Third quarter recovery continues for Caleres

United States
Published:  02 December, 2021
Credit: Allen Edmonds

Net sales were up 21.1% to US$784.2 million year-on-year for the North American headquartered footwear company, which has reported its third quarter financial results.

Caleres saw a 26.3% increase in sales in its Famous Footwear segment and a 12.3% rise in the Brand Portfolio segment, while direct-to-consumer sales represented 73.5% of the total net sales for the quarter.

Gross profit was US$335.4 million, while gross margin was 42.8% and an improvement over the previous year. There was a 47.6% gross margin in the Famous Footwear segment, and 32.9% in Brand Portfolio.

The company reported inventory levels were up 7.1%, with in-transit inventory 3.1 times higher than the third quarter of 2020, reflecting the ongoing disruptions in the global supply chain.

During the third quarter, Caleres renegotiated and renewed the terms of its asset-based credit facility. The terms of the new facility, which was restored to pre-Covid terms, includes a five-year extension on the maturity date and features a reduction in the interest rate, and more accurately reflects the company’s significantly improved capital structure, accelerated recovery in the footwear market and more positive business outlook.

Caleres notified its bondholders that it plans to redeem the remaining US$100 million of its senior notes in January of 2022 – shifting that higher-cost debt to the revolving credit facility and extinguishing all the company’s remaining long-term debt. These actions, coupled with the company’s debt reduction activities in recent quarters, will result in approximately a US$12 million decline in annual interest expense.

Diane Sullivan, Chairman and Chief Executive Officer of Caleres, said: “As we progress through the remainder of the year and head into 2022, we expect supply chain challenges to persist. However, our global associates have taken quick action – leaning into our capabilities; optimising our inventory position; and diversifying and leveraging our sourcing model to help offset the impacts caused by the ongoing disruptions.

“We believe we are well-positioned to navigate this dynamic market environment and we are confident in our ability to utilise our diversified brand model, achieve our short and long-term strategic objectives, and continue to create value for our shareholders.”