10-Q 1 cal-20220430x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended April 30, 2022

 

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from  _____________  to  _____________

Commission file number: 1-2191

CALERES, INC.

(Exact name of registrant as specified in its charter)

 

 

New York

43-0197190

(State or other jurisdiction

(IRS Employer Identification Number)

of incorporation or organization)

8300 Maryland Avenue

63105

St. Louis, Missouri

(Zip Code)

(Address of principal executive offices)

(314) 854-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock - par value of $0.01 per share

CAL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes       No

As of May 27, 2022, 36,737,534 common shares were outstanding.

PART IFINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

CALERES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ thousands)

    

April 30, 2022

    

May 1, 2021

    

January 29, 2022

Assets

 

  

 

  

 

  

Current assets:

  

 

  

 

  

Cash and cash equivalents

$

33,717

$

98,244

$

30,115

Receivables, net

 

181,551

 

132,698

 

122,236

Inventories, net

 

643,527

 

445,299

 

596,807

Income taxes

 

11,815

 

35,850

 

33,073

Property and equipment, held for sale

16,777

5,455

Prepaid expenses and other current assets

 

46,254

 

45,027

 

48,790

Total current assets

 

933,641

 

757,118

 

836,476

Prepaid pension costs

 

101,609

 

91,397

 

99,139

Lease right-of-use assets

 

503,393

 

526,011

 

503,430

Property and equipment, net

 

137,600

 

165,118

 

150,238

Goodwill and intangible assets, net

 

224,475

 

236,924

 

227,503

Other assets

 

27,580

 

26,255

 

27,140

Total assets

$

1,928,298

$

1,802,823

$

1,843,926

Liabilities and Equity

 

  

 

  

 

  

Current liabilities:

 

  

 

  

 

  

Borrowings under revolving credit agreement

$

305,000

$

200,000

$

290,000

Mandatory purchase obligation - Blowfish Malibu

45,523

Trade accounts payable

 

386,821

 

293,309

 

331,470

Income taxes

 

39,418

 

11,359

 

22,622

Lease obligations

 

118,692

 

133,327

 

128,495

Other accrued expenses

 

219,956

 

182,419

 

253,026

Total current liabilities

 

1,069,887

 

865,937

 

1,025,613

Other liabilities:

 

  

 

  

 

  

Noncurrent lease obligations

 

452,742

 

490,355

 

452,909

Long-term debt

 

 

198,966

 

Income taxes

 

7,786

 

2,464

 

2,464

Deferred income taxes

 

14,811

 

10,256

 

14,731

Other liabilities

 

25,044

 

28,189

 

24,822

Total other liabilities

 

500,383

 

730,230

 

494,926

Equity:

 

  

 

  

 

  

Common stock

 

374

 

383

 

376

Additional paid-in capital

 

169,025

 

159,381

 

168,830

Accumulated other comprehensive loss

 

(8,328)

 

(8,936)

 

(8,606)

Retained earnings

 

191,165

 

52,041

 

157,970

Total Caleres, Inc. shareholders’ equity

 

352,236

 

202,869

 

318,570

Noncontrolling interests

 

5,792

 

3,787

 

4,817

Total equity

 

358,028

 

206,656

 

323,387

Total liabilities and equity

$

1,928,298

$

1,802,823

$

1,843,926

See notes to condensed consolidated financial statements.

3

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

    

Thirteen Weeks Ended

($ thousands, except per share amounts)

April 30, 2022

    

May 1, 2021

Net sales

$

735,116

$

638,636

Cost of goods sold

 

408,122

 

363,749

Gross profit

 

326,994

 

274,887

Selling and administrative expenses

 

260,799

 

243,535

Restructuring and other special charges, net

 

 

13,482

Operating earnings

 

66,195

 

17,870

Interest expense, net

 

(2,299)

 

(11,792)

Other income, net

 

3,422

 

3,828

Earnings before income taxes

 

67,318

 

9,906

Income tax provision

 

(17,333)

 

(3,521)

Net earnings

 

49,985

 

6,385

Net (loss) earnings attributable to noncontrolling interests

 

(524)

 

238

Net earnings attributable to Caleres, Inc.

$

50,509

$

6,147

Basic earnings per common share attributable to Caleres, Inc. shareholders

$

1.34

$

0.16

Diluted earnings per common share attributable to Caleres, Inc. shareholders

$

1.32

$

0.16

See notes to condensed consolidated financial statements.

