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Caleres, Inc. (NYSE: CAL) Q1 2022 earnings name dated Could. 24, 2022
Company Contributors:
Logan Bonacorsi — Vice President of Investor Relations
Diane Sullivan — Chairman and Chief Govt Officer
Kenneth H. Hannah — Senior Vice President, Chief Monetary Officer
Analysts:
Laura Champine — Loop Capital Markets — Analyst
Dana Telsey — Telsey Advisory Group — Analyst
Jay Schmidt — President
Steven Marotta — CL King & Associates — Analyst
Presentation:
Operator
Good afternoon, and welcome to the Caleres First Quarter 2022 Earnings Name. My identify is Jeff, and I’ll be your convention coordinator. [Operator Instructions]
At the moment, I’ll flip the decision over to Ms. Logan Bonacorsi, Vice President of Investor Relations. Please go forward.
Logan Bonacorsi — Vice President of Investor Relations
Good afternoon, I’d prefer to thanks for becoming a member of our first quarter 2022 earnings name and webcast. A press launch with detailed monetary tables, in addition to our quarterly slide presentation can be found at caleres.com.
Please remember right now’s dialogue incorporates forward-looking statements, that are topic to numerous dangers and uncertainties. Precise outcomes could differ materially resulting from varied danger components, together with however not restricted to, the components disclosed within the firm’s Type 10-Okay and different filings with the U.S. Securities and Change Fee. Please confer with right now’s press launch and our SEC filings for extra data on danger components and different components, which may influence forward-looking statements. Copies of those experiences can be found on-line. The corporate undertakes no obligation to replace any data mentioned on this name at any time.
Becoming a member of me on the decision right now is, Diane Sullivan, Chairman, and CEO; Ken Hannah, Senior Vice President, and CFO; and Jay Schmidt, President. We are going to start the decision with our ready remarks and thereafter, we might be joyful to take your questions.
I’d now like to show the decision over to Diane. Diane?
Diane Sullivan — Chairman and Chief Govt Officer
Thanks, Logan, and good afternoon, everybody. I’m happy to report that Caleres continued its sturdy momentum, as we transitioned into 2022, delivering record-breaking first quarter outcomes throughout each key monetary measure. This was despite headwinds, we developed in going through, together with ongoing inflationary pressures, and the drag of provide chain associated challenges.
This was our fourth straight quarter of report outcomes, and it units the stage for one more yr of report or near-record earnings. In consequence, with right now’s earnings launch, we’re elevating our earnings per diluted share steering to be between $4.20 and $4.40.
We view our first quarter efficiency as an additional proof level of the step change that we’ve achieved within the long-term money technology potential of Caleres. On account of the good investments made and the enterprise-wide methods deployed, we consider we’ve successfully doubled our normalized mid-cycle earnings to one thing approximating $4 a share.
Now having a look on the quarter extra intently, we as soon as once more executed at a excessive degree, making important progress in opposition to our key strategic initiatives, and constructing on our great basis. Among the many highlights, Caleres turned in report gross sales of $735 million generated report consolidated gross margin revenue margin of almost 45%, and achieved report consolidated working earnings of roughly $66 million.
As well as, we printed our second ESG report in mid-April and I’m proud to say that we’ve made sturdy progress in opposition to all of our long-term objectives. We’re properly on our method to assembly these objectives by 2025, and in some circumstances earlier.
Now, earlier than shifting on to our phase efficiency, I’d like to supply an replace on our capital return program. As you recognize, in March, the Board of Administrators elevated our buyback authorization by 7 million shares, additional underscoring its confidence within the energy of the enterprise and its constructive long-term outlook. And preserving with that vote of confidence, in the course of the first quarter, we’ve returned roughly $15 million of capital to shareholders through the repurchase of roughly 701,000 shares, or roughly 2% of our shares excellent. Trying forward, we view the buyback as a prudent use of discretionary money, and consider our early progress on this entrance is already delivering worth to our shareholders.
Given the value-creating nature of the Caleres construction, we consider we’re poised to take care of this momentum this yr, and past with our dynamic and rising portfolio of manufacturers, plus the energy of our expansive direct to shopper community which simply present important entry and the flexibility to succeed in the patron, when, the place, and the way they wish to store. In our view, our multifaceted platform for partaking customers is a major and differentiating energy, one which vastly enhances our general worth proposition.
