Caleres Provides Business Update
April 02 2020 - 6:30AM
Business Wire
Extends store closures
Bolsters financial position
Continues community support efforts
Caleres (NYSE: CAL, caleres.com), a diverse portfolio of global
footwear brands, today provided a business update in light of the
rapidly evolving COVID-19 pandemic.
Caleres is committed to supporting the global community as it
works to slow the spread of the virus. Given the continued need for
an aggressive response to this current health crisis, the company’s
branded retail and Famous Footwear stores will remain closed until
further notice. Caleres will continue to assess the status of these
closures and will take direction from federal, state and local
governments as it evaluates the safe reopening of its retail stores
– understanding that this may be a staggered, regional approach. At
the same time, the company continues to take steps to enhance its
financial flexibility, reduce its cash outflows and fortify its
financial position during this period of economic disruption and
uncertainty.
Preserving cash and bolstering liquidity
In recent weeks, the company has moved quickly to drive down
costs in all areas of the business and to manage the variables
within its control to ensure that it is positioned for future
success. Caleres is leveraging the solid relationships within its
supply chain to reduce inventory and receipts and extend credit
terms; deferring or canceling capital projects; limiting cash
outflows associated with the retail store closures; postponing
certain marketing activities; and evaluating promotional
cadence.
As part of these efforts to preserve cash, Caleres has made the
difficult decision to align its staffing needs with the current,
reduced requirements of the business. As a result of this
realignment, Caleres found it necessary to lay off or furlough
Associates across its retail stores, distribution centers and
corporate operations, and has implemented a meaningful salary
reduction across all levels of the remaining global workforce,
including the executive leadership team and the company’s board of
directors. Furloughed employees will continue to receive healthcare
benefits, with Caleres paying both employee and company premiums
during this time. The company expects to maintain minimal staffing
levels while its stores are closed.
“These are difficult steps and we are acutely aware of the
impacts on our Associates, their families and our local
communities,” said Diane Sullivan, chief executive officer,
president and chairman. “While such decisions are never easy, we
believe we are taking the appropriate actions to protect the
long-term interests, health and stability of the organization, as
well as the interests of all of our stakeholders. We view these
actions as temporary, and I’ve given my commitment to our
Associates that the moment we can safely resume more normal
business operations we will do so.”
Ongoing operations and ecommerce update
With its stores closed, Caleres is sharply focused on meeting
the needs of its loyal consumer base and engaging new consumers in
the footwear market through its growing ecommerce channel. The
company is using its large, competitively advantaged network of
distribution centers and Famous Footwear locations to fulfill
online orders and to provide drop-ship services for its retail
partners’ digital platforms. Even before the virus, global
consumers were increasingly turning to ecommerce for their footwear
needs, with the company’s ecommerce-related direct-to-consumer
business expanding 23 percent year-over-year in 2019. Given the
investments made in its platform and its capabilities, Caleres is
confident that it is ready to handle the expected acceleration in
ecommerce business and is well-positioned to thrive in such a
world.
Community response and support
To assist with the COVID-19 crisis response, Caleres is working
to help address supply shortages for healthcare workers. It has
recently redirected skilled sewers to manufacture thousands of
masks per day at its Allen Edmonds factory in Port Washington,
Wisconsin. The masks are being delivered to hospitals in the
Wisconsin region. Caleres has also donated N-95 masks to healthcare
systems and first responders in New York and Saint Louis, Missouri,
and has partnered with CROCS to deliver free footwear to healthcare
professionals. The company is also donating shoes to the Two Ten
Footwear Foundation’s Share Your Shoes campaign drive.
“Guided by our strong leadership team and supported by our loyal
workforce and solid balance sheet, we’re confident that we are well
equipped to weather this health crisis and will be ready to reopen
our stores and welcome our Associates and customers back when it’s
safe to do so,” Sullivan continued. “Moreover, we believe our
high-quality brands – which consumers know and trust – are
exceptionally well-positioned for these uncertain and highly
dynamic times.”
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) the recent coronavirus outbreak
and its adverse impact on our business operations, store traffic
and financial condition (ii) changing consumer demands, which may
be influenced by consumers' disposable income, which in turn can be
influenced by general economic conditions and other factors; (iii)
impairment charges resulting from a long-term decline in our stock
price; (iv) rapidly changing fashion trends and consumer
preferences and purchasing patterns; (v) intense competition within
the footwear industry; (vi) 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; (vii) imposition of tariffs; (viii) the ability to
accurately forecast sales and manage inventory levels; (ix)
cybersecurity threats or other major disruption to the company’s
information technology systems; (x) customer concentration and
increased consolidation in the retail industry; (xi) transitional
challenges with acquisitions; (xii) a disruption in the company’s
distribution centers; (xiii) foreign currency fluctuations; (xiv)
changes to tax laws, policies and treaties; (xv) the ability to
recruit and retain senior management and other key associates;
(xvi) compliance with applicable laws and standards with respect to
labor, trade and product safety issues; (xvii) the ability to
maintain relationships with current suppliers; (xviii) the ability
to attract, retain, and maintain good relationships with licensors
and protect our intellectual property rights; and (xix) the ability
to secure/exit leases on favorable terms. 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 February 1,
2020, 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.
About Caleres
Caleres is the home of today’s most coveted footwear brands and
represents a diverse portfolio spanning all of life’s styles and
experiences. Every shoe tells a story and Caleres has the perfect
fit for every one of them. Our collections have been developed and
acquired to meet the evolving needs of today’s assorted and growing
global audiences, with consumer insights driving every aspect of
the innovation, design, and craft that go into our distinctly
positioned brands, including Famous Footwear, Sam Edelman,
Naturalizer, Allen Edmonds, Vionic, Dr. Scholl’s Shoes, and more.
The Caleres story is most simply defined by the company’s mission:
Inspire people to feel great…feet first.
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version on businesswire.com: https://www.businesswire.com/news/home/20200402005215/en/
Ken Hannah khannah@caleres.com Logan Bonacorsi
lbonacorsi@caleres.com
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