4

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    

Thirteen Weeks Ended

($ thousands)

April 30, 2022

    

May 1, 2021

Net earnings

$

49,985

$

6,385

Other comprehensive income (loss) ("OCI"), net of tax:

 

 

  

Foreign currency translation adjustment

 

(163)

 

(224)

Pension and other postretirement benefits adjustments

 

440

 

366

Other comprehensive income, net of tax

 

277

 

142

Comprehensive income

 

50,262

 

6,527

Comprehensive (loss) income attributable to noncontrolling interests

 

(525)

 

180

Comprehensive income attributable to Caleres, Inc.

$

50,787

$

6,347

See notes to condensed consolidated financial statements.

5

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    

(Unaudited)

Thirteen Weeks Ended

($ thousands)

    

April 30, 2022

    

May 1, 2021

Operating Activities

 

  

 

  

Net earnings

$

49,985

$

6,385

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

  

Depreciation

 

8,064

 

8,945

Amortization of capitalized software

 

1,265

 

1,518

Amortization of intangible assets

 

3,028

 

3,147

Amortization of debt issuance costs and debt discount

 

102

 

343

Fair value adjustments to Blowfish mandatory purchase obligation

6,389

Share-based compensation expense

 

3,799

 

2,439

Loss on disposal of property and equipment

 

933

 

811

Impairment charges for property, equipment, and lease right-of-use assets

 

1,777

 

1,888

Provision/adjustment for expected credit losses

(617)

(152)

Deferred income taxes

 

80

 

2,012

Changes in operating assets and liabilities:

 

 

  

Receivables

 

(58,698)

 

(5,553)

Inventories

 

(46,775)

 

43,062

Prepaid expenses and other current and noncurrent assets

 

1,044

 

(10)

Trade accounts payable

 

55,372

 

12,665

Accrued expenses and other liabilities

 

(43,126)

 

(14,730)

Income taxes, net

 

43,376

 

1,791

Other, net

 

77

 

(572)

Net cash provided by operating activities

 

19,686

 

70,378

Investing Activities

 

  

 

  

Purchases of property and equipment

 

(9,305)

 

(2,659)

Capitalized software

 

(2,345)

 

(1,218)

Net cash used for investing activities

 

(11,650)

 

(3,877)

Financing Activities

 

  

 

  

Borrowings under revolving credit agreement

 

205,000

 

110,500

Repayments under revolving credit agreement

 

(190,000)

 

(160,500)

Dividends paid

 

(2,648)

 

(2,663)

Acquisition of treasury stock

 

(14,673)

 

Issuance of common stock under share-based plans, net

 

(3,599)

 

(3,501)

Contributions by noncontrolling interests

 

1,500

 

Other

 

 

(450)

Net cash used for financing activities

 

(4,420)

 

(56,614)

Effect of exchange rate changes on cash and cash equivalents

 

(14)

 

62

Increase in cash and cash equivalents

 

3,602

 

9,949

Cash and cash equivalents at beginning of period

 

30,115

 

88,295

Cash and cash equivalents at end of period

$

33,717

$

98,244

See notes to condensed consolidated financial statements.

6

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Accumulated

Other

Total Caleres, Inc.

Non-

(Unaudited)

Common Stock

Additional

Comprehensive

Retained

Shareholders’

controlling

($ thousands, except number of shares and per share amounts)

    

Shares

    

Dollars

    

Paid-In Capital

    

Loss

    

Earnings

    

Equity

    

Interests

    

Total Equity

BALANCE AS OF JANUARY 29, 2022

 

37,635,145

$

376

$

168,830

$

(8,606)

$

157,970

$

318,570

$

4,817

$

323,387

Net earnings (loss)

 

  

 

  

 

  

 

  

 

50,509

 

50,509

 

(524)

 

49,985

Foreign currency translation adjustment

 

  

 

  

 

  

 

(162)

 

  

 

(162)

 

(1)

 

(163)

Pension and other postretirement benefits adjustments, net of tax of $141

 

  

 

  

 

  

 

440

 

  

 

440

 

 

440

Comprehensive income (loss)

 

  

 

  

 

  

 

278

 

50,509

 

50,787

 

(525)

 

50,262

Contributions by noncontrolling interests

1,500

1,500

Dividends ($0.07 per share)

