• Achieves record fourth quarter consolidated net sales of $696.4 million and record annual net sales of $2.97 billion
• Generates record annual earnings per share of $4.92 and adjusted earnings per share of $4.52
• Drives inventory decline of 2.8 percent compared to fiscal 2021
• Expects fiscal 2023 net sales to be flat to up 2 percent over fiscal 2022
• Expects fiscal 2023 earnings per share of $4.10 to $4.30

Caleres (NYSE: CAL), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the fourth quarter and fiscal 2022, and provided guidance for fiscal 2023.

“Caleres closed a record-setting 2022 with another quarter of strong sales and earnings performance that exceeded initial expectations,” said Jay Schmidt, president and chief executive officer. “Our fourth quarter results were led by our Brand Portfolio, which experienced strong growth in sales, gross margin and earnings and a solid performance from Famous Footwear, which continues to provide the brands, trends and value aligned with consumer preferences.”

Specifically, during the quarter, the Brand Portfolio capitalized on continued strength to drive a 6.4 percent increase in year-over-year net sales and a nearly 200 basis point improvement in gross margin resulting in record fourth quarter earnings for the segment. The Brand Portfolio also delivered its best-ever annual operating earnings, which topped $112 million with an 8.5 percent return on sales. At the same time, Famous Footwear leaned into its improved inventory position to take advantage of strong pockets of demand – leading to record fourth quarter sales as well as an increase in comparable sales. For the full year, Famous achieved its second consecutive year of double-digit operating margin.

“Overall, Caleres generated annual results well ahead of pre-pandemic levels,” said Schmidt. “The power of the Caleres portfolio and the structural changes made in recent years have effectively doubled the baseline earnings power of the company. Looking ahead, we are confident in our ability to consistently deliver annual earnings per share of more than $4.00, generate strong cash flow, and create long-term value for our shareholders.”

Fourth Quarter 2022 Results

(13-weeks ended January 28, 2023, compared to 13-weeks ended January 29, 2022)

• Net sales were $696.4 million, up 2.5 percent from the fourth quarter of 2021;
  • Famous Footwear segment sales improved 0.1 percent, with comparable sales up 0.7 percent
  • Brand Portfolio segment sales increased 6.4 percent
  • Direct-to-consumer sales represented approximately 75 percent of total net sales
• Gross profit was $281.2 million, while gross margin was 40.4 percent;
  • Famous Footwear segment gross margin of 42.4 percent
  • Brand Portfolio segment gross margin of 36.0 percent
• SG&A as a percentage of net sales was 36.7 percent, effectively in-line with the fourth quarter of fiscal 2021;
• Net earnings of $40.8 million, or earnings per diluted share of $1.13, compared to net earnings of $33.9 million, or earnings per diluted share of $0.88 in the fourth quarter of fiscal 2021;
• Adjusted net earnings of $23.4 million, or adjusted earnings per diluted share of $0.65, compared to adjusted net earnings of $34.9 million, or adjusted earnings per diluted share of $0.91 in the fourth quarter of fiscal 2021;

Fiscal Year 2022 Results

(52-weeks ended January 28, 2023, compared to 52-weeks ended January 29, 2022)

• Net sales were $2.97 billion, up 6.9 percent from fiscal 2021;
  • Famous Footwear segment sales declined 2.5 percent, with comparable sales down 1.8 percent
  • Brand Portfolio segment sales increased 22.4 percent
  • Direct-to-consumer sales represented approximately 72 percent of total net sales
• Gross profit was $1.28 billion, while gross margin was 43.3 percent;
  • Famous Footwear segment gross margin of 46.3 percent
  • Brand Portfolio segment gross margin of 37.6 percent
• SG&A as a percentage of net sales was 36.0 percent, down 30 basis points compared to fiscal 2021;
• Net earnings of $181.7 million, or earnings per diluted share of $4.92, compared to net earnings of $137.0 million, or earnings per diluted share of $3.56 in fiscal 2021;
• Adjusted net earnings of $167.1 million, or adjusted earnings per diluted share of $4.52, compared to adjusted net earnings of $165.2 million, or adjusted earnings per diluted share of $4.29 in fiscal 2021;
• Trailing twelve-month earnings before interest, taxes, depreciation, and amortization (EBITDA) of $278.4 million and adjusted EBITDA of $281.3 million, or 9.5 percent of sales;
• Inventory was down 2.8 percent compared to fiscal 2021, reflecting the company’s disciplined approach to inventory management;
• Returned $73.4 million to shareholders through dividends and share repurchases; and
• Ended the year with $307.5 million of borrowings under its asset-based revolving credit facility.

