- Shoe seller Caleres plans to close 133 stores under its Naturalizer women’s footwear brand by the end of fiscal 2020 and pivot to a digital model in response to consumer trends.
- The wind-down of the brand’s stores is part of an effort to “improve future profitability and allow greater focus on high-growth, digital channels,” the retailer said in a press release.
- The closures, in the U.S. and Canada, will cost Caleres between $20 million and $25 million and save the company up to $12 million annually, Caleres said.
Naturalizer’s origin goes back to 1927, when Caleres (previously Brown Shoe Co.) says it “realized women deserved a shoe with a beautiful fit.” By the end of 2019, it had 139 stores under the brand, about half of them in malls. Its products, which range from $69 to $250, also have some 46 retail and wholesale partners worldwide.
The shift in consumer behavior brought by 2020’s COVID-19 crisis helped spur the company to shutter roughly all the brand’s remaining footprint.
“[A]s we continue to respond to the changing patterns of consumer demand, it was the moment to address Naturalizer’s store footprint,” Caleres CEO Diane Sullivan told analysts Thursday, according to a Seeking Alpha transcript.
She added: “But make no mistake, we continue to view the Naturalizer brand as a strong and value driving component of our portfolio. And we’ll be focusing on growing the brand’s e-commerce through naturalizer.com and through our retail partners’ sites.”
CFO Ken Hannah said on the conference call that Naturalizer revenue took a hit during the spring closures and throughout the year. The declines in top-line sales have in turn been “putting pressure and putting a number of those stores into a loss position,” he said.
In a statement, Sullivan said that a larger percentage of the brand’s sales have been originating online. Sullivan also noted on the call that a number of factors drove the decision, and overall it was “really the right moment, because they were legacy retail kind of stores, where we hadn’t invested a lot in the last number of years.”
Many of the same trends have been playing out across Caleres’ business. In the third quarter, top-line sales fell by 18.3%, with sales at its Famous Footwear retail banner down 12.3%. At the same time, Caleres’ e-commerce sales spiked 24.6% in Q3 and represented about a quarter of the company’s total sales.
CL King analyst Steven Marotta said in an emailed research note that Caleres’ Q3 revenue, though down from 2019, beat Wall Street estimates. “We view the Q3 results positively, to say the least,” CL King said.”The quarter was materially better than our expectations, as we had expected an October deceleration to negatively affect results.”
CL King also noted that Caleres’ “pivot to delivering digitally is evidenced by the results, and the negative impact from Q3 social distancing was not nearly as acute as we had expected.”