CALERES INC

Previous wording

We are a global footwear company that operates retail shoe stores and e-commerce websites, and designs, develops, sources, manufactures and distributes footwear for people of all ages. Our mission is to inspire people to feel great...feet first. We offer retailers and consumers a diversified portfolio of leading footwear brands. Outfitted in our brands, customers can step confidently into every aspect of their lives. As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points. We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels. A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands. Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our “One Caleres” capabilities to increase profitability, and delivering value for our shareholders.

Current wording

first. We offer retailers and consumers a diversified portfolio of leading footwear brands. Outfitted in our brands, customers can step confidently into every aspect of their lives. As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points. We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels. A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands. Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our “One Caleres” capabilities to increase profitability, and delivering value for our shareholders.

Previous wording

Famous Footwear, which is one of America’s leading family*–*branded footwear retailers, was founded on a simple idea: that everyone deserves to feel the joy that comes from a new pair of shoes. Our Famous Footwear segment includes 860 Famous Footwear stores, famousfootwear.com and famousfootwear.ca in Canada. This national footprint of mostly off-mall store locations is convenient for Famous Footwear’s target consumer, the millennial family. We seek to meet the needs of that millennial family and others by providing an assortment of trend-right, brand-name fashion, casual and athletic footwear at a great price.

Current wording

Famous Footwear, which is one of America’s leading family*–*branded footwear retailers, was founded on a simple idea: that everyone deserves to feel the joy that comes from a new pair of shoes. Our Famous Footwear segment includes 846 Famous Footwear stores, famousfootwear.com and famousfootwear.ca in Canada. This national footprint of mostly off-mall store locations is convenient for Famous Footwear’s target consumer, the millennial family. We seek to meet the needs of that millennial family and others by providing an assortment of trend-right, brand-name fashion, casual and athletic footwear at a great price.

Previous wording

During 2023, we continued to execute on our three-pronged strategy, which concentrates on merchandising, marketing and consumer experience. We remained focused on increasing the opportunity between Famous Footwear and the brands within our Brand Portfolio segment, such as Dr. Scholl’s Shoes, LifeStride, Naturalizer and Blowfish Malibu, among others. Vertical integration provides Famous Footwear with greater access to fashion products from brands that resonate with its consumer, as well as greater ability to be flexible with trends and offer better profit potential. We also have focused on offering the consumer a balanced assortment of fashion and athletic styles from well-known brands. We continued to tightly manage our inventory levels in 2023, reducing SKU counts and amplifying key product trends and items to drive sales volume. As we work to evolve our product offerings, we are testing and adding new and emerging brands across various categories to meet the shifting preferences and behaviors of the consumer, which we believe may attract new Famous Footwear consumers while providing the current consumer with additional options. We believe our kids category, which continues to grow, is a key competitive differentiator. We view this offering as a future growth opportunity and have plans to build on the strength of this category. With the millennial mom as our target consumer, we believe her primary purchase motivation is her kids and will prioritize these purchases, even with macroeconomic pressures. As a result, we are making the kids business a critical component of how our associates connect with our consumers, including ensuring every child finds the perfect fit. Our investments in new and remodeled stores over the last few years have prioritized an elevated experience within our kids department.

Current wording

During 2024, we continued to execute on our three-pronged strategy, which concentrates on merchandising, marketing and consumer experience. We remained focused on increasing the opportunity between Famous Footwear and the brands within our Brand Portfolio segment, such as Dr. Scholl’s Shoes, LifeStride, Naturalizer and Blowfish Malibu, among others. Vertical integration provides Famous Footwear with greater access to fashion products from brands that resonate with its consumer, as well as greater ability to be flexible with trends and offer better profit potential. We also have focused on offering the consumer a balanced assortment of fashion and athletic styles from well-known brands. We continued to tightly manage our inventory levels in 2024, reducing SKU counts and amplifying key product trends and items to drive sales volume. As we work to evolve our product offerings, we are testing and adding new and emerging brands across various categories to meet the shifting preferences and behaviors of the consumer, which we believe may attract new Famous Footwear consumers while providing the current consumer with additional options. We believe our kids category, which continues to grow, is a key competitive differentiator. With the millennial mom as our target consumer, we believe her primary purchase motivation is her kids and will prioritize these purchases, even with macroeconomic pressures. As a result, we are making the kids business a critical component of how our associates connect with our consumers, including ensuring every child finds the perfect fit. Our investments in new and remodeled stores over the last few years have prioritized an elevated experience within our kids department.

