ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: We achieved exceptional financial results in the third quarter of 2021, driven by a successful back-to-school season and strong consumer demand.
−Removed: We recorded sequential net sales growth and strong gross margins, and achieved the highest third quarter operating earnings in our history.
−Removed: Our strong performance was driven by our Famous Footwear segment, which reported a 26.5% increase in same-store sales and an operating margin of 17.7%, which was the highest third quarter operating margin in its history.
−Removed: Our Brand Portfolio segment also contributed to our strong results in the third quarter of 2021, with a 12.3% increase in net sales and a 55.8% increase in operating earnings compared to the third quarter of 2020.
−Removed: Our financial results were negatively impacted in 2020 by the coronavirus (“COVID-19”) pandemic, including the temporary closure of all of our retail stores beginning in mid-March, with a phased re-opening beginning in mid-May.
−Removed: We experienced sequential improvement in sales in the latter part of 2020, driven by the reopening of our retail stores, and continued solid growth of our e-commerce business.
−Removed: During the first nine months of 2021, as the vaccines became widely distributed and governments continued to ease restrictions, consumer sentiment and spending improved, which contributed to higher store traffic and strong growth in our net sales and operating earnings.
+Added: We achieved record-setting financial results in the first quarter of 2022, maintaining our momentum from 2021, with strong sales and operating earnings contribution from both our Famous Footwear and Brand Portfolio segments.
+Added: We utilized our robust cash generation to augment our inventory levels to better align with the strong consumer demand and position us for the upcoming season.
+Added: We have also taken the opportunity to repurchase over 700,000 shares of common stock, and expect to continue to do so.
Financial Highlights
−Removed: Following is a summary of the financial highlights for the third quarter of 2021:
−Removed: ● Consolidated net sales increased $136.7 million, or 21.1%, to $784.2 million in the third quarter of 2021, compared to $647.5 million in the third quarter of 2020.
−Removed: Our Famous Footwear segment’s net sales of $494.7 million were the highest quarterly net sales in its history.
−Removed: Net sales in our Brand Portfolio segment increased $32.9 million, or 12.3%, compared to the third quarter of 2020.
−Removed: On a consolidated basis, our direct-to-consumer sales represented approximately 73% of consolidated net sales for the third quarter of 2021, compared to 71% in the third quarter of 2020.
−Removed: ● Consolidated gross profit increased $78.4 million, or 30.5%, to $335.4 million in the third quarter of 2021, compared to $257.0 million in the third quarter of 2020.
−Removed: Our gross profit margin increased to 42.8% in the third quarter of 2021, compared to 39.7% in the third quarter of 2020, reflecting a decline in promotional activity driven by strong consumer demand, partially offset by higher inbound freight costs.
−Removed: ● Consolidated operating earnings increased $61.2 million to $81.3 million in the third quarter of 2021, compared to $20.1 million in the third quarter of 2020.
+Added: Following is a summary of the financial highlights for the first quarter of 2022:
+Added: ● Consolidated net sales increased $96.5 million, or 15.1%, to $735.1 million in the first quarter of 2022, compared to $638.6 million in the first quarter of 2021.
+Added: Our Famous Footwear segment continued its strong performance with net sales of $384.5 million.
+Added: Net sales of our Brand Portfolio segment increased $115.4 million, or 46.1%, compared to the first quarter of 2021.
+Added: On a consolidated basis, our direct-to-consumer sales represented approximately 65% of consolidated net sales for the first quarter of 2022, compared to 74.5% in the first quarter of 2021.
+Added: ● Consolidated gross profit increased $52.1 million, or 19.0%, to $327.0 million in the first quarter of 2022, compared to $274.9 million in the first quarter of 2021.
+Added: Our gross profit margin increased to 44.5% in the first quarter of 2022, compared to 43.0% in the first quarter of 2021, reflecting a decline in promotional activity driven by strong consumer demand and an improved sales mix of higher margin product.
+Added: ● Consolidated operating earnings increased $48.3 million to $66.2 million in the first quarter of 2022, compared to $17.9 million in the first quarter of 2021.
● Consolidated net earnings attributable to Caleres, Inc.
−Removed: were $59.6 million, or $1.54 per diluted share, in the third quarter of 2021, compared to $14.4 million, or $0.38 per diluted share, in the third quarter of 2020.
−Removed: The following items should be considered in evaluating the comparability of our third quarter results in 2021 and 2020:
−Removed: ● Blowfish Malibu mandatory purchase obligation – As further discussed in Note 5 and Note 14 to the condensed consolidated financial statements, the Blowfish Malibu noncontrolling interest was subject to a mandatory purchase obligation after a three-year period following the 2018 acquisition, based on an earnings multiple formula.
−Removed: During the third quarter of 2021, we recorded a final fair value adjustment of $1.9 million ($1.4 million on an after-tax basis, or $0.04 per diluted share), compared to an adjustment of $5.1 million ($3.8 million on an after-tax basis, or $0.10 per diluted share) in the third quarter of 2020.
−Removed: The fair value adjustments are recorded as interest expense, net in the condensed consolidated statements of earnings (loss).
−Removed: The purchase obligation was settled for $54.6 million on November 4, 2021, subsequent to the end of the third quarter, utilizing borrowings under our revolving credit agreement.
−Removed: ● Loss on early extinguishment of debt – During the third quarter of 2021, we incurred a loss of $0.6 million ($0.5 million on an after-tax basis, or $0.01 per diluted share) related to the redemption of $100 million of our Senior Notes in August 2021, prior to maturity, and the amendment of our revolving credit facility prior to its maturity.
−Removed: Refer to Note 10 to the condensed consolidated financial statements for further discussion.
−Removed: Recent Developments – Supply Chain Disruptions
−Removed: While we achieved strong financial results for the third quarter of 2021, we continue to experience global supply chain disruptions, including a delay in the receipt of inventory due to port congestion, reduced shipping vessel and container availability, and factory closures, as well as higher inbound freight costs, all of which resulted in incremental freight expenses and lower gross profit of approximately $11.5 million for the Brand Portfolio segment during the third quarter of 2021.
−Removed: We are actively working to minimize the impact of these disruptions by diversifying and leveraging our sourcing model, but we anticipate higher inbound freight costs in the fourth quarter of 2021 and into 2022.
−Removed: As of October 30, 2021, our Brand Portfolio segment has over $100 million of inventory in transit that is not yet available to sell.
−Removed: Depending on the timing of receipt of this inventory, it is possible that certain customers may cancel their orders or demand price concessions for the late receipts.
−Removed: If we are unable to sell this in-transit inventory, we may have to liquidate it through other less profitable channels, which may negatively impact our gross margins.
−Removed: In addition, the supply chain delays and inflationary cost pressures we are currently experiencing may limit our ability to meet incremental consumer demand and may negatively impact net sales during the fourth quarter of 2021 and into 2022.
−Removed: The extent and duration of these supply chain disruptions and higher freight costs are uncertain.
−Removed: However, we are actively working to mitigate these cost pressures and recover a portion of the increased costs through price increases.
+Added: were $50.5 million, or $1.32 per diluted share, in the first quarter of 2022, compared to $6.2 million, or $0.16 per diluted share, in the first quarter of 2021.
+Added: The following items should be considered in evaluating the comparability of our first quarter results in 2022 and 2021:
+Added: ● Supply Chain Disruptions and Inflationary Pressures – During the first quarter of 2022, we continued to experience global supply chain disruptions, including a delay in the receipt of inventory due to port congestion and reduced shipping vessel and container availability.
+Added: We have also experienced inflationary pressures on product costs and inbound freight.
+Added: In order to mitigate these inflationary pressures, we began implementing price increases in the second half of 2021.
+Added: We believe our ability to continue full price selling and our disciplined approach to inventory management will continue to mitigate the impact of these supply chain disruptions and inflationary pressures on our financial results.
+Added: As of April 30, 2022, we have nearly $98 million of inventory in transit that is not yet available to sell, an increase of 105% compared to our in-transit inventory levels at May 1, 2021, but a reduction of 45% from January 29, 2022.
+Added: ● Brand Portfolio – business exits – During the first quarter of 2021, we incurred costs totaling $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share), related to the strategic realignment of Naturalizer retail store operations.
+Added: There were no corresponding charges recorded during the first quarter of 2022.
+Added: ● Blowfish Malibu mandatory purchase obligation – As further discussed in Note 5 and Note 14 to the condensed consolidated financial statements, the remaining interest in Blowfish Malibu was subject to a mandatory purchase obligation after a three-year period following the 2018 acquisition, based on an earnings multiple formula.
+Added: During the first quarter of 2021, we recorded a fair value adjustment of $6.4 million ($4.7 million on an after-tax basis, or $0.13 per diluted share).
+Added: The fair value adjustment was recorded as interest expense, net in the condensed consolidated statement of earnings.
+Added: There were no corresponding charges in the first quarter of 2022.
+Added: The purchase obligation was settled for $54.6 million on November 4, 2021.
Metrics Used in the Evaluation of Our Business
5 unchanged sentences
In addition, in order to be included in the same-store sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year.
