CALERES INC [CAL] Filings

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

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.

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INDEX

PART I		Page
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4	Controls and Procedures	34

PART II		34
Item 1	Legal Proceedings	34
Item 1A	Risk Factors	34
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3	Defaults Upon Senior Securities	35
Item 4	Mine Safety Disclosures	35
Item 5	Other Information	35
Item 6	Exhibits	36
	Signature	37

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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

—

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.

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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.

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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.

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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)