Turning now to our phase degree efficiency, beginning with our largest model Well-known Footwear. Well-known maintained its stride, leading to one other report first quarter, topping the report first quarter earnings efficiency set within the comparable interval final yr. Notably, Well-known maintained its give attention to full worth promoting which enabled us to maintain our sturdy gross margin degree, reaching a gross margin charge of over 49% in the course of the interval. This was a 405 foundation level enhance over the primary quarter of 2021 and marks the fifth straight quarter of year-over-year margin enchancment. Whereas we’re nonetheless experiencing delayed receipts to the provision chain disruptions, we consider our skill to proceed full-price promoting, and our disciplined method to stock buys, will allow Well-known to maintain a margin degree increased than our historic averages.
Along with the sturdy margin charge, sturdy demand for our differentiated assortment of manufacturers, coupled with our focused advertising method, planning, and allocation experience, and unmatched native presence, resulted in almost $50 million in working earnings for the phase. This almost 4% year-over-year enchancment was achieved regardless of the modest 3% decline in gross sales. Briefly, the sturdy monetary and working efficiency, together with the roughly 13% return on gross sales, demonstrates the facility of the Well-known model and paves the best way for one more sturdy earnings yr.
Earlier than I transfer to the model portfolio, I’d like to supply a quick replace on a few of the progress in opposition to our key focus areas in Well-known. First, because it pertains to product and as you properly know, with our 887 places, we’re the go-to native Footwear vacation spot for the millennial household. To that finish, we’ll proceed to supply what the Well-known shopper is aware of, desires, and loves, by way of our main assortment of essentially the most sought-after manufacturers. Actually, these high manufacturers proceed to be a supply of energy for Well-known in the course of the first quarter, representing a key driver in its general monetary efficiency. As we progress all year long, we’ll proceed to leverage our management place in athletic and sport, and construct upon our sturdy relationships with all key model companions.
As well as, we’ll proceed to be laser targeted on maximizing the vertical alternative between Well-known and our personal portfolio of manufacturers. As this offers the potential for increased margins for the enterprise as an entire. Of notice, portfolio manufacturers LifeStride, Scholl’s, and Blowfish carried out — had been all within the high 10 best-selling manufacturers at Well-known in the course of the quarter. Moreover, the Well-known shopper, it’s out and about, and has a rising curiosity so as to add a broader assortment of seasonal and occasional based mostly merchandise to fulfill all of their social wants. This offers a compelling alternative for us to leverage our style targeted manufacturers in our portfolio, to drive extremely worthwhile incremental gross sales.
We all know that when she buys for her household and for herself, she is spending extra, connecting extra, and returning extra usually. So, including the suitable types in the suitable places, will broaden our enterprise and supply worth on high of our core athletic and sport enterprise going ahead.
Turning now to advertising; as we highlighted in March, we accomplished a advertising attribution examine at Well-known final yr. We strategically use these findings to tell our 2022 advertising technique with the give attention to rising our contactable shopper file by buying new retaining present and reactivating earlier customers. In consequence, we’ve recognized alternatives to effectively shift a portion of our advertising {dollars} to digital in the course of the interval, to assist offset the decline in year-over-year promotional exercise which influence our digital enterprise extra considerably.
It’s vital to keep in mind that the aggressive panorama has shifted with the expectation that we’ll see one other yr of restricted promotional exercise. In consequence, it’s important that we make use of a extra tactical method to attach and have interaction with customers. And to that finish, we’re being surgical in our advertising ways, utilizing concentrating on and personalization, to be able to drive repeat purchases and dealing to shift conventional one-channel consumers to omnichannel customers. Notably in April, the place we had a extra comparable promotional cadence to the yr prior, we started to see each year-over-year buyer progress, in addition to increased spend per buyer.