−Removed: Accordingly, closed stores (including the temporary store closures for a portion of 2020 for all of our Famous Footwear and Brand Portfolio stores in North America) are excluded from the same-store sales metric for each day of the closure.
+Added: Accordingly, closed stores are excluded from the same-store sales metric for each day of the closure.
Relocated stores are treated as new stores and therefore excluded from the calculation.
5 unchanged sentences
The sales per square foot metric is calculated by dividing total retail store sales, excluding e-commerce sales, by the total square footage of the retail store base at the end of each month of the respective period.
−Removed: This metric was adversely impacted by the temporary retail store closures during a portion of the nine months ended October 31, 2020 and therefore, the metric is not comparable to the nine months ended October 30, 2021.
−Removed: While the global supply chain disruptions have caused uncertainty in the macro environment, we are actively working with our suppliers to help offset the impacts to our business and financial performance.
−Removed: Although we believe we are well-positioned to navigate through the supply chain disruptions by responding to the variables within our control, including actively working to mitigate cost pressures through price increases, we expect the inflationary economy and the increase in inbound freight costs to impact our financial results in the fourth quarter of 2021.
−Removed: As we ship spring 2022 orders, we anticipate the price increases currently being implemented will mitigate the impact of the higher freight costs.
−Removed: We continued to make excellent progress toward our balance sheet initiatives during the third quarter of 2021, including redeeming $100.0 million aggregate principal amount of our Senior Notes and securing more advantageous terms on the revolving credit agreement.
−Removed: We believe these actions, in addition to redeeming the remaining $100.0 million of Senior Notes in the fourth quarter, will result in approximately a $12 million decline in annual interest expense.
−Removed: We will continue to leverage our core competencies and execute on our short and long-term strategic priorities to enhance long-term value for our shareholders.
+Added: During the first quarter of 2022, we made significant progress against our key strategic initiatives.
+Added: We believe we are well-positioned to capitalize on favorable market dynamics, despite the geopolitical concerns, inflationary pressures and ongoing supply chain disruptions.
+Added: As we progress throughout 2022, we will maintain our focus on aligning inventory with consumer demand, which we believe will capture demand for our brands and products.
+Added: We will continue to leverage our core competencies and execute on our short and long-term strategic priorities in an effort to enhance long-term value for our shareholders.
Following are the consolidated results and the results by segment:
1 unchanged sentence
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: October 30, 2021
−Removed: October 31, 2020
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
Cost of goods sold
Selling and administrative expenses
−Removed: Impairment of goodwill and intangible assets
Restructuring and other special charges, net
−Removed: Operating earnings (loss)
+Added: Operating earnings
Interest expense, net
−Removed: Loss on early extinguishment of debt
Other income, net
−Removed: Earnings (loss) before income taxes
−Removed: Income tax (provision) benefit
−Removed: Net earnings (loss)
−Removed: Net earnings (loss) attributable to noncontrolling interests
−Removed: Net earnings (loss) attributable to Caleres, Inc.
−Removed: Net sales increased $136.7 million, or 21.1%, to $784.2 million for the third quarter of 2021, compared to $647.5 million for the third quarter of 2020.
−Removed: Our Famous Footwear segment had an extremely successful back-to-school season and continued to benefit from strong consumer demand throughout the quarter, achieving the highest quarterly net sales in the segment’s history, with net sales increasing $103.0 million, or 26.3%, compared to the third quarter of 2020.
−Removed: Net sales for our Brand Portfolio segment increased $32.9 million, or 12.3% during the third quarter of 2021, compared to the third quarter of 2020.
−Removed: While Brand Portfolio net sales improved over last year, they remain below pre-pandemic levels, due in part to the brand exits announced in late 2019 and early 2020 and the related closure of all but two Naturalizer retail stores in North America.
−Removed: On a consolidated basis, our direct-to-consumer sales represented approximately 73% of total net sales for the third quarter of 2021.
−Removed: Our casual, athletic and sport footwear categories continue to perform well, sandals experienced strong growth during the third quarter of 2021, and demand for the dress category continues to improve, as more people return to the workplace.
−Removed: Net sales increased $552.2 million, or 35.7%, to $2,098.3 million for the nine months ended October 30, 2021, compared to $1,546.1 million for the nine months ended October 31, 2020.
−Removed: As COVID-19 vaccines became more widely available and government restrictions eased, we experienced strong growth in consumer demand during the nine months ended October 30, 2021, which has led to a significant increase in retail store traffic and conversion rates.
−Removed: Our Famous Footwear segment experienced a net sales increase of $429.5 million, or 46.8%, for the nine months ended October 30, 2021, with net sales of $1,346.4 million.
−Removed: Our Brand Portfolio segment reported a $121.4 million, or 18.2%, increase in net sales, with strong sales growth from our Sam Edelman, Blowfish, Vionic and Allen Edmonds brands.
−Removed: Gross profit increased $78.4 million, or 30.5%, to $335.4 million for the third quarter of 2021, compared to $257.0 million for the third quarter of 2020, reflecting higher net sales and a higher gross profit rate.
−Removed: As a percentage of net sales, gross profit increased to 42.8% for the third quarter of 2021, compared to 39.7% for the third quarter of 2020, reflecting a significant decline in promotional activity in our Famous Footwear segment driven by strong consumer demand, partially offset by an adverse impact of approximately $11.5 million of incremental cost of goods sold in our Brand Portfolio segment associated with supply chain disruptions and related vessel and container shortages.
−Removed: As discussed above, we anticipate the higher inbound freight costs to continue in the fourth quarter of 2021 and into 2022, which may continue to impact our gross profit if we are unable to mitigate or fully recover these additional costs through price increases.
−Removed: Gross profit increased $371.0 million, or 66.1%, to $932.5 million for the nine months ended October 30, 2021, compared to $561.5 million for the nine months ended October 31, 2020, primarily due to higher net sales and a reduction in promotional activity at Famous Footwear.
−Removed: For the nine months ended October 31, 2020, our gross profit was impacted by higher incremental cost of goods sold primarily due to $33.4 million in inventory markdowns reflecting the difficult retail environment driven by the COVID-19 pandemic, as well as $1.6 million in inventory markdowns related to the decision to exit our Fergie brand.
−Removed: As a percentage of net sales, gross profit increased to 44.4% for the nine months ended October 30, 2021, compared to 36.3% for the nine months ended October 31, 2020.
+Added: Earnings before income taxes
+Added: Income tax provision
+Added: Net (loss) earnings attributable to noncontrolling interests
+Added: Net earnings attributable to Caleres, Inc.
+Added: Net sales increased $96.5 million, or 15.1%, to $735.1 million for the first quarter of 2022, compared to $638.6 million for the first quarter of 2021.
+Added: Net sales for our Brand Portfolio segment increased $115.4 million, or 46.1% during the first quarter of 2022, compared to the first quarter of 2021, and the segment surpassed its pre-pandemic sales levels.
+Added: Our Famous Footwear segment’s strong sales performance from 2021 carried over to the first quarter of 2022.
+Added: However, net sales for Famous Footwear decreased $13.6 million, or 3.4%, in the first quarter of 2022 compared to the first quarter of 2021, primarily reflecting a lower store count.
+Added: On a consolidated basis, our direct-to-consumer sales represented approximately 65% of total net sales for the first quarter of 2022.
+Added: Our casual, athletic and sport footwear categories continue to resonate with consumers and demand for the dress, occasion and wear-to-work product categories continues to improve with the rebound in
+Added: social events and celebrations and the return-to-office trending higher.
+Added: During the first quarter of 2022, we remained focused on maximizing the vertical opportunity between the Famous Footwear and Brand Portfolio segments, with LifeStride, Dr.
+Added: Scholl’s and Blowfish Malibu representing three of our top 15 best-selling brands during the quarter.
+Added: Gross profit increased $52.1 million, or 19.0%, to $327.0 million for the first quarter of 2022, compared to $274.9 million for the first quarter of 2021, reflecting higher net sales and a higher gross profit rate.
+Added: As a percentage of net sales, gross profit increased to 44.5% for the first quarter of 2022, compared to 43.0% for the first quarter of 2021, as strong consumer demand enabled more full-price selling and minimal promotional activity.
+Added: The greater sales mix of higher margin brands and product categories within our Brand Portfolio segment also contributed to the gross margin improvement.
We classify certain warehousing, distribution, sourcing and other inventory procurement costs in selling and administrative expenses.
1 unchanged sentence
Selling and Administrative Expenses
−Removed: Selling and administrative expenses increased $17.2 million, or 7.2%, to $254.1 million for the third quarter of 2021, compared to $236.9 million for the third quarter of 2020.
−Removed: The increase was primarily due to higher marketing expenses, due in part to the return to television advertising for our Famous Footwear segment;
−Removed: higher salary expenses and higher expenses associated with our cash and stock-based incentive compensation plan for certain employees.
−Removed: This increase was partially offset by lower rent and facilities expenses, primarily associated with the Naturalizer retail store closures.
−Removed: Salary expenses were lower in the third quarter of 2020, primarily attributable to the steps taken in the first quarter of 2020 to reduce expenses, including workforce reductions, and reduced hours at our retail stores .
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 32.4% for the third quarter of 2021, from 36.6% for the third quarter of 2020, reflecting better leveraging of expenses over higher net sales.
