Caleres Closes 100+ Shoe Stores, Renegotiates 1.1K Leases As D2C Sales Soar

Caleres, the 140-year-old owner of more than a dozen footwear brands and over 1,200 retail locations, said it closed the books on 2020 as a more agile, focused and profitable company, and is optimistic about the economic rebound for the second half of 2021.

In releasing its fourth-quarter results, the St. Louis-based owner of the Famous Footwear, Dr. Scholl’s and Allen Edmonds brands said that its net sales for the three months ending Jan. 30 fell 18 percent from a year ago to $571 million, its eCommerce sales rose 25 percent and its direct-to-consumer (D2C) channels accounted for 75 percent of its business.

“Caleres is a more agile and focused organization than it was at the start of 2020, with an even more vigorous commitment to connecting with our consumers and providing them with compelling and fresh product – across growing footwear categories — when, where and how they want to shop,” CEO Diane Sullivan said.

While Caleres said the pace of recovery was still uncertain, it is seeing signs of stabilization in the marketplace. Sullivan believes the company is well-positioned to capitalize as the market rebounds and the world returns to a greater degree of normalcy in the second half of the year.

Managing the Business

Going forward, Caleres said it will continue to focus on maintaining momentum at its Famous Footwear brand, while driving better alignment and improved performance throughout its portfolio of other brands. Caleres also said its disciplined cost control and capital spending efforts will continue.

“We continued the strategic rationalization of our real estate portfolio, ultimately closing 104 doors in our brick-and-mortar fleet and proactively renegotiating more than 1,100 leases, resulting in approximately 35 percent reduction in lease expense,” Sullivan said on the company’s conference call.

In particular, Sullivan noted that the ongoing exit from its Naturalizer retail fleet would result in improved profitability going forward, while more closely aligning the brand with the accelerated consumer shift toward digital. She said that 60 Naturalizer stores were closed in 2020 and that another 73 would shutter by the end of the first quarter,  leaving just seven locations in the U.S. and Asia and approximately 150 partner stores around the world.

Sport and Active Trend Not Fading

Caleres did not provide a tangible sales and earnings outlook for 2021, noting the ongoing disruption related to the pandemic and supply chain dislocations, but said it hopes to reinstate traditional guidance as the year progresses and the marketplace stabilizes.

As far as consumer trends are concerned, Sullivan said Caleres is exploring all possibilities for vertical integration within its brand portfolio, citing Dr. Scholl’s as an “excellent fit with the millennial family” as an example.

Sullivan also said there is a significant opportunity for continued momentum in its kids’ business, and that the company is starting to see demand return for open shoes and sandals as people go back to work and head outside again.

“In terms of the categories of business that we feel are going to continue to be strong, there is no doubt that the sport, active and wellness categories of business [will] absolutely continue,” Sullivan said. “We don’t think that that’s going to change significantly at all.”