Rounding out the advertising dialogue as we glance towards the vital back-to-school season, we’ll work to make sure we optimize our media funding and blend to get the largest bang for our buck. Whereas it’s too early to supply any specifics, I’m excited by the early artistic belongings that I’ve seen from the crew. The marketing campaign, which represents a tangible trendy picture of Well-known Footwear, was created partially by utilizing our shopper analytics, knowledge mined from our buyer file, in addition to early reads from our new retailer prototype and retailer refreshes.
Talking of the brand new retailer, we’re persevering with to put a powerful emphasis on enhancing the patron expertise, and have made important strides in the direction of that finish. Not too long ago we developed and are testing a prototype retailer, that provides an enhanced purchasing expertise, highlights our main assortment of essentially the most in-demand manufacturers, and elevates these manufacturers in a really energetic and thrilling method. On the similar time, we’ve been furthering our retailer refresh initiatives.
Collectively, these actions ought to additional improve the in-store expertise, generate shopper pleasure, and unlock nonetheless better worth from these already high-performing places. Whereas it’s nonetheless early, we’re already seeing constructive traits from the primary prototype and in shops which have accomplished their refreshes. We’re optimistic that these efforts will reinforce our nationwide presence, additional our differentiation, and generate strong returns.
So general, Well-known is off to an ideal begin with its more and more sturdy model consciousness, enhancing stock place, and assist from key model companions. Well-known is poised to capitalize on the present market setting.
So, let’s flip now to the model portfolio. Following the sturdy rebound within the second half of 2021, the model portfolio turned in an distinctive efficiency, eclipsing the primary quarter of 2021, surpassing its first quarter 2019 outcomes, and setting the stage for a considerably improved earnings contribution in 2022. Particularly, we delivered a 46% year-over-year enchancment in gross sales, as shopper demand, significantly for gown event and wear-to-work merchandise, accelerated in the course of the interval, and as key retail companions rebuilt their stock place. It’s vital to notice this wholesale associate post-pandemic restock will probably reasonable, as we transfer by way of the yr as they return to extra regular shopping for and replenishment patterns.
As well as, gross revenue margin reached 38%, or a 53 foundation level enchancment over the primary quarter of 2021 resulting from favorable gross sales combine, and a much less promotional retail setting. It’s price highlighting that whereas we noticed ocean freight prices start to climb in the course of the second half of final yr, we had been profitable in offsetting the impacts of these increased freight charges within the first quarter of this yr as worth will increase we carried out started to promote by way of.
We are going to proceed to work to mitigate elevated freight prices as we transfer by way of the yr. In whole, the model portfolio achieved $41 million in earnings, a $44 million enhance over 2021, and roughly $28 million enhance over the primary quarter of 2019. The higher than anticipated leads to the quarter had been pushed by double-digit enhancements from every model throughout the portfolio, with a few manufacturers recording triple-digit will increase. This broad-based efficiency highlights the depth and the breadth of the portfolio and underscores that whereas we’re capturing the acceleration and gown from time to time, we’re capitalizing on the continued demand for informal and sport-inspired types as properly.
As well as, our strategic and daring method to stock has began to repay, with the suitable stock behind the suitable manufacturers and merchandise. Additionally in the course of the quarter, the model groups continued to work to align the group behind the patron, leading to an roughly 23% enhance within the portfolio’s D2C enterprise. This included an roughly 19% progress from our owned e-commerce websites, with sturdy year-over-year will increase from almost each certainly one of our model web sites.
As well as, we drove a 26% enhance in new prospects, as customers are delighted with our modern designs, recent and compelling merchandise, and various assortments. Actually, we’re constructing a tradition of shopper centricity at Caleres, and consider we will leverage our highly effective manufacturers, shopper analytics, and general experience to develop and unlock extra worth from the overall Caleres buyer file over time.
Now trying somewhat extra intently at a few of our model wins. It’s vital to notice, that the patron is out, working, touring, socializing, and celebrating. Extra importantly, she is concentrated on footwear and is shopping for for all of life’s experiences. A giant success story in the course of the quarter got here from Naturalizer which has been step by step climbing out of its pandemic low. Naturalizer gross sales elevated considerably over the primary quarter of 2021 with a strong enhance over 2019 as properly. Because the model began the yr in good stock place, and as we strategically used air freight to make sure the provision of extremely demanded merchandise, significantly opened up event based mostly types.
