-quarter earnings that exceeded expectations and raised its full-year profit outlook, driven by a rebound in its luxury brands and improved gross margins. Adjusted earnings rose to $0.38 a share, up from $0.22 a year earlier and above the company’s prior guidance of $0.25-$0.30.
The results marked a turnaround from the prior quarter, when gross margins had contracted sharply. Consolidated net sales grew 8.5% year-over-year to $666.6 million, accelerating slightly from 8.7% growth in the fourth quarter. The improvement was led by the Brand Portfolio segment, where net sales jumped 20.6% year-over-year, with organic sales excluding Stuart Weitzman up 5.8% after a 1.5% gain in the prior quarter.
Gross margin expanded 200 basis points to 47.3%, reversing a 230-basis-point decline in the fourth quarter. The Brand Portfolio segment saw a 520-basis-point expansion to 49.0%, while Famous Footwear’s gross margin compressed 150 basis points to 43.8%. Operating margins followed a similar pattern: Brand Portfolio’s margin widened to 11.0%, while Famous Footwear’s turned slightly negative at -0.1%.
Famous Footwear continued to struggle, with net sales down 2.5% year-over-year and comparable sales declining 2.3% after a 0.1% gain in the prior quarter. The company now expects Famous Footwear’s comparable sales to decline mid-single digits in the second quarter, a steeper drop than previously forecast.
Caleres raised its full-year adjusted EPS guidance to $1.40-$1.65 from $1.35-$1.65 and lifted its GAAP EPS outlook to $1.44-$1.69 from $1.31-$1.61. Second-quarter consolidated net sales are expected to grow at a mid-to-high-single-digit rate, with gross margins expanding 345-375 basis points, driven by tariff mitigation efforts.
The company also disclosed a $3.9 million pre-tax gain from the sale of its corporate headquarters, contributing $2.9 million net of tax. Integration costs for the Stuart Weitzman acquisition fell to $25.6 million in the quarter, down from $39 million in the prior period, with remaining costs expected to total roughly $2 million for the year.