 

  

 

  

 

  

 

  

 

(2,648)

 

(2,648)

 

  

 

(2,648)

Acquisition of treasury stock

 

(701,324)

 

(7)

 

  

 

  

 

(14,666)

 

(14,673)

 

  

 

(14,673)

Issuance of common stock under share-based plans, net

 

512,508

 

5

 

(3,604)

 

  

 

  

 

(3,599)

 

  

 

(3,599)

Share-based compensation expense

 

  

 

  

 

3,799

 

  

 

  

 

3,799

 

  

 

3,799

BALANCE APRIL 30, 2022

 

37,446,329

$

374

$

169,025

$

(8,328)

$

191,165

$

352,236

$

5,792

$

358,028

BALANCE JANUARY 30, 2021

 

37,966,204

$

380

$

160,446

$

(9,136)

$

48,557

$

200,247

$

3,607

$

203,854

Net earnings

 

  

 

  

 

  

 

  

 

6,147

 

6,147

 

238

 

6,385

Foreign currency translation adjustment

 

  

 

  

 

  

 

(166)

 

  

 

(166)

 

(58)

 

(224)

Pension and other postretirement benefits adjustments, net of tax of $97

 

  

 

  

 

  

 

366

 

  

 

366

 

  

 

366

Comprehensive income

 

  

 

  

 

  

 

200

 

6,147

 

6,347

 

180

 

6,527

Dividends ($0.07 per share)

 

  

 

  

 

  

 

  

 

(2,663)

 

(2,663)

 

  

 

(2,663)

Issuance of common stock under share-based plans, net

 

327,268

 

3

 

(3,504)

 

  

 

  

 

(3,501)

 

  

 

(3,501)

Share-based compensation expense

 

  

 

  

 

2,439

 

  

 

  

 

2,439

 

  

 

2,439

BALANCE MAY 1, 2021

 

38,293,472

$

383

$

159,381

$

(8,936)

$

52,041

$

202,869

$

3,787

$

206,656

See notes to condensed consolidated financial statements.

7

CALERES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1    Basis of Presentation and General

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the United States Securities and Exchange Commission (“SEC”) and reflect all adjustments and accruals of a normal recurring nature, which management believes are necessary to present fairly the financial position, results of operations, comprehensive income and cash flows of Caleres, Inc. ("the Company").  These statements, however, do not include all information and footnotes necessary for a complete presentation of the Company’s consolidated financial position, results of operations, comprehensive income and cash flows in conformity with accounting principles generally accepted in the United States.  The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries, after the elimination of intercompany accounts and transactions.

The Company’s business is seasonal in nature due to consumer spending patterns, with higher back-to-school and holiday season sales.  Although the third fiscal quarter has historically accounted for a substantial portion of the Company’s earnings for the year, the Company is beginning to experience more equal distribution among the quarters.  Interim results may not necessarily be indicative of results which may be expected for any other interim period or for the year as a whole.

Certain prior period amounts in the notes to the condensed consolidated financial statements have been reclassified to conform to the current period presentation.  These reclassifications did not affect net earnings attributable to Caleres, Inc.

The accompanying condensed consolidated financial statements and footnotes should be read in conjunction with the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022.

Noncontrolling Interests

During 2019, the Company entered into a joint venture with Brand Investment Holding Limited (“Brand Investment Holding”), a member of the Gemkell Group, to sell Sam Edelman, Naturalizer and other branded footwear in China.  The Company and Brand Investment Holding are each 50% owners of the joint venture, which is named CLT Brand Solutions (“CLT”).  During the first quarter of 2022, CLT accrued capital contributions of $3.0 million, including $1.5 million of funding received from Brand Investment Holding.  Net sales and operating losses were $2.9 million and $0.9 million, respectively, for the thirteen weeks ended April 30, 2022.  Net sales and operating earnings (loss) were not significant during the thirteen weeks ended May 1, 2021.

The Company had a joint venture agreement with a subsidiary of C. banner International Holdings Limited (“CBI”) to market Naturalizer footwear in China.  The Company was a 51% owner of the joint venture (“B&H Footwear”), with CBI owning the other 49%.  The license enabling the joint venture to market the footwear expired in August 2017 and the parties are in the process of dissolving their joint venture agreements.  

