Caleres, Inc. Annual Report 2018
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Caleres, Inc. Annual Report 2018 Form 10-K (NYSE:CAL) Published: April 4th, 2018 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) þ A NNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 3, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 1-2191 CALERES, INC. (Exact name of registrant as specified in its charter) New York 43-0197190 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) 8300 Maryland Avenue 63105 St. Louis, Missouri (Zip Code) (Address of principal executive offices) (314) 854-4000 (Registrant’s telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock — par value $0.01 per share New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yesþ No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes¨ No þ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act: L arge accelerated filer þ A ccelerated filer ¨ N on-accelerated filer ¨ S maller reporting company E merging growth company ¨ ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ The aggregate market value of the stock held by non-affiliates of the registrant as of July 28, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1,133.1 million. As of March 2, 2018, 43,028,130 common shares were outstanding. Documents Incorporated by Reference Portions of the Proxy Statement for the 2018 Annual Meeting of Shareholders are incorporated by reference into Part III. INTRODUCTION This Annual Report on Form 10-K is a document that U.S. public companies file with the Securities and Exchange Commission ("SEC") on an annual basis. Part II of the Form 10-K contains the business information and financial statements that many companies include in the financial sections of their annual reports. The other sections of this Form 10-K include further information about our business that we believe will be of interest to investors. We hope investors will find it useful to have all of this information in a single document. The SEC allows us to report information in the Form 10-K by “incorporating by reference” from another part of the Form 10-K or from the proxy statement. You will see that information is “incorporated by reference” in various parts of our Form 10-K. The proxy statement will be available on our website after it is filed with the SEC in April 2018. Unless the context otherwise requires, “we,” “us,” “our,” “the Company” or “Caleres” refers to Caleres, Inc. and its subsidiaries. Information in this Form 10-K is current as of April 4, 2018, unless otherwise specified. CAUTION REGARDING FORWARD-LOOKING STATEMENTS In this report, and from time to time throughout the year, we share our expectations for the Company’s future performance. These forward- looking statements include statements about our business plans; the potential development, regulatory approval and public acceptance of our products; our expected financial performance, including sales performance and the anticipated effect of our strategic actions; the anticipated benefits of acquisitions; the outcome of contingencies, such as litigation; domestic or international economic, political and market conditions; and other factors that could affect our future results of operations or financial position, including, without limitation, statements under the captions “Business,” “Legal Proceedings” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Any statements we make that are not matters of current disclosures or historical fact should be considered forward-looking. Such statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will” and similar expressions. By their nature, these types of statements are uncertain and are not guarantees of our future performance. Our forward-looking statements represent our estimates and expectations at the time that we make them. However, circumstances change constantly, often unpredictably, and investors should not place undue reliance on these statements. Many events beyond our control will determine whether our expectations will be realized. We disclaim any current intention or obligation to revise or update any forward-looking statements, or the factors that may affect their realization, whether in light of new information, future events or otherwise, and investors should not rely on us to do so. In the interests of our investors, and in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Part I. Item 1A. Risk Factors explains some of the important reasons that actual results may be materially different from those that we anticipate. INDEX P ART I Page Item 1 Business 4 Item 1A Risk Factors 10 Item 1B Unresolved Staff Comments 16 Item 2 Properties 16 Item 3 Legal Proceedings 17 Item 4 Mine Safety Disclosures 18 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18 Item 6 Selected Financial Data 19 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A Quantitative and Qualitative Disclosures About Market Risk 36 Item 8 Financial Statements and Supplementary Data 37 Management’s Report on Internal Control Over Financial Reporting 37 Report of Independent Registered Public Accounting Firm 38 Report of Independent Registered Public Accounting Firm 39 Consolidated Balance Sheets 40 Consolidated Statements of Earnings 41 Consolidated Statements of Comprehensive Income 42 Consolidated Statements of Cash Flows 43 Consolidated Statements of Shareholders’ Equity 44 Notes to Consolidated Financial Statements 45 Schedule II – Valuation and Qualifying Accounts 93 Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 93 Item 9A Controls and Procedures 93 Evaluation of Disclosure Controls and Procedures 93 Internal Control Over Financial Reporting 94 Item 9B Other Information 94 PART III Item 10 Directors, Executive Officers and Corporate Governance 94 Item 11 Executive Compensation 95 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13 Certain Relationships and Related Transactions, and Director Independence 95 Item 14 Principal Accounting Fees and Services 96 PART IV Item 15 Exhibits and Financial Statement Schedules 96 Item 16 Form 10-K Summary 98 PART I I TEM 1 B USINESS Caleres, Inc., originally founded as Brown Shoe Company in 1878 and incorporated in 1913, is a global footwear retailer and wholesaler with annual net sales of $2.8 billion. In May 2015, the shareholders of Brown Shoe Company, Inc. approved a rebranding initiative that changed the name of the company to Caleres, Inc. (the "Company"). Current activities include the operation of retail shoe stores and e-commerce websites as well as the design, sourcing and marketing of footwear for women and men. Our business is seasonal in nature due to consumer spending patterns, with higher back-to-school and holiday season sales. Traditionally, the third fiscal quarter accounts for a substantial portion of our earnings for the year. Our net sales are comprised of four major categories: women's footwear, men's footwear, children's footwear and accessories. The percentage of net sales attributable to each category is as follows: 2017 2016 2015 Women's footwear 59% 63% 63% Men's footwear 25% 22% 23% Children's footwear 9% 9% 9% Accessories 7% 6% 5% In 2016, we expanded our men's business with the acquisition of Allen Edmonds, as further discussed in the Brand Portfolio section below and Note 2 to the consolidated financial statements.