Previous wording

marketing campaigns. The segment is comprised of the Sam Edelman, Vionic, Naturalizer, Allen Edmonds, Dr. Scholl’s Shoes, LifeStride, Franco Sarto, Blowfish Malibu, Rykä, Vince, Bzees, Veronica Beard and Zodiac brands. Through these brands, we offer our customers a diversified selection of footwear, each designed and targeted to a specific consumer segment within the marketplace. We are able to showcase many of our brands in our retail stores and online, leveraging our wholesale and retail platforms, sharing consumer insights across our businesses and testing new and innovative products. Our Brand Portfolio segment operates 62 retail stores in the United States for our Allen Edmonds, Sam Edelman and Naturalizer brands. This segment also includes our e-commerce businesses that sell our branded footwear. We also operate a joint venture, which expands our international presence by distributing our Sam Edelman and Naturalizer brands through e-commerce sites and 36 retail stores in East Asia.

Current wording

Our Brand Portfolio segment is consumer-focused and we believe our success is dependent upon our ability to strengthen consumers’ preference for our brands by offering compelling style, quality, differentiated brand promises and innovative marketing campaigns. The segment is comprised of the Sam Edelman, Vionic, Naturalizer, Allen Edmonds, Dr. Scholl’s Shoes, LifeStride, Franco Sarto, Blowfish Malibu, Rykä, Vince and Veronica Beard. Through these brands, we offer our customers a diversified selection of footwear, each designed and targeted to a specific consumer segment within the marketplace. We are able to showcase many of our brands in our retail stores and online, leveraging our wholesale and retail platforms, sharing consumer insights across our businesses and testing new and innovative products. Our Brand Portfolio segment operates 60 retail stores in the United States for our Allen Edmonds and Sam Edelman brands. This segment also includes our e-commerce businesses that sell our branded footwear. We also operate a joint venture, which expands our international presence by distributing our Sam Edelman and Naturalizer brands through e-commerce sites, 54 retail stores in East Asia and 120 branded stores owned and operated by third parties through franchise agreements.

Previous wording

Macroeconomic factors, including, among others, inflation, elevated interest rates, increased real estate costs, higher consumer debt levels, the end to the student loan repayment pause, and lingering fears of a recession, continued to impact consumer discretionary spending and our financial results during 2023. We experienced lighter consumer traffic in our retail stores during 2023, resulting in lower net sales. While we believe that the structural changes we’ve implemented in the last few years, as well as our diversified model and operational discipline, enable the Company to drive value in a variety of market conditions, changes in macro-level consumer spending trends may continue to adversely impact our financial results in the future. To mitigate the impact of these macroeconomic factors, we began initiating expense reduction initiatives in the first quarter of 2023. These actions, which included eliminating open corporate positions, reducing non-merchandise procurement costs and integrating our Blowfish Malibu office and information systems into the St. Louis infrastructure, are expected to result in additional savings in 2024. We believe our focus on cost control and our commitment to execute our clearly defined strategic initiatives have positioned us for sustainable, long-term growth.

Current wording

Macroeconomic factors, including, among others, inflation, elevated interest rates, increased real estate costs, higher consumer debt levels and continuing fears of a recession, continued to impact consumer discretionary spending and our financial results during 2024. In addition, the geopolitical landscape remains uncertain, with potential changes to international trade relations, tariffs and import regulations. We continued to experience lighter consumer traffic in our retail stores during 2024, resulting in lower net sales. While we believe that the structural changes we’ve implemented in the last few years, as well as our diversified model and operational discipline, enable the Company to drive value in a variety of market conditions, changes in macro-level consumer spending trends may continue to adversely impact our financial results in the future. We believe our focus on cost control and our commitment to execute our clearly defined strategic initiatives have positioned us for sustainable, long-term growth.