Extra particularly, the web wedding ceremony store and the model’s party-ready types fueled the gross sales enchancment, as customers are out and attending all of life’s celebrations. Along with the uplift in gross sales, decrease promotional exercise drove a considerable enchancment in margin. For the primary time, because the onset of the pandemic.
Sam Edelman had one other nice quarter, additionally benefiting from sturdy demand for gown merchandise and types. The class wherein Sam is most well-known and what’s [Phonetic] customers in search of. Whereas the model’s wholesale enterprise improved, the spotlight in the course of the quarter was its progress in its digital enterprise, with samedelman.com up almost 60% when in comparison with the primary quarter of 2021. I’d additionally notice that the Sam and Libby model made its debut at Walmart earlier this spring, and acquired overwhelmingly constructive response. We’re excited in regards to the energy we’re seeing in our Sam Edelman enterprise, and the potential for even stronger earnings contribution for the model in 2021.
Subsequent, we proceed to construct on the latest progress that Allen Edmonds. With sturdy enhancements in each our digital and brick and mortar gross sales, increased AURs and an roughly 600 foundation level enhance in our gross margin. Curiously, demand for gown footwear and sneakers continued into 2022. With the game class rising to our second largest classification.
Lastly, and whereas I want to discuss all of the manufacturers if time would enable, I’d be remiss if I didn’t spotlight LifeStride’s efficiency. LifeStride gross sales elevated greater than 100% over the comparable interval in 2021, because it presents its customers sturdy designs for an incredible worth throughout all classes. As well as, the model delivered increased margins and achieved its best-ever return on gross sales.
Shifting to stock; we consider the central part to driving progress within the model portfolio this yr is to make sure we higher align stock with shopper demand. To that finish, we’ve been managing our provide chain aggressively, accelerating receipts wherever attainable, and putting a powerful emphasis on increase every model’s top-selling types to drive gross sales by way of our Edit-To-Win initiative. We consider that this better alignment of stock was a aggressive benefit in the course of the quarter, and we count on extra alternative to seize demand, as we progress by way of the yr.
So, make sure the rebound within the model portfolio is enjoying out as we anticipated, with the expectation for a a lot stronger contribution this yr. Trying forward, we count on the model portfolio to construct on the strong basis, established on the outset of this yr. We are going to lean into our sturdy product design, and keep true to our edit-to-win initiative to capitalize on the good shopper demand fundamentals to unlock progress alternatives throughout our portfolio.
General, we’ve seen a structural shift upward within the earnings expectations of the enterprise, and we’re excited in regards to the future alternatives for our manufacturers and the potential for long-term worth creation. The methods in place and the capital invested have served to vastly improve the group’s earnings energy to-date, and has set the stage for nonetheless better progress, as we advance all year long.
With that, I’ll now flip it over to Ken, for a extra detailed view of our financials, capital return plans, and revised outlook for 2022. Ken?
Kenneth H. Hannah — Senior Vice President, Chief Monetary Officer
Thanks, Diane, and good afternoon, everybody. I’m excited in regards to the structural adjustments we’ve made throughout the enterprise, and the momentum we drove in the course of the first quarter. I’m much more excited in regards to the potential for future worth creation, as we progress all year long.
I’d like to start out my dialogue by sharing some extra particulars round our record-breaking outcomes, our capital allocation plans, and our outlook for 2022. It’s vital to notice that almost all of my commentary will give attention to the comparable interval in 2021, with some supplemental comparability to the primary quarter of 2019, the place related and helpful.
We delivered consolidated first quarter gross sales of $735.1 million, which was 15% above the primary quarter of 2021. As Diane talked about, this efficiency was pushed by the model portfolio’s excellent 46.1% enhance over the primary quarter of 2021. Along with nice sell-through at our retail companions and a major uplift within the direct gross sales throughout all model divisions, this gross sales enchancment within the model portfolio contains $50 million of shipments to refill our companions’ stock pipeline.