−Removed: Selling and administrative expenses increased $93.5 million, or 14.1%, to $757.0 million for the nine months ended October 30, 2021, compared to $663.5 million for the nine months ended October 31, 2020.
−Removed: The increase for the nine months ended October 30, 2021 was primarily due to higher expenses for our cash-based incentive compensation plans for certain employees, and higher salary and marketing expenses.
−Removed: Salary expenses were lower during the nine months ended October 31, 2020 as a result of the actions taken to mitigate the impact of the pandemic on our financial results.
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 36.1% for the nine months ended October 30, 2021, from 42.9% for the nine months ended October 31, 2020, reflecting better leveraging of expenses over higher net sales.
−Removed: Impairment of Goodwill and Intangible Assets
−Removed: During the nine months ended October 31, 2020, we recorded non-cash impairment charges of $262.7 million ($218.5 million on an after-tax basis), including $240.3 million associated with goodwill and $22.4 million associated with the indefinite-lived Allen Edmonds and Via Spiga trade names.
−Removed: There were no corresponding charges for the nine months ended October 30, 2021.
−Removed: Refer to Note 8 to the condensed consolidated financial statements for further discussion of these charges.
+Added: Selling and administrative expenses increased $17.3 million, or 7.1%, to $260.8 million for the first quarter of 2022, compared to $243.5 million for the first quarter of 2021.
+Added: The increase primarily reflects higher salary and benefits expenses and cash and stock-based incentive compensation plan expenses driven by our strong financial results in the quarter as well as our expectations for the full year.
+Added: Our marketing expenses also increased as a result of tailoring our e-commerce marketing to the individual consumer in an effort to drive repeat purchases.
+Added: As a percentage of net sales, selling and administrative expenses decreased to 35.5% for the first quarter of 2022, from 38.1% for the first quarter of 2021, reflecting better leveraging of expenses over higher net sales.
Restructuring and Other Special Charges, Net
−Removed: We incurred restructuring and other special charges of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) during the nine months ended October 30, 2021, reflecting expenses associated with the decision to close all Naturalizer retail stores in North America with the exception of two Naturalizer flagship retail stores in the United States.
−Removed: During the nine months ended October 31, 2020, we incurred restructuring and other special charges of $65.6 million ($52.5 million on an after-tax basis) related to the unfavorable business climate, driven by the impact of the pandemic on our business operations.
−Removed: These charges were primarily for impairment associated with lease right-of-use assets and retail store furniture and fixtures, liabilities associated with factory order cancellations and severance.
+Added: We incurred restructuring and other special charges of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) during the first quarter of 2021, reflecting expenses associated with the strategic realignment of the Naturalizer retail store operations.
Refer to Note 5 to the condensed consolidated financial statements for further discussion of these charges.
−Removed: Operating Earnings (Loss)
−Removed: Operating earnings increased $61.2 million to $81.3 million for the third quarter of 2021, compared to $20.1 million for the third quarter of 2020, primarily reflecting higher net sales and gross profit.
−Removed: As a percentage of net sales, operating earnings were 10.4% for the third quarter of 2021, compared to 3.1% for the third quarter of 2020.
−Removed: Operating earnings increased $592.3 million to $162.0 million for the nine months ended October 30, 2021, compared to an operating loss of $430.3 million for the nine months ended October 31, 2020, primarily reflecting higher net sales and gross profit, lower impairment charges and better leveraging of expenses over a higher net sales base.
−Removed: As a percentage of net sales, operating earnings were 7.7% for the nine months ended October 30, 2021, compared to an operating loss of 27.8% for the nine months ended October 31, 2020.
+Added: Operating Earnings
+Added: Operating earnings increased $48.3 million to $66.2 million for the first quarter of 2022, compared to $17.9 million for the first quarter of 2021, primarily reflecting higher net sales and gross profit.
+Added: As a percentage of net sales, operating earnings were 9.0% for the first quarter of 2022, compared to 2.8% for the first quarter of 2021.
Interest Expense, Net
−Removed: Interest expense, net decreased $5.8 million, or 53.4%, to $5.1 million for the third quarter of 2021, compared to $10.9 million for the third quarter of 2020, primarily due to a lower fair value adjustment to the Blowfish Malibu mandatory purchase obligation.
−Removed: We recognized a final fair value adjustment of $1.9 million in the third quarter of 2021, compared to an adjustment of $5.1 million in the third quarter of 2020.
−Removed: The adjustment during the third quarter of 2021 reflects the settlement of the purchase of the remaining interest in Blowfish Malibu.
−Removed: The purchase obligation of $54.6 million was paid on November 4, 2021.
−Removed: The decrease in interest expense also reflects lower average borrowings under our revolving credit agreement and a $100.0 million reduction in our outstanding Senior Notes in August 2021, as further discussed below.
−Removed: Interest expense, net decreased $4.9 million, or 14.7%, to $28.8 million for the nine months ended October 30, 2021, compared to $33.7 million for the nine months ended October 31, 2020, primarily due to lower average borrowings under our revolving credit agreement and a reduction in our outstanding Senior Notes.
−Removed: We continued to utilize our strong cash generation to reduce the incremental borrowings that were used to preserve financial flexibility at the onset of the pandemic, reducing the borrowings under our revolving credit agreement from $440.0 million in March 2020 to $175.0 million at October 30, 2021.
−Removed: In addition, we redeemed $100.0 million of our Senior Notes in August 2021, shifting this higher interest debt to borrowings under our revolving credit agreement.
−Removed: We also notified our bondholders on November 18, 2021 that we would be redeeming the remaining $100.0 million of our Senior Notes in January 2022.
−Removed: We believe these actions will result in approximately a $12 million decline in annual interest expense in 2022.
−Removed: Loss on Early Extinguishment of Debt
−Removed: The loss on early extinguishment of debt was $0.6 million for the three and nine months ended October 30, 2021, reflecting the redemption of $100 million of Senior Notes prior to maturity and the amendment of our revolving credit facility.
−Removed: Refer to Note 10 to the condensed consolidated financial statements for further discussion.
+Added: Interest expense, net decreased $9.5 million, or 80.5%, to $2.3 million for the first quarter of 2022, compared to $11.8 million for the first quarter of 2021, primarily due to the non-recurrence of the $6.4 million fair value adjustment to the Blowfish Malibu mandatory purchase obligation in the first quarter of 2021.
+Added: The purchase obligation was settled for $54.6 million on November 4, 2021.
+Added: In addition, we redeemed our $200 million aggregate principal of senior notes in the second half of 2021.
+Added: By retiring our senior notes, we shifted our higher-rate debt to the lower-rate borrowings under our revolving credit agreement, which reduced our interest expense by approximately $3.1 million compared to the first quarter of 2021.
+Added: These decreases were partially offset by an increase in interest expense attributable to higher average borrowings under our revolving credit agreement.
Other Income, Net
−Removed: Other income, net decreased $1.7 million, or 29.6%, to $3.8 million for the third quarter of 2021, compared to $5.5 million for the third quarter of 2020, which reflects a reduction of certain components of net periodic benefit income in 2021, as compared to 2020.
−Removed: Refer to Note 13 of the condensed consolidated financial statements for further detail regarding the components of net periodic benefit income.
−Removed: Other income, net decreased $1.2 million, or 9.3%, to $11.5 million for nine months ended October 30, 2021, compared to $12.7 million for the nine months ended October 31, 2020, which reflects a reduction of certain components of net periodic benefit income in 2021, as compared to 2020.
+Added: Other income, net decreased $0.4 million, or 10.6%, to $3.4 million for the first quarter of 2022, compared to $3.8 million for the first quarter of 2021, which reflects a reduction of certain components of net periodic benefit income.
Refer to Note 13 of the condensed consolidated financial statements for further detail regarding the components of net periodic benefit income.
−Removed: Income Tax (Provision) Benefit
+Added: Income Tax Provision
Our effective tax rate can vary considerably from period to period, depending on a number of factors.
−Removed: Our consolidated effective tax rate was a provision of 24.9% for the third quarter of 2021, compared to a benefit of 1.9% for the third quarter of 2020.
−Removed: The lower effective tax rate for the third quarter of 2020 reflects the impact of a higher anticipated full year tax benefit, driven by the impact of the CARES Act, which permitted us to carry back 2020 losses to years with a higher federal tax rate, and the mix of projected earnings between international and domestic jurisdictions.
−Removed: For the nine months ended October 30, 2021, our consolidated effective tax rate was 27.7%, compared to 19.8% for the nine months ended October 31, 2020.
−Removed: Our higher tax rate for the nine months ended October 30, 2021 primarily reflects strong domestic earnings and incremental valuation allowances for our deferred tax assets for certain jurisdictions.
−Removed: The rate also reflects the non-deductibility of losses at our Canadian business division, which were driven by exit-related costs associated with Naturalizer retail stores during the first quarter.
−Removed: Our effective tax rate for the nine months ended October 31, 2020 was impacted by several discrete tax items, including the non-deductibility of a portion of our intangible asset impairment charges, the provision of a valuation allowance related to certain state and Canadian deferred tax assets, and the incremental tax provision related to the vesting of stock awards.