Previous wording

Net sales decreased $150.8 million, or 5.1%, to $2,817.3 million in 2023, compared to $2,968.1 million last year, reflecting the challenging macroeconomic and retail environment. Net sales for our Famous Footwear segment decreased $95.7 million, or 5.6%, compared to 2022 net sales. Net sales for our Brand Portfolio segment decreased $51.9 million, or 3.9%, compared to 2022. The 53 rd week in 2023 contributed approximately $25 million to our consolidated net sales, including $18.2 million in our Famous Footwear segment and $6.8 million in our Brand Portfolio segment. On a consolidated basis, our direct-to-consumer sales represented approximately 72% of total net sales for both 2023 and 2022.

Current wording

Net sales decreased $94.6 million, or 3.4%, to $2,722.7 million in 2024, compared to $2,817.3 million last year, reflecting soft consumer demand and the impact of the 53 rd week in 2023. Net sales for our Famous Footwear segment decreased $52.9 million, or 3.3%, compared to 2023 net sales. Net sales for our Brand Portfolio segment decreased $44.9 million, or 3.5%, compared to 2023. The 53 rd week in 2023 contributed approximately $25 million to our 2023 consolidated net sales, including $18.2 million in our Famous Footwear segment and $6.8 million in our Brand Portfolio segment. On a consolidated basis, our direct-to-consumer sales represented approximately 72% of total net sales for both 2024 and 2023.

Previous wording

Gross profit decreased $21.9 million, or 1.7%, to $1,263.0 million in 2023, compared to $1,284.9 million in 2022, primarily driven by lower net sales. As a percentage of net sales, our gross profit rate increased to 44.8% in 2023, compared to 43.3% in 2022, primarily due to a higher gross margin rate at our Brand Portfolio segment driven by lower inventory markdowns, lower inbound freight costs and higher merchandise margins. These increases were partially offset by a decrease in the gross margin rate at our Famous Footwear segment.

Current wording

Gross profit decreased $41.0 million, or 3.2%, to $1,222.0 million in 2024, compared to $1,263.0 million in 2023, primarily driven by lower net sales. As a percentage of net sales, our gross profit rate increased slightly to 44.9% in 2024, compared to 44.8% in 2023, primarily due to a higher gross margin rate at our Brand Portfolio segment. The gross margin at Brand Portfolio benefitted from higher merchandise margins and a higher mix of retail sales, including e-commerce sales from our owned brands and sales from our branded retail stores, both of which have higher gross margins than our wholesale sales. These increases were partially offset by a decrease in the gross margin rate at our Famous Footwear segment driven by higher levels of promotional activity and clearance sales.

Previous wording

Selling and administrative expenses decreased $5.3 million, or 0.5%, to $1,062.4 million in 2023, compared to $1,067.7 million last year. The decrease is primarily due to lower anticipated payments under our cash-based incentive compensation plans and lower warehouse costs, partially offset by higher facilities costs and incremental expenses associated with the 53 rd week in 2023. As a percentage of net sales, selling and administrative expenses increased to 37.7% in 2023, from 36.0% last year, reflecting deleveraging of expenses on lower net sales.

Current wording

Selling and administrative expenses increased $2.6 million, or 0.2%, to $1,065.0 million in 2024, compared to $1,062.4 million last year. The increase is primarily due to higher salary and benefit expenses, marketing expenses, information technology and consulting expense associated with the implementation of our cloud-based ERP platform, and facilities costs, partially offset by lower expenses for our cash and share-based incentive compensation and incremental expenses associated with the 53 rd week in 2023. As a percentage of net sales, selling and administrative expenses increased to 39.1% in 2024, from 37.7% last year, reflecting deleveraging of expenses on lower net sales.

Previous wording

During 2023, we incurred restructuring costs of $6.1 million ($4.5 million on an after-tax basis, or $0.13 per diluted share), associated with our expense reduction initiatives. During 2022, we incurred restructuring and other special charges of $2.9 million ($2.7 million on an after-tax basis, or $0.07 per diluted share) associated with a CFO transition at our corporate headquarters. Refer to further discussion of these charges in theFinancial Highlights section above and Note 4 to the consolidated financial statements.

