Caleres, Inc.

Greetings and welcome to the ClaraSync fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Liz Dunn, Senior Vice President, Corporate Development and Strategic Communications. Thank you. You may begin.

Good morning and thank you for joining our fourth quarter and full year 2024 earnings call and webcast. A press release with detailed financial tables as well as our quarterly slide presentation are available at Golaris.com. Please be aware today's discussion contains forward-looking statements, which are subject to several risks and uncertainties. Actual results may differ materially due to various risk factors, including those disclosed in the company's Form 10-K and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors which could impact forward-looking statements. Copies of these reports are available online. In discussing our operational results today, we will be providing and referring to certain non-GAAP financial measures. Additional details on these measures, as well as others featured in today's earnings release and presentation, are available at Claris.com. The company undertakes no obligation to update any information discussed on this call at any time. Joining me today are Jay Schmidt, President and CEO, and Jack Calandra, Senior Vice President and CFO. Our call will begin with prepared remarks, followed by a Q&A session to address any questions you have. With that, I will now turn the call over to Jay. Jay?

Good morning, and thank you for joining us today. I've just returned from Seattle, where Calaris was honored with the Nordstrom Vendor Partner in Excellence Award for Footwear in 2024. I'm proud of this recognition, and it underscores the powerful brands and innovative products, all fueled by our Calaris capabilities and our talented team members, that led to this win. Our fourth quarter earnings were at the high end of our recent guidance. We gained market share in women's fashion footwear, according to Cercana. Our lead brands, including Sam Edelman, Allen Edmonds, Naturalizer, and Vionic, outperformed. We grew our sneaker penetration, and we invested to support our long-term growth while reducing expense elsewhere to align with our area's strategic focus. And while business in the shoe chain segment softened overall in the quarter, Famous Footwear was able to maximize key selling periods. Also in the quarter, we accelerated the evolution of our supply chain and further mitigated the impact of additional tariffs. By the end of second quarter in 2025, we now expect about 75% of our direct product sourcing to be outside of China, with our lead brands even further along in this transition. This is higher than the goal we communicated last quarter. For the remaining portion of our business still sourced from China, we are well positioned to manage additional tariffs through a combination of factory negotiations, selective price increases, and modest gross margin pressure, which has been incorporated into our forward outlook. While 2024 overall was disappointing relative to our initial expectations, we made meaningful progress in advancing our strategic priorities and positioning our brands for sustainable growth. We also laid the foundation for new brands and strategies that support future growth while returning approximately $75 million to shareholders through buybacks and our longstanding dividends. Now turning to our results. In total, we delivered fourth quarter adjusted earnings per share of 33 cents and full year adjusted earnings per share of $3.30. at the high end of our most recent guidance. Fourth quarter sales were down approximately 4% to last year, excluding the impact of the 53rd week, reflecting continued weak food sales, softer wholesale demand, and cautious consumer spending in some portions of our business. However, we ended the quarter with more current inventory in the brand portfolio and more core in famous footwear, and are poised for improved trends in 2025. Our brand portfolio sales declined 7.2% in the fourth quarter, or 5% excluding the impact of the 53rd week. Strengthened contemporary brands, continued growth in sneakers, and standout performance from Allen Edmonds and Bionics was offset by weakness in boots and softness in demand among our more value-oriented brands and wholesale customers. Despite the challenges in the quarter, Brand Portfolio delivered solid adjusted operating margins of 9.4%. Now let's take a look at our lead brand's performance. As a reminder, These four brands represent over 50% of the segment's sales and profits. For the quarter and the year, lead brand performance outplaced the overall brand portfolio, reinforcing our strategy that these brands will continue powering the future of Calaris. During the fourth quarter, Sam Edelman declined modestly year over year with strength in tall boots, Mary James, and sneakers, offset by weakness in booties. Internationally, we continued to make progress on our strategic growth agenda. Over the last six months, our team activated new premium wholesale partnerships in Europe with Printemps, Selfridges, and John Lewis, adding to the existing partnerships with Level Shoes, Palazzo, and Lane Crawford, In China and Southeast Asia, we continued to focus on expansion. We added three net new owned stores in the quarter through our international joint venture and seven franchise stores, bringing our total to 56 owned stores by year end and 47 international franchise stores. At Allen Edmonds, we had a strong fourth quarter. Excluding the impact of the 53rd week, the brand delivered growth on a comparable basis across all channels of the business. Performance was strongest in sport and in dress loafers, while boots saw meaningful recovery. The recently launched Reserve Collection continues to perform well, creating a new level of luxury footwear in the brand and attracting new consumers. Allen Edmonds ended the quarter with 56 retail stores, including 12 in the elevated Port Washington studio format. Also, we were excited to announce earlier this week that Nick Worcester has joined the brand as a creative consultant. Nick brings decades of experience in design and