−Removed: Offsetting these impacts was a benefit associated with the CARES Act, which permitted the Company to carry back 2020 losses to years with a higher federal tax rate.
−Removed: Net Earnings (Loss) Attributable to Caleres, Inc.
+Added: Our consolidated effective tax rate was 25.7% for the first quarter of 2022, compared to 35.5% for the first quarter of 2021.
+Added: The higher effective tax rate for the first quarter of 2021 primarily reflects the non-deductibility of losses at our Canadian division, which were driven by exit-related costs associated with Naturalizer retail stores.
+Added: This impact on the tax rate was partially offset by discrete tax benefits totaling $1.2 million in the first quarter of 2021.
Net Earnings Attributable to Caleres, Inc.
−Removed: were $59.6 million and $103.2 for the third quarter and nine months ended October 30, 2021, respectively, compared to net earnings of $14.4 million and net losses of $362.1 million for the third quarter and nine months ended October 31, 2020, respectively, as a result of the factors described above.
+Added: Net earnings attributable to Caleres, Inc.
+Added: were $50.5 million for the first quarter of April 30, 2022, compared to net earnings of $6.2 million for the first quarter of 2021, as a result of the factors described above.
FAMOUS FOOTWEAR
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: October 30, 2021
−Removed: October 31, 2020
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
($ millions, except sales per square foot)
1 unchanged sentence
Selling and administrative expenses
−Removed: Restructuring and other special charges, net
−Removed: Operating earnings (loss)
+Added: Operating earnings
Same-store sales % change
2 unchanged sentences
Impact of changes in Canadian exchange rate on sales
−Removed: Sales per square foot, excluding e-commerce (thirteen and thirty-nine weeks ended)
+Added: Sales per square foot, excluding e-commerce (thirteen weeks ended)
Sales per square foot, excluding e-commerce (trailing twelve months)
3 unchanged sentences
Ending stores
−Removed: Net sales of $494.7 million in the third quarter of 2021 increased $103.0 million, or 26.3%, compared to the third quarter of 2020.
−Removed: We achieved the highest quarterly net sales in our history, driven by an extremely successful back-to-school season.
−Removed: Even after the back-to-school season concluded, sales momentum continued, driven by strong growth from brick-and-mortar as consumers returned to in-store shopping.
−Removed: E-commerce penetration in the third quarter of 2021 was approximately 13% of net sales, compared to approximately 17% in the third quarter of 2020 when retail store traffic was negatively impacted by the pandemic.
−Removed: Although supply chain disruptions led to a delay in inventory receipts, our athletic, casual and sandals categories of footwear performed very well during the quarter.
−Removed: During the third quarter of 2021, we opened one store and closed eight stores, resulting in 905 stores and total square footage of 6.0 million at the end of the third quarter of 2021, compared to 925 stores and total square footage of 6.1 million at the end of the third quarter of 2020.
−Removed: Sales to members of our customer loyalty program, Famously You Rewards ("Rewards"), continue to account for a majority of the segment’s sales, with approximately 78% of our net sales made to program members in the third quarter of 2021, compared to 80% in the third quarter of 2020.
−Removed: Net sales of $1,346.4 million for the nine months ended October 30, 2021 increased $429.5 million, or 46.8%, compared to $916.9 million for the nine months ended October 31, 2020.
−Removed: Our strong performance during the nine months ended October 30, 2021 was attributable to a number of factors.
−Removed: As COVID-19 vaccines became more widely available and government restrictions eased, we experienced strong growth in consumer demand, which led to a significant increase in retail store traffic and conversion rates during the nine months ended October 30, 2021.
−Removed: E-commerce penetration has remained strong in 2021 at approximately 13% of net sales in the nine months ended October 30, 2021, compared to approximately 22% in the nine months ended October 31, 2020 when our retail stores were temporarily closed from mid-March, with a phased reopening beginning in May.
−Removed: While supply chain disruptions have resulted in delays and lower receipts, our well-positioned inventory drove our record-setting results.
−Removed: Our casual, athletic and sport categories of footwear continued to be the strongest performers.
−Removed: D uring the nine months ended October 30, 2021, we opened nine stores and closed 20 stores.
−Removed: Gross profit increased $75.5 million, or 47.2%, to $235.5 million for the third quarter of 2021, compared to $160.0 million for the third quarter of 2020, driven by the sales increase and a higher gross profit rate.
−Removed: As a percentage of net sales, our gross profit increased to 47.6% for the third quarter of 2021, compared to 40.9% for the third quarter of 2020.
−Removed: Due to strong consumer demand and having the right level of inventory for our key brands and styles, we significantly reduced promotional activity, resulting in higher gross margins in both our retail stores and e-commerce business during the third quarter of 2021.
−Removed: Gross profit increased $294.4 million, or 84.5%, to $642.7 million for the nine months ended October 30, 2021, compared to $348.3 million for the nine months ended October 31, 2020, reflecting both higher net sales and gross profit rate.
−Removed: As a percentage of net sales, our gross
−Removed: profit increased to 47.7% for the nine months ended October 30, 2021, compared to 38.0% for the nine months ended October 31, 2020, reflecting a reduction in promotional activity driven by strong consumer demand and our well-positioned inventory.
−Removed: In addition, our gross profit margin in the nine months ended October 31, 2020 was adversely impacted by $6.0 million in incremental inventory markdowns, reflecting the difficult retail environment in 2020 driven by the pandemic.
+Added: Net sales of $384.5 million in the first quarter of 2022 decreased $13.6 million, or 3.4%, compared to the first quarter of 2021, primarily reflecting a lower store count.
+Added: Consumer demand remained strong and the sales momentum from 2021 continued into 2022, despite the impact of lower government stimulus in the current period.
+Added: Athletics and casual continue to be our top selling categories while the Caleres brands of LifeStride, Dr.
+Added: Scholl’s and Blowfish Malibu were all in our top 15 best-selling brands.
+Added: During the first quarter of 2022, we closed seven stores, resulting in 887 stores and total square footage of 5.9 million at the end of the first quarter of 2022, compared to 913 stores and total square footage of 6.0 million at the end of the first quarter of 2021.
+Added: Sales to members of our customer loyalty program, Famously You Rewards ("Rewards"), continue to account for a majority of the segment’s sales, with approximately 79% of our net sales made to program members in the first quarter of 2022, compared to 81% in the first quarter of 2021.
+Added: Gross profit increased $9.4 million, or 5.2%, to $189.2 million for the first quarter of 2022, compared to $179.8 million for the first quarter of 2021, driven by a higher gross profit rate.
+Added: As a percentage of net sales, our gross profit increased to 49.2% for the first quarter of 2022, compared to 45.2% for the first quarter of 2021.
+Added: Our higher gross profit margin in the first quarter of 2022 was primarily due to more full price selling and a reduction in promotional activity driven by strong demand for our product assortment and disciplined inventory management.
Selling and Administrative Expenses
−Removed: Selling and administrative expenses increased $15.9 million, or 12.1%, to $148.1 million for the third quarter of 2021, compared to $132.2 million for the third quarter of 2020.
−Removed: The increase was primarily due to higher payroll in the third quarter of 2021 associated with our retail store associates, as well as an increase in marketing expenses, as we resumed our television advertising campaigns.
−Removed: Salary expenses were lower in the third quarter of 2020, primarily attributable to reduced hours at our retail stores.
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 29.9% for the third quarter of 2021, compared to 33.8% for the third quarter of 2020, reflecting better leveraging of expenses over a higher net sales base.
−Removed: Selling and administrative expenses increased $51.6 million, or 13.9%, to $422.0 million for the nine months ended October 30, 2021, compared to $370.4 million for the nine months ended October 31, 2020.
−Removed: The increase was primarily due to higher payroll expenses associated with our retail store associates.
−Removed: Salary expenses were lower in the nine months ended October 31, 2020 as a result of our retail stores being temporarily closed for a portion of 2020.
−Removed: Variable expenses, including marketing and logistics, were also higher, reflecting the increase in sales volume in the nine months ended October 30, 2021.
−Removed: In addition, strategic actions were taken to reduce expenses in the first nine months of 2020, particularly to mitigate the impact of the pandemic during the period of retail store closures in the first half of the year.
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 31.3% for the nine months ended October 30, 2021, compared to 40.4% for the nine months ended October 31, 2020, reflecting better leveraging of our expenses over higher net sales.
−Removed: Restructuring and Other Special Charges, Net
−Removed: Restructuring and other special charges were $16.6 million for the nine months ended October 31, 2020, consisting primarily of impairment charges on furniture and fixtures in our retail stores and lease right-of use assets reflecting the impact of the pandemic on our business operations.
−Removed: Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.
−Removed: There were no corresponding charges during the three months ended October 31, 2020 or nine months ended October 30, 2021.
−Removed: Operating Earnings (Loss)
−Removed: Operating earnings increased $59.6 million to operating earnings of $87.4 million for the third quarter of 2021, compared to $27.8 million for the third quarter of 2020.
−Removed: Our operating earnings for the third quarter of 2021 exceeded our full year 2019 operating earnings.
−Removed: As a percentage of net sales, operating earnings were 17.7% for the third quarter of 2021, compared to 7.1% for the third quarter of 2020.