Current wording

During 2024, we incurred restructuring costs of $7.1 million ($5.3 million on an after-tax basis, or $0.15 per diluted share). The costs were primarily for the exit of the Naturalizer retail store operations and other restructuring costs, mainly severance. During 2023, we incurred restructuring and other special charges of $6.1 million ($4.5 million on an after-tax basis, or $0.13 per diluted share) associated with our expense reduction initiatives. Refer to further discussion of these charges in theFinancial Highlights section above and Note 4 to the consolidated financial statements.

Previous wording

Operating earnings decreased $19.8 million to $194.5 million in 2023, compared to $214.3 million last year, reflecting the factors described above. As a percentage of net sales, operating earnings were 6.9% in 2023, compared 7.2% in 2022.

Current wording

Operating earnings decreased $44.6 million to $149.9 million in 2024, compared to $194.5 million last year, reflecting the factors described above. As a percentage of net sales, operating earnings were 5.5% in 2024, compared 6.9% in 2023.

Previous wording

Interest expense, net increased $5.1 million, or 35.6%, to $19.4 million in 2023, compared to $14.3 million last year, primarily attributable to higher interest rates on our revolving credit agreement, partially offset by lower average borrowings. Refer to Note 11 to the consolidated financial statements for additional information related to our borrowings.

Current wording

Interest expense, net decreased $5.4 million, or 27.8%, to $14.0 million in 2024, compared to $19.4 million last year, reflecting lower average borrowings and a lower weighted-average interest rate on our revolving credit facility. Refer to Note 11 to the consolidated financial statements for additional information related to our borrowings.

Previous wording

Our consolidated effective tax rate was 5.2% in 2023, compared to 15.7% in 2022. Our lower tax rates for 2023 and 2022 primarily reflect the release of $26.7 million and $17.4 million, respectively, of valuation allowances recorded for certain deferred tax assets. As a result of the significant loss before income taxes in 2020 driven by the impairment of goodwill and intangible assets during the pandemic, we entered into a three-year cumulative loss position for federal, state and certain international jurisdictions. At that time, we increased our valuation allowances on deferred tax assets to $50.0 million, reflecting the uncertainty regarding the utilization of our deferred tax assets in those jurisdictions. Due to stronger earnings in 2022 and 2023, the Company is no longer in a cumulative three-year loss position. Accordingly, the Company released valuation allowances on certain deferred tax assets totaling $17.4 million ($0.47 per diluted share) in 2022 and $26.7 million ($0.75 per diluted share) in 2023.

Current wording

Our consolidated effective tax rate was 21.5% in 2024, compared to 5.2% in 2023. Our lower tax rate for 2023 primarily reflected the release of $26.7 million of valuation allowances recorded for certain deferred tax assets. As a result of the significant loss before income taxes in 2020 driven by the impairment of goodwill and intangible assets during the pandemic, we entered into a three-year cumulative loss position for federal, state and certain international jurisdictions. At that time, we increased our valuation allowances on deferred tax assets to $50.0 million, reflecting the uncertainty regarding the utilization of our deferred tax assets in those jurisdictions. Due to stronger earnings in 2022 and 2023, the Company was no longer in a cumulative three-year loss position. Accordingly, the Company released valuation allowances on certain deferred tax assets totaling $26.7 million ($0.75 per diluted share) in 2023.

Previous wording

In 2021, the OECD released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules for tax years beginning in 2024. The United States has not yet enacted legislation implementing Pillar Two. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our effective tax rate.

Current wording

In 2021, the OECD released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules, which became effective on January 1, 2024. The United States has not yet enacted legislation implementing Pillar Two. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our tax provision or effective tax rate.

Previous wording

Consolidated net earnings attributable to Caleres, Inc. were $171.4 million in 2023, compared to $181.7 million last year, reflecting the factors described above.

Current wording

Consolidated net earnings attributable to Caleres, Inc. were $107.3 million in 2024, compared to $171.4 million last year, reflecting the factors described above.