Capital Allocation Update

Caleres continued to reduce the borrowings under its asset-based revolving credit facility – paying down $57 million during the fourth quarter. The company also returned $2.5 million to shareholders through its quarterly dividend. The Caleres board of directors recently approved its next quarterly dividend.

In fiscal 2022, Caleres continued to invest in value-driving growth opportunities while at the same time returning $73.4 million to shareholders through share repurchases and dividend payments. Specifically, Caleres repurchased 2.6 million shares of common stock, or approximately 7 percent of shares outstanding, for $63.2 million. The company returned $10.2 million to shareholders through its quarterly dividend.

Fiscal 2023 Outlook:

The Company is introducing its financial outlook for fiscal 2023 and first quarter of 2023 and notes that its fiscal 2023 is a 53-week year and compares to a 52-week year in fiscal 2022.

Caleres expects consolidated net sales to be flat to up 2 percent, including the 53^rd week this year, compared to 2022 and earnings per diluted share to be in the range of $4.10 to $4.30. This outlook balances strong momentum in our business and structural improvements in our earnings ability against anticipated headwinds that include inflationary pressures, higher interest rates, and continuing uncertainty in the macro-economic environment.

In addition, for fiscal 2023, the company expects:

• Consolidated operating margin of 7.1 percent to 7.3 percent;
• Interest expense of $18 million to $20 million, reflecting higher interest rates;
• Capital expenditures of $60 million to $70 million; and
• Effective tax rate of about 25 percent.

For first quarter 2023 the company expects:

• Consolidated net sales down 4 percent to 6 percent, due to timing of wholesale shipments in the Brand Portfolio in first quarter 2022 to satisfy customer restocking efforts; and
• Diluted earnings per share of $0.92 to $0.97.

Investor Conference Call

Caleres will host a conference call at 10:00 a.m. ET today, Tuesday, March 14. The webcast and associated slides will be available at https://investor.caleres.com/events-and-presentations/default.aspx. A live conference call will be available at (877) 704-4453 for North America participants or (201) 389-0920 for international participants, no passcode necessary. A replay will be also available at https://investor.caleres.com/events-and-presentations/default.aspx for a limited period. Investors may also access the replay by dialing (844) 512-2921 in North America or (412) 317-6671 internationally and using the conference pin 13736520.

Definitions

All references in this press release, outside of the condensed consolidated financial statements that follow, unless otherwise noted, related to net earnings attributable to Caleres, Inc. and diluted earnings per common share attributable to Caleres, Inc. shareholders, are presented as net earnings and earnings per diluted share, respectively.

Non-GAAP Financial Measures

In this press release, the company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic and estimated future gross profit, operating earnings, net earnings and earnings per diluted share, earnings before interest, taxes, depreciation and amortization adjusted to exclude certain gains, charges, and recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) inflationary pressures; (ii) supply chain disruptions (iii) changing consumer demands, which may be influenced by general economic conditions and other factors; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ix) cybersecurity threats or other major disruption to the company’s information technology systems; (x) the ability to accurately forecast sales and manage inventory levels; (xi) a disruption in the company’s distribution centers; (xii) the ability to recruit and retain senior management and other key associates; (xiii) the ability to secure/exit leases on favorable terms; (xiv) the ability to maintain relationships with current suppliers; (xv) transitional challenges with acquisitions and divestitures; (xvi) changes to tax laws, policies and treaties; (xvii) our commitments and shareholder expectations related to environmental, social and governance considerations; (xviii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xix) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. The company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report on Form 10-K for the year ended January 29, 2022, which information is incorporated by reference herein and updated by the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.