The Company consolidates CLT and B&H Footwear into its condensed consolidated financial statements.  Net (loss) earnings attributable to noncontrolling interests represents the share of net earnings or losses that is attributable to Brand Investment Holding and CBI.  Transactions between the Company and the joint ventures have been eliminated in the condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

COVID-19, Supply Chain Disruptions and Inflationary Pressures

The coronavirus (“COVID-19”) continues to adversely impact the United States and global economies.  During 2021, our business operations were impacted by the delayed receipt of inventory attributable to temporary factory shutdowns, border closures, port congestion and shipping vessel and container availability.  While inventory receipts improved during the first quarter of 2022, supply chain disruptions continue to impact our business operations and financial results.  We experienced higher transportation costs throughout 2021 and continue to experience inflationary pressures for freight and other product costs.

8

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted.  The CARES Act includes a provision that allows the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022.  During 2020, the Company deferred approximately $9.4 million of employer social security payroll taxes.  As of April 30, 2022, employer social security payroll taxes totaling $5.0 million, which are payable by December 31, 2022, are presented in other accrued expenses on the condensed consolidated balance sheet.  As of May 1, 2021, approximately $4.7 million of deferred employer social security payroll taxes was recorded in other accrued expenses and $4.7 million was recorded in other liabilities on the condensed consolidated balance sheet.  

Property and Equipment, Held for Sale

In April 2021, the Company announced that it would begin marketing for sale its nine-acre corporate headquarters campus (the “Campus”) located in Clayton, Missouri.  In January 2022, the Company classified a portion of the Campus as property and equipment, held for sale on the consolidated balance sheet as of January 29, 2022. During the first quarter of 2022, the Company continued its negotiations and an agreement for the sale of the Campus was signed on April 27, 2022, subject to certain closing conditions. The sale of the Campus is expected to close and qualify as a completed sale during the second quarter of 2022. Accordingly, the Campus has been classified as property and equipment, held for sale on the condensed consolidated balance sheet as of April 30, 2022 and is reflected within the Eliminations and Other category. The Company evaluated the Campus asset group for impairment indicators and determined that no indicators were present.  The Company intends to execute a lease agreement for a portion of a new office building to be built on a parcel of the headquarters campus, as well as a lease agreement for the existing headquarters building during the period of construction.  These lease agreements are expected to be finalized during the second quarter of 2022.  

Note 2    Impact of New Accounting Pronouncements

The Company has evaluated all recently issued, but not yet effective, accounting pronouncements and does not expect any of the pronouncements to have a material impact on the Company’s condensed consolidated financial statements or disclosures.

9

Note 3    Revenues

Disaggregation of Revenues

The following table disaggregates revenue by segment and major source for the periods ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended April 30, 2022

Eliminations and

($ thousands)

    

Famous Footwear

    

Brand Portfolio

    

Other

    

Total

Retail stores

$

331,988

$

14,217

$

$

346,205

Landed wholesale - e-commerce - drop ship (1)

 

 

31,773

 

(998)

 

30,775

E-commerce - Company websites (1)

 

51,938

 

50,702

 

 

102,640

Total direct-to-consumer sales

383,926

96,692

(998)

479,620

Wholesale - e-commerce (1)

 

 

60,716

 

 

60,716

Landed wholesale

 

 

175,327

 

(14,128)

 

161,199

First-cost wholesale

 

 

30,076

 

 

30,076

Licensing and royalty

 

422

 

2,906

 

 

3,328

Other (2)

 

154

 

23

 

 

177

Net sales

$

384,502

$

365,740

$

(15,126)

$

735,116

    

Thirteen Weeks Ended May 1, 2021

Eliminations and

($ thousands)

    

Famous Footwear

    

Brand Portfolio

    

Other

    

Total

Retail stores

$

334,745

$

15,008

$

$

349,753

Landed wholesale - e-commerce - drop ship (1)

20,814

(394)

20,420

E-commerce - Company websites (1)

 

63,122

 

42,738

 

 

105,860

Total direct-to-consumer sales

397,867

78,560

(394)

476,033

Wholesale - e-commerce (1)

 

 

37,480

 

 

37,480

Landed wholesale

 

 

115,347

 

(9,379)

 

105,968

First-cost wholesale

 

 

16,718

 

 

16,718

Licensing and royalty

 

 

2,164

 

 

2,164

Other (2)

 

237

 

36

 

 

273

Net sales

$

398,104

$

250,305

$

(9,773)

$

638,636

(1)Collectively referred to as "e-commerce" in the narrative below
(2)Includes breakage revenue from unredeemed gift cards

Retail stores

Traditionally, the majority of the Company’s revenue is generated from retail sales where control is transferred and revenue is recognized at the point of sale. Retail sales are recorded net of estimated returns and exclude sales tax. The Company records a returns reserve and a corresponding return asset for expected returns of merchandise.