Previous wording

We have both domestic and international operations. Domestic operations include the nationwide operation of our Famous Footwear and other branded retail footwear stores, the wholesale distribution of footwear to numerous retail consumers and the operation of our e-commerce websites. International operations primarily consist of wholesale operations in East Asia, Canada and Europe, retail operations in Canada and East Asia and the operation of our international e-commerce websites. In addition, we license certain of our trade names to third parties who distribute and/or operate retail locations internationally. The operations in East Asia include first-cost transactions, where footwear is sold at international ports to customers who then import the footwear into the United States and other countries. The breakdown of domestic and international net sales and earnings before income taxes is as follows:

Current wording

We have both domestic and international operations. Domestic operations include the nationwide operation of our Famous Footwear and other branded retail footwear stores, the wholesale distribution of footwear to numerous retail consumers and the operation of our domestic e-commerce websites. International operations primarily consist of wholesale operations in East Asia, Canada and Europe, retail operations in Canada and East Asia and the operation of our international e-commerce websites. In addition, we license certain of our trade names to third parties who distribute and/or operate retail locations internationally. The operations in East Asia include first-cost transactions, where footwear is sold at international

Previous wording

Net sales decreased $95.7 million, or 5.6%, to $1,609.4 million in 2023, compared to $1,705.1 million last year. Comparable sales decreased 6.3% in 2023 driven by a decline in consumer traffic in our retail stores as the challenging macroeconomic environment continued to impact sales. Despite the challenging retail environment, we experienced strong demand for key athletic brands and casual product, such as slippers. We remain focused on maximizing the vertical integration opportunity between the Brand Portfolio and Famous Footwear segments, with Dr. Scholl’s Shoes, LifeStride, Naturalizer and Blowfish Malibu representing four of Famous Footwear’s top 20 best-selling footwear brands in 2023. Our e-commerce penetration in 2023 was approximately 13% of net sales, a slight decline from 14% last year. During 2023, we closed 13 stores on a net basis as we continued to focus on optimizing our store base.

Current wording

Net sales decreased $52.9 million, or 3.3%, to $1,556.5 million in 2024, compared to $1,609.4 million last year, reflecting soft consumer demand and the impact of the 53 rd week in 2023, which contributed $18.2 million to our 2023 net sales. Comparable sales decreased 1.3% in 2024 driven by a decline in consumer traffic in our retail stores. Despite the challenging retail environment, we experienced growth in our e-commerce business and higher penetration of this channel in 2024. Our e-commerce penetration in 2024 grew to 14% of net sales, from 13% last year. Our kids category, which is a key differentiator for Famous Footwear, continued to outperform our other categories, while our boots category was weaker. We remain focused on maximizing the vertical integration opportunity between the Brand Portfolio and Famous Footwear segments, with Dr. Scholl’s Shoes, LifeStride, Naturalizer and Blowfish Malibu representing four of Famous Footwear’s top 20 best-selling footwear brands in 2024. During 2024, we closed 14 stores on a net basis as we continued to focus on optimizing our store base. During 2024, we converted 12 stores to the new FLAIR (Famous Localized and Immersive Retail) concept, and these stores continue to outperform our traditionally designed retail stores. In addition, we opened our first new store with the FLAIR concept in the fourth quarter of 2024. We ended the year with a total of 34 FLAIR stores and anticipate investing in more store conversions in 2025.

Previous wording

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 77% of net sales to loyalty program members in both 2023 and 2022.

Current wording

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 75% of net sales to loyalty program members in 2024, compared to 77% in 2023.

Previous wording

Gross profit decreased $69.5 million, or 8.8%, to $719.5 million in 2023, compared to $789.0 million last year, primarily driven by lower net sales. As a percentage of net sales, our gross profit rate decreased to 44.7% in 2023, compared to 46.3% in 2022. During 2022, strong demand and a higher mix of current inventory resulted in fewer markdowns and minimal clearance selling. During 2023, we experienced a more normalized mix of clearance product sold and margins on those sales were in line with historical levels.

Current wording

Gross profit decreased $32.9 million, or 4.6%, to $686.6 million in 2024, compared to $719.5 million last year, primarily driven by lower net sales. As a percentage of net sales, our gross profit rate decreased to 44.1% in 2024, compared to 44.7% in 2023 as a result of higher levels of promotional activity and clearance sales.

Previous wording

Selling and administrative expenses increased $1.1 million, or 0.2%, to $594.3 million during 2023, compared to $593.2 million last year. The increase primarily reflects higher facilities costs, partially offset by lower salary and benefits expenses, lower advertising expenses and lower distribution costs. As a percentage of net sales, selling and administrative expenses increased to 36.9% in 2023 from 34.8% last year, reflecting the deleveraging of expenses on lower net sales.

