Jay Schmidt, president and chief executive officer admitted Caleres’ performance in Q1 “fell short of expectations” after a fall in sales and earnings were hit by increased cost pressures.
For the 13 weeks ending 3 May, net sales were $614.2m, down 6.8% from the first quarter of 2024. Sales in its Famous Footwear segment were down 6.3%, and 4.6% on a comparable basis. Its Brand Portfolio segment net sales declined 6.9%.
Go deeper with GlobalData
Gross profit was $278.7m, while gross margin was 45.4%, down 150 basis points versus last year.
SG&A as a percentage of net sales was 43.4%, up 300 basis points versus last year, reflecting deleverage on the sales decline.
Caleres Q1 net earnings sank to $6.9m from $30.9m a year earlier.
Caleres announced structural cost-cutting actions that will result in $15m SG&A reduction on an annualised basis, and $7.5m in fiscal 2025.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIt also said it expects dollars sourced from China to be 10% or less in the second half of the year.
Schmidt explained: “While our brands continue to resonate with consumers and both segments of our business gained market share in the period, our first quarter results fell short of expectations. February sales were particularly weak, and although trends improved in March and April, overall performance was below plan.
“Furthermore, operating earnings were pressured by lower gross margins, increased reserves, and costs to cancel and move inventory. Despite the weak quarter, we did experience improving momentum at retail and growth in our strategically important international business.”
“The operating environment has become more challenging, and we must redouble our efforts to drive growth and profitability. In the near term, we are focused on controlling what we can control, including optimising our sourcing strategy.
“Additionally, we expect to decrease SG&A by $15m on an annualised basis through structural expense cuts. We are viewing this as an opportunity to strengthen Caleres and position our company for the future,” added Schmidt.
He continued: “Longer term, we are confident in our ability to get back on track, execute our strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders.”