As deliberate, Well-known Footwear gross sales declined a modest 3%, reflecting a decrease retailer depend, and the easing of the pandemic within the prior interval, and that it spurred a burst and pent-up shopper demand. Our consolidated gross margin was 44.5%, up 144 foundation factors from the primary quarter of 2021 reflecting one other quarter of sturdy margin efficiency at Well-known, and enhancing margins on the model portfolio. Actually, Well-known Footwear delivered gross revenue margin of 49.2% within the quarter, this 405 foundation level enchancment over 2021 was pushed primarily by the sturdy shopper demand for main manufacturers and magnificence assortment, the continuation of extra full worth promoting, and one other quarter of minimal promotional exercise.
The model portfolio recorded first quarter gross margin of 38.1%, a 53 foundation level enchancment over the primary quarter of 2021, resulting from favorable gross sales combine, and a a lot much less promotional retail setting. As Diane famous, we had been capable of offset the influence of upper freight and enter prices in the course of the interval with increased common costs, as each value and common worth was up near 13%.
First quarter SG&A expense was $260.8 million in the course of the interval or 35.5% of internet gross sales, a $17.3 million enhance from the identical interval a yr in the past, resulting from increased variable prices on our elevated gross sales, extra investments in advertising, and better wages and labor prices. Our working earnings for the quarter had been $66.2 million or 9% of gross sales, producing diluted earnings per share for the quarter of $1.32. That is up from $0.36 within the first quarter of 2019, and $0.60 within the first quarter of 2021. Our EBITDA for the trailing 12 months was in extra of $300 million and over 11% of gross sales.
Turning now to the stability sheet and our money stream, the corporate generated $19.7 million in money from operations in the course of the quarter, and used that money to fund our dividend, purchase again shares, and proceed to put money into our enterprise. We ended the primary quarter of 2022 with $305 million in borrowings beneath our revolving credit score facility and no long-term debt. Our first quarter curiosity expense was $2.3 million, down $5 million from the primary quarter of 2019. We count on our curiosity expense to approximate $10 million for fiscal 2022.
I now suppose it might be useful to spend a minute unpacking our stock place. Our stock at quarter-end was up roughly 45% in comparison with the primary quarter of 2022 — 2021, excuse me, which was unusually low, it was flat to the primary quarter of 2019. The rise included a 16% enhance at Well-known Footwear and a 99% enhance for the model portfolio. Well-known Footwear stock was 13% beneath 2019 ranges. Whereas the Model Portfolio was 15% increased than our 2019 ranges, together with roughly $100 million of in-transit stock, not but out there to promote. The quarterly in-transit stock degree was down from $177 million at fiscal year-end 2021.
Now let’s flip to capital allocation. As you recognize, we fastidiously and continuously consider essentially the most value-enhancing avenues for our free money stream. At the beginning of the fiscal yr, we put in place a versatile capital return program, inclusive of dividends, share buybacks, and investing and rising our enterprise. We executed on that plan in the course of the quarter, repurchasing almost 2% of our shares excellent for $15 million, using the money generated in the course of the interval. As well as, because the begin of the fiscal second quarter, we repurchased an extra 800,000 shares of Caleres widespread inventory for roughly $19 million.
If you embrace the purchases made in the course of the second quarter, this brings our whole share repurchase up to now to 1.5 million shares or 4% of our shares excellent. Our up to date fiscal yr steering takes our share repurchase exercise up to now into consideration. We proceed to view our inventory as a horny funding choice and count on to make ongoing purchases beneath the prevailing authorization all through the rest of 2022.
Lastly, given the sturdy begin to the yr, and inclusive of the corporate’s present expectations for its underlying enterprise, together with what we all know now about anticipated macro challenges that embrace geopolitical issues, inflationary pressures and ongoing provide chain disruptions, Caleres now expects annual consolidated gross sales to be up between 2% and 5% when in comparison with 2021 and earnings per share to be between $4.20 and $4.40 per share. Moreover, we count on the second quarter of 2022 to be according to the primary quarter of 2022. It’s vital to notice that our revised steering vary does embrace the influence of the share repurchase exercise up to now.
With that, I’d like to show the decision over to the operator for questions. Operator?
Questions and Solutions:
Operator
[Operator Instructions] Your first query comes from the road of Laura Champine from Loop Capital. Your line is open.