−Removed: Operating earnings (loss) increased $259.4 million to operating earnings of $220.7 million for the nine months ended October 30, 2021, compared to an operating loss of $38.7 million for the nine months ended October 31, 2020.
−Removed: As a percentage of net sales, operating earnings were 16.4% for the nine months ended October 30, 2021, compared to an operating loss of 4.2% for the nine months ended October 31, 2020.
+Added: Selling and administrative expenses increased $7.6 million, or 5.8%, to $139.5 million for the first quarter of 2022, compared to $131.9 million for the first quarter of 2021.
+Added: The increase was primarily due to higher salaries and benefits expenses and higher logistics costs.
+Added: As a percentage of net sales, selling and administrative expenses increased to 36.3% for the first quarter of 2022, compared to 33.2% for the first quarter of 2021.
+Added: Operating Earnings
+Added: Operating earnings increased $1.8 million to $49.7 million for the first quarter of 2022, compared to $47.9 million for the first quarter of 2021.
+Added: As a percentage of net sales, operating earnings were 12.9% for the first quarter of 2022, compared to 12.0% for the first quarter of 2021.
BRAND PORTFOLIO
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: October 30, 2021
−Removed: October 31, 2020
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
($ millions, except sales per square foot)
1 unchanged sentence
Selling and administrative expenses
−Removed: Impairment of goodwill and intangible assets
Restructuring and other special charges, net
7 unchanged sentences
Impact of changes in Canadian exchange rate on retail sales
−Removed: Sales per square foot, excluding e-commerce (thirteen and thirty-nine weeks ended)
+Added: Sales per square foot, excluding e-commerce (thirteen weeks ended)
Sales per square foot, excluding e-commerce (trailing twelve months)
4 unchanged sentences
(1) Direct-to-consumer includes sales of our retail stores and e-commerce sites and sales through our customers’ websites that we fulfill on a drop-ship basis.
−Removed: Net sales increased $32.9 million, or 12.3%, to $300.5 million for the third quarter of 2021, compared to $267.6 million for the third quarter of 2020.
−Removed: We continued to experience strong sales growth from our Blowfish Malibu, Sam Edelman, Allen Edmonds and Vionic brands, which carry a large assortment of athletic and casual styles.
−Removed: Both Sam Edelman and Allen Edmonds reported growth in the dress shoe category, as more people return to the workplace and attend special occasion events.
−Removed: While the segment experienced sequential sales improvement, our net sales in the third quarter of 2021 continued to be adversely impacted by the delayed receipt of inventory due to supply chain disruptions, including port congestion and factory closures.
−Removed: During the third quarter of 2021, we closed one store and opened four stores, resulting in a total of 90 stores and total square footage of 0.1 million at the end of the third quarter of 2021, compared to 197 stores and total square footage of 0.3 million at the end of the third quarter of 2020.
−Removed: Net sales increased $121.4 million, or 18.2%, to $789.8 for the nine months ended October 30, 2021, compared to $668.4 million for the nine months ended October 31, 2020, reflecting the same factors as described above.
−Removed: During the nine months ended October 30, 2021, we experienced strong sales growth from our Sam Edelman, Blowfish Malibu, Vionic and Allen Edmonds brands.
−Removed: In the first quarter of 2021, we closed the remaining 73 Naturalizer stores in North America that were scheduled for closure as part of our strategic realignment of the Naturalizer retail store operations.
−Removed: We remain focused on growing the brand’s e-commerce business through naturalizer.com, our retail partners and their websites, and the two flagship stores in the United States and three stores in China that we continue to operate.
−Removed: Including the Naturalizer closures, we closed 86 stores and opened six stores during the nine months ended October 30, 2021.
−Removed: On a trailing twelve-month basis, sales per square foot, excluding e-commerce sales, increased to $756 for the twelve months ended October 30, 2021, compared to $190 for the twelve months ended October 31, 2020.
−Removed: Our unfilled order position for our wholesale sales increased $146.0 million, or 62.2%, to $380.7 million at October 30, 2021, compared to $234.7 million at October 31, 2020.
−Removed: The increase in our backlog order levels reflects increased consumer demand trends.
−Removed: In addition, the
−Removed: global supply chain disruptions have caused a delay in the receipt of inventory due to port congestion, reduced shipping vessel and container availability.
−Removed: We are actively working to diversify and leverage our sourcing model to help offset the impact of these supply chain challenges, but expect the disruptions to continue into 2022.
−Removed: Gross profit increased $4.6 million, or 4.9%, to $98.9 million for the third quarter of 2021, compared to $94.3 million for the third quarter of 2020, reflecting higher net sales, partially offset by a lower gross profit rate.
−Removed: As a percentage of net sales, our gross profit decreased to 32.9% for the third quarter of 2021, compared to 35.2% for the third quarter of 2020, reflecting higher inbound freight costs.
−Removed: In connection with the supply chain disruptions described earlier, our freight costs have risen significantly.
−Removed: We anticipate the higher inbound freight costs to continue into 2022, which may continue to impact our gross profit if we are unable to mitigate or fully recover these additional costs from price increases.
−Removed: Gross profit increased $76.1 million, or 35.9%, to $287.8 million for the nine months ended October 30, 2021, compared to $211.7 million for the nine months ended October 31, 2020, due to higher net sales and improved gross profit rate.
−Removed: Our gross profit in the nine months ended October 31, 2020 was impacted by higher incremental cost of goods sold primarily due to $27.5 million in inventory markdowns reflecting the difficult retail environment driven by the pandemic, as well as $1.6 million in inventory markdowns related to the decision to exit our Fergie brand.
−Removed: As a percentage of net sales, our gross profit increased to 36.4% for the nine months ended October 30, 2021, compared to 31.7% for the nine months ended October 31, 2020.
+Added: Our Brand Portfolio segment achieved record-setting first quarter net sales of $365.7 million in the first quarter of 2022, driven by our strong product design, diverse and targeted assortments, and our strategic approach to inventory management.
+Added: While the net sales increase of $115.4 million, or 46.1%, compared to the first quarter of 2021, was broad-based across all of our brands, our Sam Edelman, LifeStride, Naturalizer, Blowfish Malibu, Allen Edmonds and Vionic brands were the most significant contributors.
+Added: We experienced strong growth in the dress, occasion and wear-to-work footwear categories for many of our brands, including Sam Edelman, Naturalizer, LifeStride and Allen Edmonds.
+Added: Our sport-inspired and casual footwear categories also resonated strongly with our customers during the quarter.
+Added: In addition, our net sales benefited as our retail partners sought to replenish their inventories during the first quarter of 2022.
+Added: The incremental sales from inventory replenishment is expected to moderate as we move through fiscal 2022 as our partners return to more normal buying and replenishment patterns.
+Added: During the first quarter of 2022, we closed four stores and opened one store, resulting in a total of 83 stores and total square footage of 0.1 million at the end of the first quarter of 2022, compared to 95 stores and total square footage of 0.1 million at the end of the first quarter of 2021.
+Added: In the first quarter of 2021, we permanently closed the remaining 73 Naturalizer stores in North America that were scheduled for closure as part of our strategic realignment of the Naturalizer retail store operations.
+Added: We continue to focus on growing the brand’s e-commerce business through naturalizer.com, our retail partners and their websites, and the two flagship stores in the United States.
+Added: On a trailing twelve-month basis, sales per square foot, excluding e-commerce sales, increased to $987 for the twelve months ended April 30, 2022, compared to $336 for the twelve months ended May 1, 2021.
+Added: With the closure of nearly all of our Naturalizer retail stores, the majority of our Brand Portfolio segment stores are for our Allen Edmonds brand, which have higher retail price points than the Naturalizer brand.
+Added: Our unfilled order position for our wholesale sales increased $137.0 million, or 51.8 %, to $401.5 million at April 30, 2022, compared to $264.5 million at May 1, 2021.
+Added: The increase in our backlog order levels primarily reflects higher consumer demand .
+Added: Gross profit increased $45.3 million, or 48.2%, to $139.3 million for the first quarter of 2022, compared to $94.0 million for the first quarter of 2021, reflecting higher net sales and gross profit rate.
+Added: As a percentage of net sales, our gross profit increased to 38.1% for the first quarter
+Added: of 2022, compared to 37.6% for the first quarter of 2021.
+Added: The increase in our gross profit margin was driven by an improved mix of higher margin brands and product categories and a less promotional retail environment.
+Added: While we have experienced inflationary pressures related to product costs and inbound freight through the first quarter, we have been able to successfully offset these impacts through price increases.
+Added: We anticipate the inflationary pressures to continue throughout 2022 and will continue to focus on mitigating the impact of these costs.
Selling and Administrative Expenses
−Removed: Selling and administrative expenses increased $0.5 million, or 0.6%, to $87.5 million for the third quarter of 2021, compared to $87.0 million for the third quarter of 2020.
−Removed: The increase was driven by higher salary and marketing expenses, partially offset by lower rent and facilities expenses, primarily due to the lower store count.
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 29.1% for the third quarter of 2021, compared to 32.5% for the third quarter of 2020.
