Retail: 59
Retail: 180
Mon, Aug 28, 2017
Vol 1, Issue No. 33

Famous Footwear Stumbles; Zumiez Sees Gains from Footwear, Hard Goods

Caleres-owned Famous Footwear is continuing to actively shed inventory in Q2 after reporting a 1 percent comparable sales decline and overall 3.1 percent revenue drop to $352.2 million on 28 fewer doors in Q1. A mid-single digit comp gain in April, which included record athletic sales, was unable to turn around the period’s fortunes that saw a high-single digit comp sales slide in February. CAL CEO and President Diane Sullivan told analysts the chain will continue to tighten its relationship with customers through its growing loyalty club program and also “elevate its product assortments” through stronger relationships with vendors.

Nike, an estimated 22 percent of Famous sales in FY18 according to analysts, is projected to have higher sales within the banner this year. “The new (Nike) product as it is showing up, we’re actually seeing some nice gains,” Caleres CFO Ken Hannah told analysts. “It’s really the clearing out of the older product that’s putting the pressure on the first half of the year. But we are expecting Nike in total to net to a positive.”

On the subject of tariffs, Caleres senior management confirmed it has been actively diversifying production away from China over the past five years, now sourcing approximately 60 percent of its merchandise mix in the country. Contingency plans in place, in case additional duties are added to Chinese imports, include additional sourcing shits, possible price increases and working with factories on ways to reduce costs.

In other retail news:

At Zumiez, where Q1 comps rose 3.3 percent and above a guided range of down 2 percent to flat, the retailer said sales improved during the last two months of the quarter. Revenue gains were led by footwer and hard goods as apparel sales trends were softer. North American sales rose 6.7 percent to $188 million on higher transaction volume and dollars per transaction that were fueled by higher AURs (average unit retail). Zumiez is forecasting flat product margins in FY19 and low-single digit comp sales growth. The retailer will open 15 stores this fiscal year, including six in North America. Meanwhile, CFO Chris Work confirmed that 7.9 percent of Zumiez consolidated U.S. sales are sourced in China with hats, belts, backpacks, wallets and other accessories already impacted by higher duties. Overall, approximately 45 percent of the banner’s branded and private label product is sourced in China, down from approximately 60 percent two quarters ago.