Benzinga - by Nabaparna Bhattacharya, Benzinga Editor.
Telsey Advisory Group analyst Dana Telsey reiterated the Less Risk rating on Caleres, Inc. (NYSE: CAL) with a price target of $30.
While the macro environment remains uncertain, the analyst notes that CAL is proactively driving $20 million in cost savings this year (along with another $10 million in freight benefits) and remains focused on debt reduction in the near term.
CAL will report 2Q23 results on Thursday, August 31.
For the second quarter, the analyst looks for EPS of $0.90 vs. $1.38 last year, which compares to the consensus of $0.88 and guidance of $0.87-$0.92.
The analyst thinks CAL is managing well in a challenging environment, with a structurally sound business and elevated earnings potential
relative to the pre-pandemic model.
On the top line, Telsey forecasts a sales decline of 4.5% Y/Y to
$706 million, in line with the consensus estimate of $705 million and within the management's expectation for sales to be down 4%-5% Y/Y.
In addition, balance sheet deleverage supports further earnings potential over time while creating flexibility to continue to invest in growth opportunities and affording CAL the ability to return cash to shareholders.
Segmentally, the analyst expects Famous Footwear to decline 6.5% Y/Y, along with a 1.5% Y/Y contraction in the branded portfolio.
Going forward, the analyst adds that CAL plans to chase more lifestyle products at FF and lean hard into the back-to-school season.
From a real estate perspective, the analyst expects to hear more about the plans to open 20 more remodeled stores over the balance of the year.
For the quarter to be reported, Telsey projects gross margin to decline 50 bps Y/Y to 45.1% (vs. consensus of 45%) and 220 bps of operating deleverage to 38.6% (vs. consensus of 38.4%).
Taken together, the analyst forecasts a 280 bps operating margin contraction to 6.5%, in line with consensus and compared to last year's 9.3% margin.
Price Action: CAL shares are trading higher by 0.50% to $24.27 on the last check Friday.
Latest Ratings for CAL
| Jun 2021 | CL King | Upgrades | Neutral | Buy |
| Jun 2020 | Susquehanna | Downgrades | Neutral | Negative |
| Apr 2020 | Susquehanna | Maintains | Neutral |
View the Latest Analyst Ratings
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