Caleres Faces Major Setback as Q2 Earnings Fall Short
Caleres Faces Major Setback
Footwear retailer Caleres (NYSE: CAL) has recently encountered a significant decline in its stock price, dropping by 16%. This downturn follows the company’s report of second quarter earnings that did not meet market expectations, coupled with a revised forecast for the entire fiscal year.
Disappointing Earnings Report
For the second quarter, Caleres reported adjusted earnings per share of $0.85. This figure is notably lower than the expected $1.25, indicating a troubling gap in performance. Revenues also fell short of predictions, arriving at $683.3 million against anticipated figures of $728.78 million, marking a year-over-year decline of 1.8%.
Challenges Faced by the Company
Caleres attributed these disappointing results to various operational hurdles, particularly stemming from their recent SAP implementation. Additionally, the company experienced segments of weak seasonal demand, contributing to the overall downturn.
Sales Performance of Key Brands
Notably, sales from Famous Footwear saw a modest increase of 1.5% year-over-year. In contrast, the Brand Portfolio segment faced a decline of 5.1%. This disparity highlights differing consumer responses across the company's brand offerings.
Revised Fiscal Outlook
In response to the underperformance, Caleres has significantly adjusted its fiscal 2024 guidance. The company now projects earnings per share to be between $3.94 and $4.09, a downward revision from the prior estimate of $4.30 to $4.60. This revision also sits below the analyst consensus of $4.42.
Full-year Sales Forecast Adjusted
Furthermore, Caleres has revised its full-year sales forecast, now anticipating a low-single-digit percentage decline. This is a considerable shift from earlier projections that expected growth to remain flat or range between 2%.
Cost-saving Measures Implemented
To counteract the fiscal shortfall, Caleres announced a series of restructuring initiatives aimed at generating approximately $7.5 million in annualized cost savings. The company stated that it has proactively addressed the challenges arising from the ERP implementation that previously affected operational visibility.
Confidence in Future Earnings
Despite the setbacks, CEO Jay Schmidt expressed optimism regarding the company's prospects, stating, "Looking ahead, we are confident in our ability to deliver earnings per share in line with our revised guidance." This statement reflects the leadership’s commitment to regaining stability and growth moving forward.
Frequently Asked Questions
What caused the stock drop for Caleres?
The stock dropped due to disappointing second quarter earnings that missed analyst expectations and a revision of the fiscal outlook.
How did Caleres perform in the second quarter?
Caleres reported earnings of $0.85 per share, below the expected $1.25, with a revenue of $683.3 million, missing estimates significantly.
What restructuring actions is Caleres taking?
Caleres is implementing restructuring initiatives intended to save approximately $7.5 million annually to enhance efficiency and address operational challenges.
How did sales perform across Caleres' brands?
Famous Footwear sales increased by 1.5%, while sales in the Brand Portfolio segment decreased by 5.1% year-over-year.
What is the future outlook for Caleres?
Caleres has revised its earnings guidance downward but remains confident in their revised expectations for future performance.
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