Current wording

Selling and administrative expenses increased $4.6 million, or 0.8%, to $598.9 million during 2024, compared to $594.3 million last year. The increase primarily reflects higher facilities costs, including depreciation expense associated with the investments in the FLAIR store concept, and higher salary and benefits expenses, partially offset by lower marketing expenses. As a percentage of net sales, selling and administrative expenses increased to 38.5% in 2024 from 36.9% last year, reflecting the deleveraging of expenses on lower net sales.

Previous wording

Restructuring and other special charges of $1.4 million were recorded during 2023 for expenses associated with expense reduction initiatives, primarily severance. Refer to Note 4 to the consolidated financial statements for additional information related to these charges. There were no corresponding charges in 2022.

Current wording

Restructuring and other special charges of $0.6 million were incurred for severance costs during 2024. Restructuring and other special charges of $1.4 million were recorded during 2023 for expenses associated with expense reduction initiatives, primarily severance. Refer to Note 4 to the consolidated financial statements for additional information related to these charges.

Previous wording

Operating earnings decreased $72.0 million to $123.8 million for 2023, compared to $195.8 million last year, primarily reflecting lower net sales and gross profit, as described above. As a percentage of net sales, operating earnings were 7.7% for 2023, compared to 11.5% last year.

Current wording

Operating earnings decreased $36.7 million to $87.1 million for 2024, compared to $123.8 million last year, primarily reflecting lower net sales and gross profit, as described above. As a percentage of net sales, operating earnings were 5.6% for 2024, compared to 7.7% last year.

Previous wording

We closed five stores and opened four stores in the United States, and expanded our retail store presence in East Asia by opening 10 stores and closing three stores, resulting in a total of 62 stores in the United States and 36 stores in East Asia at the end of 2023. During 2024, we expect to continue to expand our international retail presence by opening approximately 35 stores in East and Southeast Asia.

Current wording

We closed six stores and opened four stores in the United States and expanded our retail store presence in East Asia by opening 20 stores and closing two stores, resulting in a total of 60 stores in the United States and 54 stores in East Asia at the end of 2024. There were also 120 international branded stores owned and operated by third parties through franchise agreements at the end of 2024, compared to 107 international branded stores at the end of 2023.

Previous wording

The unfilled order position for our wholesale business decreased $50.1 million to $234.5 million at the end of 2023, compared to $284.6 million at the end of last year. The decrease in our backlog order levels reflects more conservative buying by our wholesale customers as they more tightly manage their inventory levels and the dynamic nature of inventory buying, which includes periodic replenishment orders and shipping directly to the end consumer purchasing from our wholesale customers’ websites.

Current wording

The unfilled order position for our wholesale business increased $25.7 million to $260.2 million at the end of 2024, compared to $234.5 million at the end of last year.

Previous wording

Selling and administrative expenses increased $12.9 million, or 3.4%, to $397.9 during 2023, compared to $385.0 million last year. The increase was driven by higher marketing expenses and higher facilities costs, partially offset by lower logistics costs and salary and benefit expenses. In addition, 2022 included again recognized upon the modification of an international licensing contract. As a percentage of net sales, selling and administrative expenses increased to 31.4% in 2023 from 29.1% last year, reflecting deleveraging of expenses over a lower net sales base.

Current wording

Selling and administrative expenses increased $10.0 million, or 2.5%, to $407.9 during 2024, compared to $397.9 million last year. The increase was driven by higher salary and benefits, higher marketing expenses and higher distribution expenses. As a percentage of net sales, selling and administrative expenses increased to 33.2% in 2024 from 31.4% last year, reflecting deleveraging of expenses over a lower net sales base.

Previous wording

Restructuring and other special charges of $2.6 million were recorded during 2023 for expenses associated with our expense reduction initiatives, primarily severanceand other costs to integrate the Blowfish Malibu office, showroom and information systems into the St. Louis infrastructure. Refer to Note 4 to the consolidated financial statements for additional information related to these charges. There were no corresponding charges in 2022.