Retail sales to members of the Company’s loyalty programs, including the Famously You Rewards program, include two performance obligations: the sale of merchandise and the delivery of points that may be redeemed for future purchases. The transaction price is allocated to the separate performance obligations based on the relative stand-alone selling price. The stand-alone selling price for the points is estimated using the retail value of the merchandise earned, adjusted for estimated breakage based upon historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired.

10

E-commerce

The Company also generates revenue from sales on websites maintained by the Company that are shipped from the Company’s distribution centers or retail stores directly to the consumer, picked up directly by the consumer from the Company’s stores and e-commerce sales from the Company’s wholesale customers’ websites that are fulfilled on a drop-ship or first-cost basis (collectively referred to as "e-commerce"). The Company transfers control and recognizes revenue for merchandise sold that is shipped directly to an individual consumer upon delivery to the consumer.

Landed wholesale

Landed sales are wholesale sales in which the merchandise is shipped directly to the customer from the Company’s warehouses. Many customers purchasing footwear on a landed basis arrange their own transportation of merchandise and, with limited exceptions, control is transferred at the time of shipment.

First-cost wholesale

First-cost sales are wholesale sales in which the Company purchases merchandise from an international factory that manufactures the product and subsequently sells to a customer at an overseas port. Revenue is recognized at the time the merchandise is delivered to the customer’s designated freight forwarder and control is transferred to the customer.

Licensing and royalty

The Company has license agreements with third parties allowing them to sell the Company’s branded product, or other merchandise that uses the Company’s owned or licensed brand names. These license agreements provide the licensee access to the Company’s symbolic intellectual property, and revenue is therefore recognized over the license term. For royalty contracts that do not have guaranteed minimums, the Company recognizes revenue as the licensee’s sales occur. For royalty contracts that have guaranteed minimums, revenue for the guaranteed minimum is recognized on a straight-line basis during the term, until such time that the cumulative royalties exceed the total minimum guarantee. Up-front payments are recognized over the contractual term to which the guaranteed minimum relates.

The Company also licenses its Famous Footwear trade name and logo to a third-party financial institution to offer Famous Footwear-branded credit cards to its consumers.  The Company receives royalties based upon cardholder spending, which is recognized as licensing revenue at the time when the credit card is used.    

Contract Balances

Revenue is recorded at the transaction price, net of estimates for variable consideration for which reserves are established, including returns, allowances and discounts. Variable consideration is estimated using the expected value method and given the large number of contracts with similar characteristics, the portfolio approach is applied to determine the variable consideration for each revenue stream. Reserves for projected returns are based on historical patterns and current expectations.

Information about significant contract balances from contracts with customers is as follows:

($ thousands)

    

April 30, 2022

    

May 1, 2021

    

January 29, 2022

Customer allowances and discounts

$

22,896

$

19,260

$

20,328

Loyalty programs liability

 

18,152

 

16,177

 

18,814

Returns reserve

 

16,376

 

14,469

 

12,468

Gift card liability

 

6,130

 

5,423

 

6,804

Changes in contract balances with customers generally reflect differences in relative sales volume for the periods presented. In addition, during the thirteen weeks ended April 30, 2022, the loyalty programs liability increased $7.6 million due to points and material rights earned on purchases and decreased $8.2 million due to expirations and redemptions.  During the thirteen weeks ended May 1, 2021, the loyalty programs liability increased $9.3 million due to points and material rights earned on purchases and decreased $7.1 million due to expirations and redemptions.