Laura Champine — Loop Capital Markets — Analyst
Thanks for taking my query, and congratulations on a pleasant quarter. I needed to present you type of my interpretation of your feedback that Q2 needs to be just like Q1, and rescue me if I’m incorrect on this. So, I’m guessing that you simply imply gross sales and earnings whole ranges might be related, however given the seasonality we usually see, I’d count on revenues to be increased on the model portfolio and decrease at — I’m sorry, increased at Well-known and somewhat bit decrease seasonally at model portfolio? Does that make sense?
Kenneth H. Hannah — Senior Vice President, Chief Monetary Officer
Sure, Laura. Thanks for the query, and a possibility to make clear. On a consolidated foundation, we count on gross sales and earnings to be similar to what we simply reported in 2022’s first quarter. If you look, one of many causes that we known as out the $50 million of pipeline fill at our companions. was that’s actually the distinction between Q1 and Q2 for sort of the Model Portfolio phase, after which that delta maintain these gross sales comparatively constant could be the rise that you’d see at Well-known Footwear.
Laura Champine — Loop Capital Markets — Analyst
Acquired it. Thanks for that.
Kenneth H. Hannah — Senior Vice President, Chief Monetary Officer
You’re welcome.
Operator
Your subsequent query comes from the road of Dana Telsey. Your line is open.
Dana Telsey — Telsey Advisory Group — Analyst
Thanks. Good afternoon, everybody, and congratulations on the good progress.
Diane Sullivan — Chairman and Chief Govt Officer
Thanks Dana.
Dana Telsey — Telsey Advisory Group — Analyst
In mild of the present setting, how would you body the well being of the patron, what you’re seeing in pricing, what you’re doing on pricing in Well-known and within the branded portfolio? And any updates on the provision chain? After which I’ve a follow-up. Thanks.
Diane Sullivan — Chairman and Chief Govt Officer
Okay, nice. That is Diane, I’d say, the patron demand fundamentals so far as we will see stay very sturdy. I believe we’re terribly lucky that we’ve a portfolio of various manufacturers like we’ve, that attain. So many various shopper segments and worth factors, together with Well-known that actually reaches so many customers, and has all of the nationwide manufacturers that they really need.
So, fairly truthfully, Dana, we’ve not seen any important change within the demand of the patron within the final variety of weeks. It’s nonetheless is robust as April had been, and actually don’t consider that that’s going to alter that considerably for us, as we transfer by way of the second quarter and thru the remainder of the yr. Once more, all to be seen, however we really feel very assured in all the alerts that we’re seeing about our enterprise.
The second factor is that, with respect to cost elasticity and worth will increase, once more, similar factor; due to the a lot decrease promotional setting, it’s lots quieter than it had been, in addition to the truth that we actually took our buy will increase up going into spring of this yr. Once more, really feel like all of that appears like proper now that that’s holding, and we actually once more consider that a part of that has been, we’ve at all times tried to ship unbelievable worth every single day within the merchandise that we ship to the customers. So, that may be, I believe the second thought — second level.
After which lastly, by way of provide chain prices. That in lead occasions, I’d let you know that from a price, enter value, and positively transportation value, we’ve not seen something that may give us any indication that we must always count on lot up in that space till 2023, however we’ve definitely accounted for that, as we’ve been considerate about our steering for the remainder of the yr. And we’ll see what occurs within the ports, as they undergo their negotiation in July. However once more, we’re working very exhausting to be sure that we’ve the suitable merchandise and the suitable stock on the proper time, to proceed to drive that and fulfill our customers going ahead. So, not a number of change in that space, however feeling like we’ve a very good stability of stock to assist our wants.
Dana Telsey — Telsey Advisory Group — Analyst
Acquired it. And only a fast follow-up, the energy of Nike and Well-known and the way that’s doing for you? After which additionally the order e-book on the branded portfolio, how is that trying and something we needs to be awaiting? Thanks.
