Caleres Reports Record Consolidated Net Sales and Earnings in Second Quarter 2022 and Reiterates Full Year 2022 Earnings Per Share Guidance

• Delivers record second quarter consolidated net sales of $738.3 million
• Generates record second quarter earnings per diluted share of $1.38
• Repurchases approximately 1.1 million shares of Caleres common stock
• Reiterates fiscal year 2022 earnings per share guidance

Caleres (NYSE: CAL, caleres.com), a diverse portfolio of consumer-driven footwear brands, today reported financial results for the second quarter ended July 30, 2022. During the quarter, Caleres continued its strong execution, delivering record second quarter sales and earnings and making significant accomplishments toward its enterprise-wide strategies. Net sales rose 9.3 percent year-over-year driven by positive momentum in the Brand Portfolio segment reflecting the successful execution of its initiatives to elevate product design, refine product assortments and increase the availability of inventory to meet demand. Notably, the company achieved net earnings of $51.2 million and generated a 45.6 percent consolidated gross profit margin. In addition, Caleres strategically deployed cash to augment inventory levels ahead of the fall buying and back-to-school seasons, prioritized investment in value-enhancing growth opportunities and repurchased $27.0 million, or 1.1 million shares, of Caleres common stock.

“During the second quarter, Caleres delivered another exceptional financial and operational performance with record second quarter sales and earnings and strong gross profit margins – marking yet another period of outstanding results,” said Diane Sullivan, Chairman and Chief Executive Officer. “In particular, Caleres utilized its growing and dynamic portfolio to capitalize on robust consumer demand in trending footwear categories, to support strong consolidated margin levels and to drive another excellent quarter of return on sales. In short, we demonstrated again that our versatile structure provides a significant and differentiating strength that, over the long term, enables Caleres to drive exceptional results in strong market environments while still generating attractive levels of profitability in difficult macro environments.”

Second Quarter 2022 Highlights

(13-weeks ended July 30, 2022 compared to 13-weeks ended July 31, 2021)

• Net sales were $738.3 million, up 9.3 percent from the second quarter of fiscal 2021;

-­ A 3.8 percent sales decline in the Famous Footwear segment

-­ A 35.6 percent sales increase in the Brand Portfolio segment

-­ Direct-to-consumer sales represented approximately 72 percent of total net sales

• Gross profit was $336.8 million, while gross margin was 45.6 percent;

-­ A 48.9 percent gross margin in the Famous Footwear segment

-­ A 38.3 percent gross margin in the Brand Portfolio segment

• SG&A as percentage of sales was 36.4 percent, 206-basis points lower than second quarter of fiscal 2021;
• Net earnings of $51.2 million, or earnings of $1.38 per diluted share, compared to net earnings of $37.4 million, or earnings of $0.97 per diluted share in the second quarter of fiscal 2021;
• Trailing twelve-month adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $324.2 million; or 11.0 percent of sales;
• Inventory levels were up approximately 36 percent, year-over-year, reflecting efforts to increase inventory levels ahead of the fall buying and back-to-school seasons. Inventory was down 2.7 percent when compared to second quarter of 2019 – a more comparable period;
• Generated $7.6 million in cash from operations; and
• Returned $29.6 million to shareholders through dividends and share repurchases.

Capital Return Progress

During the second quarter, Caleres opportunistically repurchased 1.1 million shares of common stock, representing approximately 3 percent of shares outstanding, at a total cost of $27.0 million. At quarter-end, approximately 7.2 million shares remained available in the current share repurchase authorization. The company views its substantial and ongoing buyback program as a highly effective mechanism for enhancing shareholder value.

In addition to buybacks, Caleres returned $2.6 million to shareholders through its recurring quarterly cash dividend during the second quarter.

Future dividend declarations and share repurchases will be based on a number of factors, including business and market conditions, the company’s future financial performance and other capital priorities.

Outlook

“With $2.70 of diluted earnings per share delivered in the first half, 2022 is shaping up to be another outstanding year for Caleres,” said Sullivan. “Even with ongoing inflationary pressures and uncertainties around the direction of consumer spending, Caleres is exceptionally well-positioned to maintain its significant momentum due to its diversified portfolio that can capitalize on opportunities across a broad spectrum of consumer segments and throughout a wide a range of market environments. Furthermore, the Caleres team is committed to utilizing our core competencies – in brand building, merchandising, marketing and logistics – to further our strategic priorities, while mobilizing quickly to unlock enterprise-wide growth opportunities. With the work we’ve done to structurally strengthen the long-term cash generating potential of the enterprise we are enthusiastic about the long-term prospects for profitability and remain sharply focused on creating value for our shareholders through our capital return program.”

Fiscal Year 2022 Outlook:

Caleres is reiterating its fiscal year 2022 financial outlook. Specifically, the company is raising and tightening its consolidated sales levels from up between 2 percent and 5 percent to up between 4 percent to 6 percent when compared to fiscal year 2021 and still expects earnings per diluted share to be between $4.20 and $4.40, which would represent another year of record or near-record earnings for the organization.

Investor Conference Call

Caleres will host an investor conference call at 5:00 p.m. ET today, Tuesday, August 23. The webcast and associated slides will be available at investor.caleres.com/news/events. A live conference call will be available at (877) 704-4453 for analysts in North America or (201) 389-0920 for international analysts, no passcode necessary. A replay will be available at investor.caleres.com/news/events/archive 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 13732134.

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 adjusted to exclude certain gains, charges, and recoveries, earnings before interest, taxes, depreciation and amortization, 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) supply chain disruptions and inflationary pressures; (ii) the coronavirus pandemic and its adverse impact on our business operations and financial condition (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) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xviii) 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.