11

The following table summarizes the activity in the Company’s allowance for expected credit losses during the thirteen weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

($ thousands)

    

April 30, 2022

May 1, 2021

Balance, beginning of period

$

9,601

$

14,928

Provision/adjustment for expected credit losses

(617)

(152)

Uncollectible accounts written off, net of recoveries

(526)

(3,404)

Balance, end of period

$

8,458

$

11,372

Note 4    Earnings Per Share

The Company uses the two-class method to compute basic and diluted earnings per common share attributable to Caleres, Inc. shareholders.  In periods of net loss, no effect is given to the Company’s participating securities since they do not contractually participate in the losses of the Company.  The following table sets forth the computation of basic and diluted earnings per common share attributable to Caleres, Inc. shareholders for the periods ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

($ thousands, except per share amounts)

    

April 30, 2022

    

May 1, 2021

NUMERATOR

Net earnings

$

49,985

$

6,385

Net loss (earnings) attributable to noncontrolling interests

 

524

 

(238)

Net earnings attributable to Caleres, Inc.

$

50,509

$

6,147

Net earnings allocated to participating securities

 

(2,017)

 

(210)

Net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities

$

48,492

$

5,937

 

  

 

  

DENOMINATOR

 

  

 

  

Denominator for basic earnings per common share attributable to Caleres, Inc. shareholders

 

36,209

 

36,707

Dilutive effect of share-based awards

 

467

 

158

Denominator for diluted earnings per common share attributable to Caleres, Inc. shareholders

 

36,676

 

36,865

 

  

 

  

Basic earnings per common share attributable to Caleres, Inc. shareholders

$

1.34

$

0.16

 

  

 

  

Diluted earnings per common share attributable to Caleres, Inc. shareholders

$

1.32

$

0.16

Options to purchase 16,667 shares of common stock for both the thirteen weeks ended April 30, 2022 and May 1, 2021 were not included in the denominator for diluted earnings per common share attributable to Caleres, Inc. shareholders because the effect would be anti-dilutive.  

During the thirteen weeks ended April 30, 2022, the Company repurchased 701,324 shares under the 2019 publicly announced share repurchase program, which permits repurchases of up to 5.0 million shares.  The Company did not repurchase any shares under share repurchase programs during the thirteen weeks ended May 1, 2021.  Refer to further discussion in Item 2, Unregistered Sales of Equity Securities and Use of Proceeds.  Subsequent to quarter-end, the Company has repurchased approximately 905,000 shares at an aggregate price of $22.0 million, bringing our fiscal year-to-date total to approximately 1,606,000 shares at an aggregate price of $36.7 million.

12

Note 5    Restructuring and Other Special Charges

Brand Portfolio – Business Exits

During the thirteen weeks ended May 1, 2021, the Company incurred costs of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) related to the strategic realignment of the Naturalizer retail store operations.  These costs primarily represented lease termination and other store closure costs, including employee severance, for the 73 stores that were closed during the first quarter of 2021.  These charges are presented in restructuring and special charges on the condensed consolidated statement of earnings within the Brand Portfolio segment for the thirteen weeks ended May 1, 2021.  There were no corresponding charges during the thirteen weeks ended April 30, 2022.  As of April 30, 2022 and May 1, 2021, reserves of $0.1 million and $5.2 million, respectively, were included on the condensed consolidated balance sheets.

Blowfish Mandatory Purchase Obligation

In 2018, the Company acquired a controlling interest in Blowfish Malibu.  The remaining interest was subject to a mandatory purchase obligation after a three-year period, which ended on July 31, 2021, based upon an earnings multiple formula as specified in the purchase agreement.  Approximately $9.0 million was initially assigned to the mandatory purchase obligation and fair value adjustments were recorded as interest expense.  The fair value adjustments on the mandatory purchase obligation totaled $6.4 million ($4.7 million on an after-tax basis, or $0.13 per diluted share) for the thirteen weeks ended May 1, 2021.  There were no corresponding charges during the thirteen weeks ended April 30, 2022.  The mandatory purchase obligation was settled for $54.6 million on November 4, 2021.  Refer to further discussion regarding the mandatory purchase obligation in Note 14 to the condensed consolidated financial statements.

 

Note 6    Business Segment Information

Following is a summary of certain key financial measures for the Company’s business segments for the periods ended April 30, 2022 and May 1, 2021:

Famous

Brand

Eliminations

($ thousands)

    

Footwear

    

Portfolio

    

and Other

    

Total

Thirteen Weeks Ended April 30, 2022

  

  

  

  

Net sales

$

384,502

$

365,740

$

(15,126)

$

735,116

Intersegment sales (1)

 

15,126

 

15,126

Operating earnings (loss)

 

49,688

 

41,349

 

(24,842)