Caleres CEO Diane Sullivan and her management team, seeing a positive bounce from boots in Q2, are optimistic the category’s sales momentum will continue in H2 for Famous Footwear. She cited Dr. Martens, short booties and sneaker booties as having “very good” early reads in August. Meanwhile, Caleres is utilizing its sourcing expertise and vendor partnerships to maneuver additional footwear production away from China, where approximately 60 percent of its current assortment is produced, down from about 85 percent in 2014.
“We are working with our partners to reduce costs while also selectively exploring price increases where they will be the least disruptive to our consumers,” Sullivan told analysts.
In Q2, Famous Footwear generated a 1.5 percent increase in same-store sales despite a late spring that negatively impacted the period’s sandal sales. Total banner sales dipped 2.2 percent on 35 fewer doors to $419.8 million as a “noticeable increase in demand for novelty and newness” impacted margins. Still, a 15 basis-point drop in gross margin to 43.4 percent was seen as “better than expected” as the chain cleared inventory ahead of the back-to-school selling season.
“We have to make sure we redouble our efforts on making sure we create new products and a sense of urgency and newness all the time,” Sullivan said, “because we could see already this spring that she wasn’t interested in core products. She wasn’t interested in anything that she had seen before. It was really all about newness.”
The current FY outlook for Famous Footwear calls for flat to low-single digit same store sales and net profit increase (midpoint of EPS range) of approximately 9 percent.