Diane Sullivan — Chairman and Chief Govt Officer
Yeah. Okay. Thanks, Dana. With respect to Nike, once more continues to be superb for us, and we’re not seeing any slowdown within the demand for the Nike merchandise nor, our alternative to have the ability to have these merchandise in our shops. So, our groups are doing a terrific job there. We’re persevering with to see — the promote by way of there could be very, superb together with frankly actually a broad vary of manufacturers throughout the Well-known expertise. So, it’s been actually superb all the best way round.
And by way of the order e-book, I’ll let Jay make a remark, however we’d say that we like what we’re seeing, and it definitely helps the steering that we’ve shared with you for the remainder of the yr. So Jay, possibly somewhat colour on the order e-book for Q3?
Jay Schmidt — President
Yeah, I’d say, Dana, that the Q3 order e-book is shaping up properly versus ’21 place, and we’re inspired by our fill charge up to now. We haven’t adjusted our purchasing to account for increased transportation lead occasions. So, that’s leading to somewhat of a better fill charge. And whereas there are nonetheless a number of uncertainties with port delays and COVID shutdowns. To this point we haven’t skilled any important cancellations and don’t anticipate that being the case going ahead.
Dana Telsey — Telsey Advisory Group — Analyst
Thanks.
Operator
Your subsequent query comes from the road of Steve Marotta. Your line is open.
Steven Marotta — CL King & Associates — Analyst
Good night, all people, Diane, and Ken, and Logan, congratulations once more on a terrific quarter. Diane, you’ve touched on this already, I’m hoping possibly you would simply put a finer level on it. Clearly, the steering was superb for the stability of the yr. What offers you confidence that gross margins will maintain throughout the portfolio, and that promotions, simply competitively gained’t tick-up for the stability of the yr?
Diane Sullivan — Chairman and Chief Govt Officer
Sure, properly, a few issues. You by no means know for certain, however I believe we’ve taken a really life like view on our steering for the remainder of the yr. Now we have superb visibility clearly into what our expectations are proper now for the second quarter. Ken commented somewhat bit on that already. We even have actually managed our promotions in our personal shops, to be sure that I believe we had 70 fewer days, frankly, within the first quarter of promotional exercise than we had final yr. So, we’re actually dialing it again, we’re preserving our inventories, as tight as we presumably can and managing the push and the pull of all of that, in a manner that we consider that we have to. And once more, I believe the groups have accomplished an ideal job and specializing in the manufacturers actually and the types that the patron desires.
So, we’ve actually made certain we’ve these proper manufacturers and people proper types, to be sure that our margins proceed to be — mirror the sort of enchancment that we’ve seen for the final variety of quarters. So, once more, feeling very constructive, Steve, about what that appears like. And once more it’s all tied to, I believe actually managing our stock in the easiest way that we presumably can. And we’ve simply excellent capabilities, by way of how we plan and the way we allocate stock, and we’ve excellent operational excellence on the execution of all of that.
Steven Marotta — CL King & Associates — Analyst
Nice. That’s very useful. And Ken apart from the pipeline fill that you simply referred to you, from the branded portfolio standpoint within the first quarter, had been there another places and takes to shifting, say earlier deliveries? Or was there another important call-outs for the branded portfolio aspect on shipments within the first quarter?
Kenneth H. Hannah — Senior Vice President, Chief Monetary Officer
No, I imply I believe Diane mentioned, we had double-digit progress throughout the manufacturers and numerous them had been up triple digits. So, I believe it was the breadth of not solely our merchandise, however the customers that we’re servicing, and we count on the momentum that we had in Q1 to stream into Q2, and we needed to ensure we did name out the pipeline fill, as a result of that’s not — that gained’t repeat in Q2. However throughout all manufacturers, all classes, we’re seeing a superb efficiency.
Steven Marotta — CL King & Associates — Analyst
Very useful, thanks. I’ll take the stability offline. Thanks.
Diane Sullivan — Chairman and Chief Govt Officer
Thanks, Steve.
Operator
There are not any extra questions at the moment. Turning the decision again over to Ms. Diane Sullivan for closing remarks.
Diane Sullivan — Chairman and Chief Govt Officer
Thanks very a lot. Admire you all becoming a member of us this afternoon, and we’ll see you alongside the best way. A few of you subsequent week, so we sit up for that. Take care.
Operator
[Operator Closing Remarks]
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