−Removed: Selling and administrative expenses decreased $4.0 million, or 1.6%, to $249.2 million for the nine months ended October 30, 2021, compared to $253.2 million for the nine months ended October 31, 2020.
−Removed: The decrease was driven by lower retail facilities costs, primarily due to the lower store count, partially offset by higher marketing expenses.
−Removed: As a percentage of net sales, selling and administrative expenses decreased to 31.5% for the nine months ended October 30, 2021, compared to 37.9% for the nine months ended October 31, 2020.
−Removed: Impairment of Goodwill and Intangible Assets
−Removed: During the first quarter of 2020, we incurred impairment charges of $262.7 million, including $240.3 million associated with goodwill and $22.4 million associated with intangible assets, including $12.2 million for the Allen Edmonds trade name and $10.2 million for the Via Spiga trade name.
−Removed: There were no corresponding charges in the third quarter of 2020 or for the nine months ended October 30, 2021.
−Removed: Refer to Note 8 to the condensed consolidated financial statements for further discussion of these charges.
+Added: Selling and administrative expenses increased $14.7 million, or 17.5%, to $98.0 million for the first quarter of 2022, compared to $83.3 million for the first quarter of 2021.
+Added: The increase was driven by higher salaries and benefits expenses and higher marketing expenses.
+Added: As a percentage of net sales, selling and administrative expenses decreased to 26.8% for the first quarter of 2022, compared to 33.3% for the first quarter of 2021, reflecting better leveraging of expenses over a higher net sales base.
Restructuring and Other Special Charges, Net
−Removed: Restructuring and other special charges of $13.5 million were recorded during the nine months ended October 30, 2021, reflecting expenses associated with the decision to close all but two flagship Naturalizer retail stores in the United States.
−Removed: These costs primarily represented lease termination and other store closure costs, including employee severance.
−Removed: For the nine months ended October 31, 2020, we recorded restructuring and other special charges of $48.4 million, reflecting expenses associated with the impact of the pandemic on our business operations, primarily impairment charges on store furniture and fixtures and lease right-of-use assets, liabilities due to our factories for order cancellations and severance.
+Added: We incurred restructuring and other special charges of $13.5 million during the first quarter of 2021 for expenses associated with the strategic realignment of our Naturalizer retail store operations.
+Added: 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.
Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.
+Added: There were no corresponding charges during the first quarter of 2022.
Operating Earnings (Loss)
−Removed: Operating earnings increased $4.1 million to $11.4 million for the third quarter of 2021, compared to $7.3 million for the third quarter of 2020, as a result of the factors described above.
−Removed: As a percentage of net sales, operating earnings were 3.8% for the third quarter of 2021, compared to 2.7% in the third quarter of 2020.
−Removed: Operating earnings (loss) increased $377.7 million to operating earnings of $25.1 million for the nine months ended October 30, 2021, compared to an operating loss of $352.6 million for the nine months ended October 31, 2020, as a result of the factors described above.
−Removed: As a percentage of net sales, operating earnings were 3.2% for the nine months ended October 30, 2021, compared to an operating loss of 52.7% for the nine months ended October 31, 2020.
+Added: Operating earnings increased to $41.3 million for the first quarter of 2022, compared to an operating loss of $2.8 million for the first quarter of 2021, as a result of the factors described above.
+Added: As a percentage of net sales, operating earnings were 11.3% for the first quarter of 2022, compared to an operating loss of 1.1% in the first quarter of 2021.
ELIMINATIONS AND OTHER
Thirteen Weeks Ended
−Removed: Thirty-Nine Weeks Ended
−Removed: October 30, 2021
−Removed: October 31, 2020
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
Cost of goods sold
Selling and administrative expenses
−Removed: Restructuring and other special charges, net
Operating loss
The Eliminations and Other category includes the elimination of intersegment sales and profit, unallocated corporate administrative expenses, and other costs and recoveries.
−Removed: The net sales elimination of $11.0 million for the third quarter of 2021 is $0.8 million, or 6.7%, lower than the third quarter of 2020, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.
−Removed: The net sales elimination of $37.9 million for the nine months ended October 30, 2021 is $1.3 million, or 3.3%, lower than the nine months ended October 31, 2020, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.
−Removed: Selling and administrative expenses increased $0.7 million, to $18.4 million in the third quarter of 2021, compared to $17.7 million for the third quarter of 2020.
−Removed: The increase primarily reflects higher expenses for our cash and stock-based incentive compensation plans for certain employees.
−Removed: Selling and administrative expenses increased $45.9 million, to $85.9 million in the nine months ended October 30, 2021, compared to $40.0 million for the nine months ended October 31, 2020, reflecting higher expenses for our cash and stock-based incentive compensation plans for certain employees and higher expenses associated with certain cash-based director compensation plans that are variable based on our stock price.
−Removed: The increase in the cash-based director compensation plans reflects growth in our stock price during the nine months ended October 30, 2021, compared to a decline in the nine months ended October 31, 2020.
−Removed: Restructuring and other special charges of $0.6 million for the nine months ended October 31, 2020 were associated with workforce reductions as we sought to minimize our expense structure during the pandemic, as well as incremental expenses associated with deep cleaning our facilities and related supplies.
−Removed: Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.
−Removed: There were no corresponding expenses for the nine months ended October 30, 2021.
+Added: The net sales elimination of $15.1 million for the first quarter of 2022 is $5.3 million, or 54.8%, higher than the first quarter of 2021, reflecting an increase in product sold from our Brand Portfolio segment to Famous Footwear.
+Added: Selling and administrative expenses decreased $5.0 million, to $23.3 million in the first quarter of 2022, compared to $28.3 million for the first quarter of 2021.
+Added: The decrease primarily reflects lower expenses for certain employee benefits and lower expenses associated with our cash-based director compensation plans, reflecting a decrease in our stock price during the first quarter of 2022, compared to an increase in the first quarter of 2021.
LIQUIDITY AND CAPITAL RESOURCES
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
January 29, 2022
Borrowings under revolving credit agreement
−Removed: Current portion of long-term debt
Long-term debt
−Removed: Total debt (1)
−Removed: (1) As presented here, total debt excludes the Blowfish Malibu mandatory purchase obligation, which was valued at $54.6 million, $30.1 million and $39.1 million as of October 30, 2021, October 31, 2020 and January 30, 2021, respectively.
−Removed: The mandatory purchase obligation of $54.6 million was paid on November 4, 2021.
−Removed: Total debt obligations of $274.6 million at October 30, 2021 decreased $224.1 million, from $498.7 million at October 31, 2020, and decreased $174.3 million, from $448.9 million at January 30, 2021.
−Removed: The decreases from both October 31, 2020 and January 30, 2021 reflect continued progress toward reducing our debt levels.
−Removed: In August 2021, we redeemed $100.0 million aggregate principal amount of our Senior Notes using borrowings under the revolving credit agreement.
−Removed: Due to this redemption, borrowings under our revolving credit facility increased by $75.0 million during the third quarter of 2021, ending the quarter with an outstanding balance of $175.0 million.
−Removed: We continued to utilize our strong cash generation to reduce the incremental borrowings that were used to preserve financial flexibility at the onset of the pandemic, reducing the borrowings under our revolving credit agreement from $440.0 million in March 2020 to $175.0 million at October 30, 2021.
−Removed: Net interest expense for the third quarter of 2021 decreased $5.8 million to $5.1 million, compared to $10.9 million for the third quarter of 2020.
−Removed: The decrease is primarily attributable to a $3.2 million decrease in the fair value adjustment for the mandatory purchase obligation associated with the Blowfish Malibu acquisition, as further discussed in Note 5 and Note 14 to the condensed consolidated financial statements.
−Removed: In addition, the redemption of $100.0 million of our Senior Notes in August 2021 and lower average borrowings under our revolving credit agreement contributed to the decrease in interest expense.
−Removed: As further discussed below, we notified the holders of the Senior Notes that we will be redeeming the remaining $100.0 million aggregate principal amount of Senior Notes in January 2022.
−Removed: The extinguishment of Senior Notes will result in a reduction of annual interest expense of approximately $12 million.
+Added: (1) As presented here, total debt as of May 1, 2021 excludes the Blowfish Malibu mandatory purchase obligation, which was valued at $45.5 million.
+Added: The mandatory purchase obligation of $54.6 million was paid on November 4, 2021, as further discussed in Note 14 to the condensed consolidated financial statements.
+Added: Total debt obligations of $305.0 million at April 30, 2022 decreased $94.0 million, from $399.0 million at May 1, 2021, and increased $15.0 million, from $290.0 million at January 29, 2022.
+Added: The decrease from May 1, 2021 reflects continued progress toward reducing our debt levels using our strong cash generation over the last twelve months.
+Added: In August 2021, we redeemed $100.0 million aggregate principal amount of our senior notes and on January 3, 2022, we redeemed the remaining $100.0 million of senior notes.
+Added: We shifted this higher interest rate debt to borrowings under the revolving credit facility, which is expected to result in net interest expense savings on an ongoing basis.
+Added: The increase in total debt from January 29, 2022 is due primarily to higher inventory purchases during the quarter to satisfy the stronger consumer demand.
