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Caleres' (CAL) Earnings Beat in Q3, Sales Decrease 4.6% Y/Y
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Caleres, Inc. (CAL - Free Report) posted mixed results in the third quarter of fiscal 2023 wherein the top line missed the Zacks Consensus Estimate while the bottom line surpassed. While sales decreased year over year, earnings increased from the year-ago period.
This presently Zacks Rank #3 (Hold) company’s stock movement shows that its shares have gained 18.6% in the past three months compared with the industry’s 4% rise.
Q3 Insights
The company posted adjusted earnings from continuing operations of $1.37 a share, outshining the Zacks Consensus Estimate of $1.28. Also, the bottom line increased 19.1% from earnings of $1.15 a share earned in the same quarter a year ago.
Consolidated net sales of $761.9 million dipped 4.6% year over year on lower sales across all the segments. Also, the metric missed the consensus mark of $772 million. Famous Footwear segment net sales declined 6.7% with comparable sales down 6.9%, while the Brand Portfolio unit’s sales dropped 0.8%. Direct-to-consumer sales accounted for roughly 73% of the overall quarterly sales.
Gross profit rose 0.1% year over year to $340.4 million with the gross margin increasing 210 basis points (bps) to 44.7%. Moreover, adjusted EBITDA grew 12.2% to $81.1 million with adjusted EBITDA margin expansion of 150 bps to 10.6%.
Other Financials
Caleres ended the quarter with cash and cash equivalents of $34 million and a total shareholders’ equity of $520.2 million including non-controlling interests of $6.8 million. Cash generated from operating activities was $157.2 million during the 39 weeks ended Oct 28, 2023.
Caleres has lowered the borrowings under its asset-based revolving credit facility, hence paying down $22.0 million in the reported quarter. The company invested $20.5 million in capital expenditures and returned $2.5 million to shareholders via quarterly dividends.
Outlook
Moving ahead, management is optimistic about the key brand assets, robust One Caleres capabilities and sturdy balance sheet. These positives are likely to deliver a third straight year of adjusted earnings in excess of the $4.00-per-share baseline. However, it has been witnessing a weak consumer demand landscape across the Famous Footwear division. Consequently, Caleres projects consolidated net sales to decline 4.5-5.5%, including the impact of the 53rd week of the current fiscal year.
For fiscal 2023, Caleres expects a consolidated operating margin of 7.3-7.5%, interest expenses of about $18 million and an effective tax rate of 25%. It envisions earnings per share to be in the range of $3.96-$4.06, inclusive of $7 million of restructuring charges with cost-control efforts and adjusted earnings per share of $4.10-$4.20. Capital expenditures of $50 million are projected for the fiscal year.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Gap (GPS - Free Report) and American Eagle Outfitters (AEO - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 10.4% from the year-ago reported figure. ANF has delivered an earnings surprise of 724.8% in the last four quarters.
Gap, a renowned clothing retailer, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year earnings per share suggests growth of 280% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 43.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year earnings per share suggests growth of 37.1% from the year-ago reported figure.
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Caleres' (CAL) Earnings Beat in Q3, Sales Decrease 4.6% Y/Y
Caleres, Inc. (CAL - Free Report) posted mixed results in the third quarter of fiscal 2023 wherein the top line missed the Zacks Consensus Estimate while the bottom line surpassed. While sales decreased year over year, earnings increased from the year-ago period.
This presently Zacks Rank #3 (Hold) company’s stock movement shows that its shares have gained 18.6% in the past three months compared with the industry’s 4% rise.
Q3 Insights
The company posted adjusted earnings from continuing operations of $1.37 a share, outshining the Zacks Consensus Estimate of $1.28. Also, the bottom line increased 19.1% from earnings of $1.15 a share earned in the same quarter a year ago.
Consolidated net sales of $761.9 million dipped 4.6% year over year on lower sales across all the segments. Also, the metric missed the consensus mark of $772 million. Famous Footwear segment net sales declined 6.7% with comparable sales down 6.9%, while the Brand Portfolio unit’s sales dropped 0.8%. Direct-to-consumer sales accounted for roughly 73% of the overall quarterly sales.
Caleres, Inc. Price, Consensus and EPS Surprise
Caleres, Inc. price-consensus-eps-surprise-chart | Caleres, Inc. Quote
Gross profit rose 0.1% year over year to $340.4 million with the gross margin increasing 210 basis points (bps) to 44.7%. Moreover, adjusted EBITDA grew 12.2% to $81.1 million with adjusted EBITDA margin expansion of 150 bps to 10.6%.
Other Financials
Caleres ended the quarter with cash and cash equivalents of $34 million and a total shareholders’ equity of $520.2 million including non-controlling interests of $6.8 million. Cash generated from operating activities was $157.2 million during the 39 weeks ended Oct 28, 2023.
Caleres has lowered the borrowings under its asset-based revolving credit facility, hence paying down $22.0 million in the reported quarter. The company invested $20.5 million in capital expenditures and returned $2.5 million to shareholders via quarterly dividends.
Outlook
Moving ahead, management is optimistic about the key brand assets, robust One Caleres capabilities and sturdy balance sheet. These positives are likely to deliver a third straight year of adjusted earnings in excess of the $4.00-per-share baseline. However, it has been witnessing a weak consumer demand landscape across the Famous Footwear division. Consequently, Caleres projects consolidated net sales to decline 4.5-5.5%, including the impact of the 53rd week of the current fiscal year.
For fiscal 2023, Caleres expects a consolidated operating margin of 7.3-7.5%, interest expenses of about $18 million and an effective tax rate of 25%. It envisions earnings per share to be in the range of $3.96-$4.06, inclusive of $7 million of restructuring charges with cost-control efforts and adjusted earnings per share of $4.10-$4.20. Capital expenditures of $50 million are projected for the fiscal year.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Gap (GPS - Free Report) and American Eagle Outfitters (AEO - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 10.4% from the year-ago reported figure. ANF has delivered an earnings surprise of 724.8% in the last four quarters.
Gap, a renowned clothing retailer, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year earnings per share suggests growth of 280% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 43.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year earnings per share suggests growth of 37.1% from the year-ago reported figure.