branding, having worked at Barney's New York, Neiman Marcus, Tom Brown, and many others. His expertise will be instrumental in evolving Allen Edmonds while staying true to its heritage. Naturalizer had a more challenged quarter with strength in sneakers offset by weakness in casual and dress shoes. While dress boots continue to be strong, especially in wide shaft, short boots remain weak. We are seeing good early selling in spring in sneakers, including the new Bedita sneaker with colorful suede uppers and casual sandals, as well as improved e-commerce metrics. In the coming months, we will announce new brand ambassadors and new collaborations that will move the brand forward. Bionic delivered a strong quarter with sales driven by hybrid and casual sports styles. including the Uptown Loafer and Winnie Lace-Up Sneaker. Bionic continues to grow at Nordstrom, where the brand was prominently featured in the successful January Make Room for Shoes event. During the quarter, Bionic led with product innovation, launching the Walkmax Sneaker and the 23 Walk Loafer, further expanding the brand's position in the walking category. We also launched BioLab during the quarter, a team of brand partners who will work with the Vionic team on research and development, product innovation, and advancing brand advocacy with podiatrists and the broader wellness community. Beyond the performance of our lead brands, we saw tremendous results from Vincent Veronica Beard. These two brands operate at the top of our current price architecture, and each has a unique point of view in the marketplace. The performance we are seeing from these brands gives us confidence to further expand into the contemporary segment. To that end, we recently announced the launch of Favorite Daughter Footwear under license for fall 2025. Founders Erin and Sarah Foster bring a distinctive fashion perspective and have built a fresh new brand at the intersection of content and commerce. As you are also aware, we announced our definitive agreement to acquire Stuart Weitzman from Tapestry. While we will not be able to share our detailed plans at this time, It is clear to us that this iconic brand fits extremely well into our company as our newest lead brand. The acquisition will give us more exposure to the contemporary segment, premium price points, direct-to-consumer, and international markets. We look forward to providing more details once the transaction closes this summer. Turning now to famous footwear, comp store sales were down 2.9%, with the brick-and-mortar comp sales down 4.1%, and comparable web sales up 3.1%. During the quarter, key holiday weeks performed well, but overall business was otherwise soft. Men's performed best, kids performed about in line with the overall comp trend, and women saw the biggest decline. Total Athletic declined low single digits, albeit with solid growth from Adidas and New Balance. And Total Fashion declined mid-high single digits. As expected, the boot category saw high single-digit sales declines. And finally, sales of Calera's own brands increased 1.5 points in penetration in the quarter and were up year over year. On the inventory side, Famous effectively cleared through excess seasonal inventory and is positioned well with fresh product introductions in spring 2025. We finished the year with 34 flare stores. and our newest generation of flare stores outperform the rest of brick and mortar stores by almost 10 points in the quarter. We will continue improving and expanding our flare stores with plans to upgrade 25 more stores to the flare format in 2025 and open one additional new flare store. The flare concept continues to be a powerful way for us to showcase strongly demanded brands and elevated styles, while also attracting new premium products and brands. For Back to School in 2025, we have secured several new strongly demanded brands and products at Famous Footwear. While we can't reveal the details yet, These exceptional additions to the famous brand family will add some major heat during a vital season while positioning us long-term to better reach our target customer segments. We also recently announced that we bolstered our merchandising leadership and expertise, hiring industry veteran Brian Costello as Famous Footwear's Chief Merchandising Officer. Brian most recently led Nordstrom Rack's footwear and accessories business. His success on both the fashion and the athletic sides of the business in an open-cell retail environment makes him an ideal fit for Famous, and we look forward to his impact on the business. So Jack will walk through the guidance in more detail, but as we move forward to 2025, and the current macroeconomic environment with persistent inflation and newer tariffs. We believe it is prudent to take a conservative view for the year. At both Famous Footwear and across the brand portfolio, we are seeing signs indicating continued headwinds with the value-based consumer and challenges for the brands that service them. In addition, the latest feedback from key retail partners indicates that they will be more cautious with receipts and inventory in light of the current economic environment. After a difficult year in 2024, we are focused on improving sales trends and delivering on our guidance in 2025. We will continue our strategic investment spending while staying disciplined on overall expense levels And we will remain nimble with product strategies and sourcing to maximize our wins and minimize the impact of tariffs. So despite this posture, I remain optimistic about what we have in store for 2025. Our lead brands remain strong and are collectively gaining market share. and we have expanded our customer reach with greater focus on the significant opportunity we see in contemporary at premium price points. The hard work of our talented team and the impact of new leadership across several areas of our business, along with strategic brand partnerships and the planned acquisition of Stuart Weitzman, position us well to drive significant value in 2025 and beyond. And with that, I will now hand it over to Jack for a more detailed view of our financial performance and our outlook. Jack?