+Added: Net interest expense for the first quarter of 2022 decreased $9.5 million to $2.3 million, compared to $11.8 million for the first quarter of 2021.
+Added: The decrease is primarily attributable to the non-recurrence of the $6.4 million fair value adjustment to the Blowfish Malibu mandatory purchase obligation recorded in the first quarter of 2021.
+Added: The Blowfish Malibu mandatory purchase obligation of $54.6 million was paid on November 4, 2021, as further discussed in Note 5 and Note 14 to the condensed consolidated financial statements.
+Added: In addition, as discussed above, the redemption of all outstanding senior notes in 2021 also contributed to the decrease in interest expense in the first quarter of 2022.
+Added: These decreases were partially offset by higher average borrowings under our revolving credit agreement.
Credit Agreement
As further discussed in Note 10 to the condensed consolidated financial statements, the Company maintains a revolving credit facility for working capital needs.
−Removed: On October 5, 2021, we entered into a Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the “Credit Agreement”) which, among other modifications, extends the maturity date of the credit facility from January 18, 2024, to October 5, 2026, and decreases the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to $500.0 million, subject to borrowing base restrictions, and may be further increased by up to $250.0 million.
+Added: On October 5, 2021, we entered into a Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the “Credit Agreement”) which, among other modifications, extended the maturity date of the credit facility from January 18, 2024, to October 5, 2026 and decreased the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to $500.0 million, subject to borrowing base restrictions, and may be further increased by up to $250.0 million.
Interest on the borrowings is at variable rates based on the London Interbank Offered Rate ("LIBOR") (with a floor of 0.0%), or the prime rate (as defined in the Credit Agreement), plus a spread.
The Credit Agreement decreased the spread applied to the LIBOR or prime rate by a total of 75 basis points.
−Removed: At October 30, 2021, we had $175.0 million in borrowings and $12.5 million in letters of credit outstanding under the Credit Agreement.
−Removed: Total borrowing availability was $312.5 million at October 30, 2021.
−Removed: We were in compliance with all covenants and restrictions under the Credit Agreement as of October 30, 2021.
−Removed: On July 27, 2015, we issued $200.0 million aggregate principal amount of senior notes due on August 15, 2023 (the "Senior Notes").
−Removed: The Senior Notes bear interest at 6.25%, which is payable on February 15 and August 15 of each year.
−Removed: On August 16, 2021, we redeemed $100.0 million of the Senior Notes at 100.0%, shifting this higher interest debt to borrowings under the revolving credit agreement.
−Removed: Additionally, during the third quarter of 2021, we determined that we would redeem the remaining $100.0 million aggregate principal amount of Senior Notes in the fourth quarter of 2021.
−Removed: On November 18, 2021, we notified the holders of our Senior Notes that we would be redeeming the remaining $100.0 million in January 2022.
−Removed: The Senior Notes contain covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets.
−Removed: As of October 30, 2021, we were in compliance with all covenants and restrictions relating to the Senior Notes.
−Removed: Supplemental Guarantor Financial Information
−Removed: The Senior Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by all of its existing and future subsidiaries that are guarantors under the Company’s Credit Agreement.
−Removed: The guarantors are 100% owned by Caleres, Inc.
−Removed: ("Parent").
−Removed: On October 31, 2018, Vionic was joined to the Credit Agreement as a guarantor.
−Removed: After giving effect to the joinder, the Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds, LLC, Vionic Group, LLC and Vionic International, LLC are each co-borrowers and guarantors under the Credit Agreement.
−Removed: The following tables present summarized financial information for the Parent and guarantors on a combined basis after elimination of intercompany transactions between entities and amounts related to investments in any subsidiary that is a non-guarantor:
−Removed: October 30, 2021
−Removed: January 30, 2021
−Removed: Current assets
−Removed: Non-current assets
−Removed: Current liabilities
−Removed: Non-current liabilities
−Removed: Thirty-Nine Weeks
−Removed: ( $ millions )
−Removed: October 30, 2021
−Removed: Net sales (1)
−Removed: Operating earnings
−Removed: Net earnings attributable to Caleres, Inc.
−Removed: (1) Intercompany activity with the non-guarantor entities for the thirty-nine weeks ended October 30, 2021 was not material.
+Added: At April 30, 2022, we had $305.0 million in borrowings and $10.8 million in letters of credit outstanding under the Credit Agreement.
+Added: Total borrowing availability was $184.2 million at April 30, 2022.
+Added: We were in compliance with all covenants and restrictions under the Credit Agreement as of April 30, 2022.
+Added: On July 27, 2015, we issued $200.0 million aggregate principal amount of senior notes due in 2023 (the "Senior Notes").
+Added: The Senior Notes were guaranteed on a senior unsecured basis by each of the subsidiaries of Caleres, Inc.
+Added: that is an obligor under the Credit Agreement, and bore interest of 6.25%, which was payable on February 15 and August 15 of each year.
+Added: On August 16, 2021, we redeemed $100.0 million of the Senior Notes at 100.0%.
+Added: In addition, on January 3, 2022, we redeemed the remaining $100.0 million of Senior Notes at 100.0%.
+Added: Refer to further discussion regarding the Senior Notes in Note 10 to the condensed consolidated financial statements.
Working Capital and Cash Flow
−Removed: Thirty-Nine Weeks Ended
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: Thirteen Weeks Ended
+Added: April 30, 2022
Net cash provided by operating activities
Net cash used for investing activities
−Removed: Net cash used for financing activities
+Added: Net cash used for provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
−Removed: (Decrease) increase in cash and cash equivalents
+Added: Increase in cash and cash equivalents
Reasons for the major variances in cash provided (used) in the table above are as follows:
−Removed: Cash provided by operating activities was $87.9 million higher in the nine months ended October 30, 2021 as compared to the nine months ended October 31, 2020, primarily reflecting the following factors:
−Removed: ● An increase in net earnings, after consideration of non-cash items, in the nine months ended October 30, 2021, compared to the comparable period in 2020, primarily driven by the strong consumer demand and positive financial results of our Famous Footwear segment;
−Removed: ● A larger increase in accounts payable in the nine months ended October 30, 2021, compared to the nine months ended October 31, 2020;
+Added: Cash provided by operating activities was $50.6 million lower in the thirteen weeks ended April 30, 2022 as compared to the thirteen weeks ended May 1, 2021, primarily reflecting the following factors:
+Added: ● An increase in inventory during the thirteen weeks ended April 30, 2022, primarily reflecting higher inventory in response to consumer demand, as well as earlier purchasing of inventory for the Brand Portfolio segment to offset the increased transportation lead times, compared to a decrease during the thirteen weeks ended May 1, 2021;
+Added: ● A larger increase in accounts receivable in the thirteen weeks ended April 30, 2022, compared to the thirteen weeks ended May 1, 2021, attributable to higher wholesale sales during the period;
+Added: ● A larger decrease in accrued expenses and other liabilities in the thirteen weeks ended April 30, 2022 due in part to higher incentive compensation payments in 2022 due to the strong 2021 financial results, compared to the thirteen weeks ended May 1, 2021;
partially offset by
−Removed: ● An increase in inventory during the nine months ended October 30, 2021, primarily reflecting the increase in our in-transit inventory due to supply chain disruptions, compared to a decrease during the nine months ended October 31, 2020;
−Removed: ● A smaller increase in accrued expenses and other liabilities during the nine months ended October 30, 2021 compared to the nine months ended October 31, 2020.
+Added: ● A larger increase in accounts payable in the thirteen weeks ended April 30, 2022, compared to the thirteen weeks ended May 1, 2021, reflecting higher inventory purchases;
+Added: ● Higher net earnings in the thirteen weeks ended April 30, 2022, compared to the thirteen weeks ended May 1, 2021.
Supply chain financing :
−Removed: Certain of our suppliers are given the opportunity to sell receivables from us related to products that we’ve purchased to participating financial institutions at a rate that leverages our credit rating, which may be more beneficial to the suppliers than the rate
−Removed: they can obtain based upon their own credit rating.
+Added: Certain of our suppliers are given the opportunity to sell receivables from us related to products that we have purchased to participating financial institutions at a rate that leverages our credit rating, which may be more beneficial to the suppliers than the rate they can obtain based upon their own credit rating.
We negotiate payment and other terms with our suppliers, regardless of whether the supplier participates in the program, and our responsibility is limited to making payment based on the terms originally negotiated with the supplier.
These liabilities continue to be presented as accounts payable in our condensed consolidated balance sheets, with changes reflected within cash flows from operating activities when settled.
−Removed: As of October 30, 2021 and October 31, 2020, we had $64.0 million and $17.9 million, respectively, of accounts payable subject to supply chain financing arrangements.
−Removed: Cash used for investing activities was $0.9 million lower for the nine months ended October 30, 2021 as compared to the nine months ended October 31, 2020, reflecting slightly lower capital expenditures in the nine months ended October 30, 2021.
+Added: As of April 30, 2022 and May 1, 2021, we had $45.0 million and $55.0 million, respectively, of accounts payable subject to supply chain financing arrangements.
+Added: Cash used for investing activities was $7.8 million higher for the thirteen weeks ended April 30, 2022 as compared to the thirteen weeks ended May 1, 2021, reflecting higher capital expenditures.