Current wording

Restructuring and other special charges of $6.3 million were incurred during 2024. The costs were primarily associated with the exit of our Naturalizer retail store operations and severance. Restructuring and other special charges of $2.6 million were recorded during 2023 for expenses associated with our expense reduction initiatives, primarily severanceand other costs to integrate the Blowfish Malibu office, showroom and information systems into the St. Louis infrastructure. Refer to Note 4 to the consolidated financial statements for additional information related to these charges.

Previous wording

We achieved another year of record operating earnings and operating margin. Operating earnings increased $33.1 million to $145.5 million in 2023, compared to $112.3 million last year, as a result of the factors described above. As a percentage of net sales, operating earnings were 11.4% in 2023, compared to 8.5% last year.

Current wording

Operating earnings decreased $23.4 million to $122.1 million in 2024, compared to $145.5 million last year, as a result of the factors described above. As a percentage of net sales, operating earnings were 10.0% in 2024, compared to 11.4% last year.

Previous wording

The net sales elimination of $63.0 million for 2023 is $3.3 million, or 5.4%, higher than in 2022, reflecting an increase in product sold from our Brand Portfolio segment to Famous Footwear.

Current wording

The net sales elimination of $59.7 million for 2024 is $3.3 million, or 5.1%, lower than in 2023, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.

Previous wording

Selling and administrative expenses decreased $19.5 million, or 21.7%, to $70.1 million in 2023, compared to $89.6 million last year. The decrease primarily reflects lower anticipated payments under our cash and share-based incentive compensation plans and other employee benefits.

Current wording

Selling and administrative expenses decreased $11.9 million, or 16.9%, to $58.2 million in 2024, compared to $70.1 million last year. The decrease primarily reflects lower anticipated payments under our cash and share-based incentive compensation plans and other employee benefits.

Previous wording

Restructuring and other special charges of $2.1 million in 2023 were associated with expense reduction initiatives, primarily severance, at our corporate headquarters. Restructuring and other special charges of $2.9 million in 2022 were associated with a CFO transition at our corporate headquarters. Refer to Note 4 to the consolidated financial statements for additional information related to these charges.

Current wording

Restructuring and other special charges of $0.2 million in 2024 were associated with severance. Restructuring and other special charges of $2.1 million in 2023 were associated with expense reduction initiatives, primarily severance, at our corporate headquarters. Refer to Note 4 to the consolidated financial statements for additional information related to these charges.

Previous wording

Our borrowings under the revolving credit agreement decreased $125.5 million to $182.0 million at the end of 2023, compared to $307.5 million at the end of last year. The decrease reflects strong cash generation in 2023 and our priority to reduce borrowings under the revolving credit agreement to mitigate the high interest rate environment. Net interest expense in 2023 was $19.4 million, compared to $14.3 million in 2022. The increase in net interest expense in 2023 was primarily due to higher interest rates, partially offset by lower average borrowings on our revolving credit agreement. The interest on our revolving credit facility is based on a variable interest rate, which has resulted in higher interest expense in the current rising interest rate environment. Our interest expense will continue to be adversely affected by elevated interest rates in 2024.

Current wording

Our borrowings under the revolving credit agreement increased $37.5 million to $219.5 million at the end of 2024, compared to $182.0 million at the end of last year. We used our revolving credit facility to repurchase $65.5 million of shares of our common stock under our share repurchase program. This increase was partially offset by cash generated from our operations in 2024. Net interest expense in 2024 was $14.0 million, compared to $19.4 million in 2023. The decrease in net interest expense in 2024 reflects lower average borrowings and a lower weighted-average interest rate on our revolving credit facility.

Previous wording

At February 3, 2024, we had $182.0 million of borrowings and $9.5 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was $308.5 million at February 3, 2024. We were in compliance with all covenants and restrictions under the Credit Agreement as of February 3, 2024.

Current wording

At February 1, 2025, we had $219.5 million of borrowings and $8.2 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was $272.3 million at February 1, 2025. We were in compliance with all covenants and restrictions under the Credit Agreement as of February 1, 2025.

Previous wording

Working capital at February 3, 2024 was $46.0 million, which was $125.7 million higher than at January 28, 2023. The increase in working capital from 2022 primarily reflects lower borrowings under our revolving credit agreement, other accrued expenses and lease obligations, partially offset by lower inventory. Our current ratio was 1.06 to 1 at February 3, 2024, compared to 0.91 to 1 at January 28, 2023. Our debt-to-capital ratio was 24.3% as of February 3, 2024, compared to 41.9% at January 28, 2023, reflecting higher shareholders’ equity attributable to our strong financial results in 2023.

