Caleres reports 18% sales decline, announces closure of 133 Naturalizer stores
St. Louis, Missouri-based footwear group Caleres announced further declines in its Q3 revenues on Thursday and revealed plans to implement widespread closures in the brick-and-mortar network of its Naturalizer business, as part of a strategic realignment of the brand’s operations to respond to increased online demand.
For the third quarter October 31, 2020, Caleres reported net sales of $647.5 million, down 18.3% from $792.4 million in the prior-year period. Direct-to-consumer sales accounted for 71.4% of this quarterly total.
Sales at Caleres’ Famous Footwear retail chain, which recently gained a new president in the form of Michael Edwards, decreased 12.3% in the quarter. The company’s brand portfolio segment saw a 25.6% year-over-year decline in its revenues, which nonetheless managed an impressive sequential increase of approximately 45%.
Sales from the company’s owned e-commerce platforms rose 24.6% compared to the same period in the previous year, representing 25.4% of the company’s quarterly net sales.
Net income at the group was $14.4 million, or $0.38 per diluted share, falling from $28.0 million, or $0.69 per diluted share, in the third quarter of fiscal 2019.
“Caleres furthered its recovery during the third quarter delivering results significantly better than anticipated in nearly all major financial metrics,” commented Caleres chairman, president and CEO Diane Sullivan in a release, before going on to point out the company’s progress in cutting costs during the period.
Overall, Caleres was able to achieve a year-over-year expense reduction of approximately $38 million in Q3, largely due to improved store productivity and actions taken to align the group’s resources with the current market environment, which continues to suffer from the ongoing Covid-19 pandemic.
Year to date the company reported net sales of $1.5 billion, down 30.4% from $2.2 billion in the same nine-month period in the previous year. Not loss for the period was $361.9 million, or $9.67 per diluted share, compared to net earnings of $62.1 million, or $1.51 per diluted share, reported by the group last year.
Moving forward, Caleres announced that it intends to permanently shutter approximately 133 stores run under the Naturalizer banner in the U.S. and Canada by the end of fiscal 2020.
Implemented as part of a strategic shift intended to reduce the company’s brick-and-mortar footprint and strengthen its online presence, the closures are expected to result in an annual pre-tax benefit of between $10 million and $12 million once complete.
Along with these store closures, Caleres will be right-sizing its back-office infrastructure in order to better support digital growth. Altogether, these realignment measures are expected to cost the company between $20 million and $25 million in pre-tax charges in the fourth quarter.
“Like the rest of the industry we have seen a structural shift in the shopping behavior of the consumer – a change that has been further accelerated by the global health crisis,” added Sullivan. “With a larger percentage of Naturalizer’s sales originating online, now is the opportune time to shed the legacy stores and evolve it to be more profitable.”
Caleres, whose portfolio also includes Sam Edelman, Allen Edmonds and Dr. Scholl’s Shoes, among other brands, currently operates more than 1,100 retail stores.
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