In 2022, we expect our purchases of property and equipment and capitalized software to be between $35 million and $45 million, as compared to $24.1 million in 2021.
−Removed: Cash used for financing activities was $181.5 million higher for the nine months ended October 30, 2021 as compared to the nine months ended October 31, 2020, primarily due to the redemption of $100.0 million of senior notes and $75.0 million of net repayments on our revolving credit agreement in the nine months ended October 30, 2021, compared to net borrowings of $25.0 million in the comparable period in 2020.
−Removed: In addition, we did not repurchase any shares under our share repurchase programs during the nine months ended October 30, 2021, compared to $23.3 million in the nine months ended October 31, 2020.
+Added: We continue to invest in our Famous Footwear store refresh initiative.
+Added: In addition, in the first quarter of 2022, we tested a new prototype Famous Footwear store that offers an enhanced shopping experience, highlights our leading assortment of trending brands and elevates those brands in an energetic and exciting manner.
+Added: We plan to invest in additional prototype stores and store refreshes throughout 2022, which we believe will reinforce our national presence and further differentiate our store experience from that of our competitors.
+Added: Cash used for financing activities was $52.2 million lower for the thirteen weeks ended April 30, 2022 as compared to the thirteen weeks ended May 1, 2021, primarily due to net borrowings on our revolving credit agreement of $15.0 in the thirteen weeks ended April 30, 2022, compared to net repayments of $50.0 million in the comparable period in 2021.
+Added: In addition, we repurchased $14.7 million of shares under our share repurchase programs during the thirteen weeks ended April 30, 2022, with no corresponding share repurchases during the thirteen weeks ended May 1, 2021.
A summary of key financial data and ratios at the dates indicated is as follows:
−Removed: October 30, 2021
−Removed: October 31, 2020
+Added: April 30, 2022
January 29, 2022
2 unchanged sentences
Debt-to-capital ratio (3)
−Removed: (1) Operating working capital has been computed as total current assets, excluding cash, less total current liabilities, excluding borrowings under revolving credit agreement, current portion of long-term debt and lease obligations.
+Added: (1) Operating working capital has been computed as total current assets, excluding cash and property and equipment, held for sale, less total current liabilities, excluding borrowings under revolving credit agreement and lease obligations.
(2) The current ratio has been computed by dividing total current assets by total current liabilities.
(3) The debt-to-capital ratio has been computed by dividing total debt by total capitalization.
−Removed: Total debt is defined as long-term debt (including the current portion) and borrowings under revolving credit agreement.
+Added: Total debt is defined as long-term debt and borrowings under revolving credit agreement.
Total capitalization is defined as total debt and total equity .
−Removed: Operating working capital at October 30, 2021 was $120.6 million, which was $123.5 million lower than at October 31, 2020 and $71.2 million lower than at January 30, 2021.
−Removed: Our current ratio was 0.81 to 1 as of October 30, 2021, compared to 0.91 to 1 at October 31, 2020 and 0.86:1 at January 30, 2021.
−Removed: The decreases in operating working capital and the current ratio from both October 31, 2020 and January 30, 2021 primarily reflects higher trade accounts payable and accrued expenses, and an increase in the Blowfish Malibu mandatory purchase obligation attributable to strong growth in the brand, partially offset by higher inventory.
−Removed: Our debt-to-capital ratio was 47.3% as of October 30, 2021, compared to 65.6% as of October 31, 2020 and 68.8% at January 30, 2021.
−Removed: The decrease in our debt-to-capital ratio from October 31, 2020 and January 30, 2021 primarily reflects lower borrowings on our revolving credit facility and a lower outstanding amount of senior notes at October 30, 2021.
−Removed: We believe the cash provided by our operations, as well as $312.5 million in borrowing availability under the Credit Agreement, provide ample liquidity to meet the Company’s working capital needs for the foreseeable future.
−Removed: In addition, the amendment to the revolving credit facility agreement increased the amount by which the Credit Agreement may be further increased from $150.0 million to $250.0 million.
−Removed: We declared and paid dividends of $0.07 per share in the third quarter of both 2021 and 2020.
+Added: Operating working capital at April 30, 2022 was $237.0 million, which was $110.7 million and $43.2 million higher than at May 1, 2021 and January 29, 2022, respectively.
+Added: The increase in operating working capital from May 1, 2021 primarily reflects higher receivables and
+Added: the settlement of the Blowfish Malibu mandatory purchase obligation in the fourth quarter of 2021.
+Added: The increase in operating working capital from January 29, 2022 primarily reflects higher inventories, partially offset by higher trade payables.
+Added: Our current ratio was 0.87 to 1 as of April 30, 2022, consistent with May 1, 2021, and 0.82:1 at January 29, 2022.
+Added: Our debt-to-capital ratio was 46.0% as of April 30, 2022, compared to 65.9% as of May 1, 2021 and 47.3% at January 29, 2022.
+Added: The decrease in our debt-to-capital ratio from May 1, 2021 and January 29, 2022 primarily reflects the extinguishment of our senior notes and higher equity attributable to our strong financial results.
+Added: We declared and paid dividends of $0.07 per share in the first quarter of both 2022 and 2021.
The declaration and payment of any future dividend is at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors.
However, we presently expect that dividends will continue to be paid.
−Removed: CONTRACTUAL OBLIGATIONS
−Removed: Our contractual obligations primarily consist of purchase obligations, operating lease commitments, the current portion of our long-term debt and related interest, minimum license commitments, financial instruments, mandatory purchase obligation associated with the acquisition of Blowfish Malibu, one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, obligations for our supplemental executive retirement plan and other postretirement benefits and obligations.
−Removed: As further discussed in Note 10 to the condensed consolidated financial statements, during the third quarter of 2021, we redeemed $100.0 million of Senior Notes.
−Removed: We also made the decision during the third quarter of 2021 to redeem the remaining $100.0 million of Senior Notes during the fourth quarter of 2021, prior to the maturity date of August 15, 2023, and have presented those notes as a current liability on the condensed consolidated balance sheet as of October 30, 2021.
−Removed: As discussed in Note 5 to the condensed consolidated financial statements, on November 4, 2021, we paid the mandatory purchase obligation totaling $54.6 million, which was associated with the acquisition of Blowfish Malibu in July 2018.
−Removed: Except for these items and changes within the normal course of business (primarily changes in purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of our operations, changes in borrowings under our revolving credit agreement and changes in operating lease commitments as a result of new stores, store closures and lease renewals), there have been no other significant changes to the contractual obligations identified in our Annual Report on Form 10-K for the year ended January 30, 2021.
+Added: We have various contractual or other obligations, including borrowings under our revolving credit facility, operating lease commitments, one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings and obligations for our supplemental executive retirement plan and other postretirement benefits.
+Added: We also have purchase obligations to purchase inventory, assets and other goods and services.
+Added: We believe our operating cash flows are sufficient to meet our material cash requirements for at least the next 12 months.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
3 unchanged sentences
Recently issued accounting pronouncements and their impact on the Company are described in Note 2 to the condensed consolidated financial statements.
−Removed: We have experienced inflationary pressures on our product costs for most of 2021.
−Removed: We believe that the rates of inflation we have experienced have not had a significant effect on our net sales or operating earnings for the three and nine months ended October 30, 2021.
−Removed: While we have historically been able to offset our product cost increases by increasing prices, negotiating costs, or changing suppliers, we may not be able to offset price increases in the future, which may have an adverse effect on our results of operations and financial condition.
−Removed: However, we are actively working to mitigate these cost pressures and recover a portion of the increased costs through price increases.
FORWARD-LOOKING STATEMENTS
1 unchanged sentence
Such statements are subject to various risks and uncertainties that could cause actual results to differ materially.
−Removed: These risks include (i) economic conditions, supply chain disruptions and 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;
−Removed: (ii) the coronavirus pandemic and its adverse impact on our business operations, store traffic and financial condition;
−Removed: (iii) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions and other factors;
+Added: These risks include (i) supply chain disruptions and inflationary pressures;
+Added: (ii) the coronavirus pandemic and its adverse impact on our business operations and financial condition;
+Added: (iii) changing consumer demands, which may be influenced by general economic conditions and other factors;
(iv) rapidly changing consumer preferences and purchasing patterns and fashion trends;
−Removed: (v) intense competition within the footwear industry;
−Removed: (vi) customer concentration and increased consolidation in the retail industry;
+Added: (v) customer concentration and increased consolidation in the retail industry;
+Added: (vi) intense competition within the footwear industry;
(vii) foreign currency fluctuations;
−Removed: (viii) impairment charges resulting from a long-term decline in our stock price;
+Added: (viii) 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;
(ix) cybersecurity threats or other major disruption to the Company’s information technology systems;
2 unchanged sentences
(xii) the ability to recruit and retain senior management and other key associates;
−Removed: (xiii) the ability to maintain relationships with current suppliers;
−Removed: (xiv) the ability to secure/exit leases on favorable terms;
+Added: (xiii) the ability to secure/exit leases on favorable terms;
+Added: (xiv) the ability to maintain relationships with current suppliers;
(xv) transitional challenges with acquisitions and divestitures;
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.