Current wording

Working capital at February 1, 2025 was $78.6 million, which was $32.6 million higher than at February 3, 2024. The increase in working capital from 2023 primarily reflects higher inventory and trade accounts receivable and lower trade accounts payable, partially offset by higher borrowings under our revolving credit agreement and higher lease obligations. Our current ratio was 1.10 to 1 at February 1, 2025, compared to 1.06 to 1 at February 3, 2024. Our debt-to-capital ratio was 26.6% as of February 1, 2025, compared to 24.3% at February 3, 2024, primarily reflecting higher borrowings under our revolving credit agreement in 2024.

Previous wording

Cash provided by operating activities was $74.3 million higher in 2023 than last year, reflecting the following factors:

Current wording

Cash provided by operating activities was $95.6 million lower in 2024 than last year, reflecting the following factors:

Previous wording

Cash used for investing activities was $14.4 million lower in 2023 than last year, reflecting lower capital expenditures. In 2024, we expect our purchases of property and equipment and capitalized software to be between $60 million and $70 million.

Current wording

Cash used for investing activities was $2.1 million higher in 2024 than last year, reflecting higher capital expenditures. In 2025, we expect our purchases of property and equipment and capitalized software to be between $50 million and $55 million.

Previous wording

Cash used for financing activities was $104.8 million higher in 2023 than last year, primarily due to net repayments on our revolving credit agreement of $125.5 million in 2023, compared to net borrowings of $17.5 million in 2022. In addition, the issuance of common stock under share-based plans was $5.7 million higher in 2023 compared to 2022. These increases were partially offset by a $45.8 million decrease in repurchases of common stock under our share repurchase programs during 2023 compared to 2022.

Current wording

Cash used for financing activities was $118.5 million higher in 2024 than last year, primarily due to net borrowings on our revolving credit agreement of $37.5 million in 2024, compared to net repayments on our revolving credit agreement of $125.5 million in 2023. This increase was partially offset by a $48.1 million increase in repurchases of common stock under our share repurchase programs during 2024.

Previous wording

We paid dividends of $0.28 per share in each of 2023, 2022 and 2021. The 2023 dividends marked the 101st year of consecutive quarterly dividends. On March 14, 2024, the Board of Directors declared a quarterly dividend of $0.07 per share, payable on April 12, 2024, to shareholders of record on March 28, 2024. 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.

Current wording

We paid dividends of $0.28 per share in each of 2024, 2023 and 2022. The 2024 dividends marked the 102nd year of consecutive quarterly dividends. On March 14, 2025, the Board of Directors declared a quarterly dividend of $0.07 per share, payable on April 11, 2025, to shareholders of record on March 27, 2025. 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.

Previous wording

During 2020, we entered into a three-year cumulative loss position driven by the significant loss before income taxes. At that time, we increased our valuation allowances on deferred tax assets to $50.0 million, reflecting the uncertainty regarding the utilization of our deferred tax assets in those jurisdictions. Due to stronger earnings in 2022 and 2023, the Company is no longer in a cumulative three-year loss position as of February 3, 2024. Accordingly, we released valuation allowances on certain deferred tax assets totaling $17.4 million in 2022 and $26.7 million in 2023. As of February 3, 2024, we have valuation allowances totaling $7.2 million, reflecting the uncertainty regarding the utilization of net operating loss carryforwards.

Current wording

During 2020, we entered into a three-year cumulative loss position driven by the significant loss before income taxes. At that time, we increased our valuation allowances on deferred tax assets to $50.0 million, reflecting the uncertainty regarding the utilization of our deferred tax assets in those jurisdictions. Due to stronger earnings in 2022 and 2023, the Company was no longer in a cumulative three-year loss position as of February 3, 2024. Accordingly, we released valuation allowances on certain deferred tax assets totaling $17.4 million in 2022 and $26.7 million in 2023. During 2024, we released valuation allowances totaling $3.7 million. As of February 1, 2025, we have valuation allowances totaling $3.4 million, reflecting the uncertainty regarding the utilization of net operating loss carryforwards.