Caleres Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chandana Madaka - KeyBanc Capital Markets - Analyst : This is Chandana Madaka on for Ashley Owens this morning. So I just wanted to ask just broadly, you're a year into your long-term plan that you outlined at Investor Day. Can you just provide more thoughts around the confidence levels? How should we be thinking about top line growth and scaling to that in next year and beyond? Is there any shift in the makeup there? And then you spoke to EPS expectations that are now expected to take a bit longer. So from an OpEx perspective, is there anything to call out on what's driving the adjustment? Any bucket that's contributing more?

Question: Chandana Madaka - KeyBanc Capital Markets - Analyst : Awesome. Just as a follow-up, I wanted to ask if there's anything more specific that you could discuss around the dynamics in China. What do you think is contributing to the softness there? Is it more broadly macro and consumer spend? And just speak to your confidence in the region as you're investing in opening more stores there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 3:00PM, CAL.N - Q3 2024 Caleres Inc Earnings Call

Question: Laura Champine - Loop Capital Markets - Analyst : If I look at the shifts in guidance, it doesn't seem to be top line as much as it is op margin, and it's -- perhaps that's mostly on gross margin. How much of this is just more markdowns to clear inventory in Q4? And how impactful, if it's impactful at all, is the customer (technical difficulty) called out in your press release today?

Question: Laura Champine - Loop Capital Markets - Analyst : So that seems like more of a top line issue, and I wouldn't expect a big markdown of receivables to impact margins in Q4. Is that fair?

Question: Laura Champine - Loop Capital Markets - Analyst : Right, exactly. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 3:00PM, CAL.N - Q3 2024 Caleres Inc Earnings Call

Question: Laura Champine - Loop Capital Markets - Analyst : Okay. And any framing you can give us around how large that customer is as a percentage of your wholesale business?

Question: Laura Champine - Loop Capital Markets - Analyst : So it sounds like you listed them in the press release in the order of their relative impact, which brings me to my final question. How large is China as a percentage of total sales at this point?

Question: Mitch Kummetz - Seaport Research Partners - Analyst : I just want to start on 4Q. The implied guide there looks like kind of maybe at the midpoint of the range. Sales down, I think, 6%. Jack, can you remind us what the sales impact of the 53rd week was last year, maybe in total and then how that split between Famous and BP? I assume it's mostly, if not all, on the Famous side. And when you look at that implied sales outlook, what are you assuming in terms of BP growth in the fourth quarter and then also Famous comp?

Question: Mitch Kummetz - Seaport Research Partners - Analyst : And on the Famous down slightly adjusted, I could probably try to back into some sort of comp assumption there, but maybe you could save me the trouble and kind of let me know what you're thinking in terms of comp on that business?

Question: Mitch Kummetz - Seaport Research Partners - Analyst : And then, Jack, I think you mentioned in response to one of Laura's questions that gross margin you expect to be down in the fourth quarter. It looks like -- again, if I kind of take the midpoint of your guide, it looks like maybe op margin down around 70 basis points in 4Q. Can you say how much you expect gross margin to be down? I assume maybe you're assuming some SG&A deleverage as well.

Question: Mitch Kummetz - Seaport Research Partners - Analyst : And is your Famous comp, your quarter-to-date -- I don't know, can you say anything about quarter-to-date at Famous? Is that sort of in line with that sort of plus 1% to 1.5%? Or is it below that and you expect that to pick up as the holiday season kicks in some more?

Question: Mitch Kummetz - Seaport Research Partners - Analyst : And maybe just a last one. On the boots, you said it was the biggest negative impact on the third quarter. Is there any way to quantify that? I would imagine boots are more significant in 4Q. So are you expecting the impact to be more significant in the fourth quarter than the third quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 3:00PM, CAL.N - Q3 2024 Caleres Inc Earnings Call

Question: Dana Telsey - Telsey Advisory Group - Analyst : As you think about the Brand Portfolio, what were the biggest brands where there was a rate of change? What decelerated? Did anything accelerate in Brand Portfolio? And then as you think of the Famous Footwear business, what are you seeing there in terms of the health of that consumer? And it sounds like the FLAIR stores still outperformed the base. Is it still 43 you're looking for this year? And just lastly, with the promotions in this current fourth quarter, how do you expect them to be different? You mentioned BOGO before. What's adjusting in the promotions in Famous Footwear or in Brand Portfolio as you go forward?

Question: Dana Telsey - Telsey Advisory Group - Analyst : Got it. And then just on that promotional part, Jay, how you're thinking about that, whether it's BOGO or how do you think of that as we go through the holiday season? Does it change at all?

Question: Dana Telsey - Telsey Advisory Group - Analyst : And just one last thing. How much was the industry down versus yourself? Was there a change in industry trend?

Question: Dana Telsey - Telsey Advisory Group - Analyst : Yes.