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Caleres Inc (NYSE:CAL)
Q3 2019 Earnings Call
Nov 25, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to the Caleres Third Quarter Earnings Conference Call. My name is Catherine and I will be your conference coordinator. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

At this time, I would like to turn the call over to Ken Hannah, Senior Vice President and Chief Financial Officer. Please go ahead.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Good afternoon. I would like to thank you for joining our Third Quarter 2019 Earnings Call and Webcast. A press release with detailed financial tables, as well as slides are available at caleres.com. Please be aware, today's discussion contains forward-looking statements, which are subject to a number of risks and opportunities.

Actual results may differ materially due to various risk factors, including but not limited to the factors disclosed in the Company's Form 10-K and other filings with the U.S. Securities and Exchange Commission. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online. The Company undertakes no obligation to update any information discussed in this call at any time.

Joining me on the call today is Diane Sullivan, CEO, President and Chairman.

I would now like to turn the call over to Diane.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thanks, Ken and good afternoon, everyone. It was good to see many of you at our Investor Day in October. Thank you for joining our third quarter call and for your continued support of Caleres. And during the third quarter, we continued to successfully execute on our strategies as we broaden the reach and power of our brands and products, strengthen connections with consumers and accelerated the innovation of capabilities and operations. Our drive to leverage our investments and insight, combined with our industry leading footwear capabilities, allowed us to deliver continued positive same-store sales growth at Famous Footwear and increased market share within the Brand Portfolio. As it relates to strengthening our connections with consumers, we're excited to have opened the new Famous Footwear store in New York City, ahead of the busiest shopping period of the year. This store in Herald Square, which is just down the street from our original 34th Street location, will enable us to broaden the reach of the brand, featuring world-class and demand brands at a great value. This high impact brand enhancing location is going to feature dedicated trend shops that will deepen our emotional connection with the customer and truly make them feel a little famous when they shop with us.

As it relates to broadening the reach and power of our brands and products, we also launched 27EDIT, our Halo brand for our Naturalizer brand family and over 50 brick-and-mortar doors, following a successful online performance in spring. This collection of premium Footwear combines all the fit and comfort components that Naturalizer is known for, while elevating the design and materials with a more contemporary aesthetic. Most importantly, this collection was based on feedback from our consumer insights division which identified a demand from our target customer, not met from our current brand offerings.

We're also proud to report that the Dr. Scholl Herzog Sneaker, a versatile and eco-conscious sports shoe to count the first prize ever and footwear honor at the accessories council, Designer Excellence Award. This shoe brings to life the brand's mission to make shoes in a new more eco-conscious way featuring things like repurposed scrap leather, plant-based foam insoles, top-cloth made from recycled bottles and natural soles, made from a blend of rice husks and rubber. And by this time next year, Dr. Scholl's will feature eco-conscious materials in all of it shoes. And as it relates to accelerating the innovation of capabilities and operations, we also further expanded our consumer fulfilment capabilities by completing the final automation of our in-house distribution facility in the third quarter. I'm very pleased to report that the facility has performed as planned, since the cut over.

Now turning to the details of the third quarter. At Famous Footwear, we had an excellent back to school, allowing us to generate our eighth consecutive year of positive back to school, same-store sales growth. This was the biggest 10 selling weeks in the history of Famous and contributed to a 2.5% increase in same-store sales for the quarter. We experienced, strengthen our athletic, boots and sandal categories and saw increases in all channels across all of our back-to-school timing zones.

Our kids business was particularly strong in the quarter and our decision to elevate our assortment of trend-right premium in demand brands and styles with key programs delivered what our consumer was looking for. We also benefited in the quarter from continued improvements from our key athletic vendor. We are seeing our customers respond to our enhanced offering as they recognize that Famous offers the best brands in styles at a great value. In addition to delivering compelling product, we are pleased with the results that we've been seeing in our revamped loyalty program, famously rewards. And that's driving increased engagement among existing members and continued growth in our new and reactivated membership base.

Existing rewards members are shopping more frequently across all channels and spending more per shopping occasion. And of course, we're going to continue to learn and evolve -- as we move to the next phase of this program and make sure that we're continuing to connect with consumers. Looking forward for Famous, we are well positioned for holiday from both the product mix and a total inventory standpoint, and are very confident about our assortment. We have a promotional plan and a marketing strategy in place including a return to TV that we feel will deliver our sales and margin plan.

Now turning to the Brand Portfolio, where our sales were short of our internal plans as we experienced a later start to fall, along with a moderation of our core products and associated replenishment programs. In total, we were again able to take share in the quarter at the Brand Portfolio, experiencing sequential improvement over the course of the quarter. Our fall styles are resonating with the consumer and our boot selling is very strong. The relative sell-through of our brands at our retail partners continues to outpace the market, while we adjust to an industry shift to more dynamic and on-demand ordering, as evidenced by the increases that we are seeing in our e-commerce related sales.

Importantly, we have carefully managed our inventory with nearly an 8% reduction year-over-year, exiting the quarter and we're happy with the quality and the freshness of our -- of the inventory in the marketplace. It's critically important that we built the flexibility into our model, because this is allowing us to meet increasing consumer demand for newness in an environment where retailers have become even more focused on inventory discipline. On balance, we are well positioned to deliver around these changes in consumer and retailer preferences, giving the investments that we have made in our capabilities enabling speed, agility and efficiencies.

So now let me give you a brief update as well on two of our most recent acquisitions, Blowfish Malibu and Vionic. Blowfish Malibu products has performed very well in the marketplace and the brand is really naturally positioned to capture what the consumer's looking for right now, that sport and casual lifestyle, this fresh and very young spirit, a constant newness in their assortment and you just top it all off with a can't beat price-value equation. This combination is delivering results and Don and the team have done a terrific job by capitalizing on these trends, and we're really looking forward to seeing what's next from that team.

And at Vionic, we're working rapidly to ensure that the brand can react with more speed and agility to meet the needs of the consumer. We've worked with the team to ensure that the brand has the capabilities to deliver trend right product and newness more frequently. And they've already moved to a four season calendar. We also think it's -- that we needed to make sure they has the capabilities to test and validate new constructions ahead of mass market launches. They are now using our data and predictive analytics for the consumer that we found successful on Brand Portfolio. And then when you add that all up in the end, this is going to result in a leaner inventories and fresh product as we will no longer be front-loading but flowing and chasing items.

As Dan Friedman and Chris Gallagher have worked together, they have already streamlined Vionic's process taking weeks out of their commercialization and development calendar. These actions provide even more fuel and support to this brand that has such a unique value proposition.

And finally before I turn the call over to Ken, I wanted to briefly address tariffs and their impact on our business. This quarter, the increase in tariffs that were put into place in early September with almost immediate effect created some headwinds in the quarter. As a result, our third quarter earnings results include a $0.07 growth impact associated with the tariff increase. We were able to offset $0.04 of the tariff headwinds by taking discipline action and maintaining strong price controls. But our earnings were still impacted by $0.03 this quarter. We expect another $0.02 net impact in Q4 for a total of $0.05 for the year. As a result, we are narrowing the top end of our full year adjusted EPS guidance range by $0.05 to $2.35-$2.40.

I'm confident that the teams are focusing on what we can control and operating with a necessary discipline to deliver our guidance.

And with that, I'd like to turn the call over to Ken for a financial review.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thank you, Diane, and good afternoon everyone. For the third quarter, we reported earnings per share of $0.69. This included $0.02 of Vionic integration-related expense and $0.07 related to the fair value adjustment associated with the mandatory purchase obligation for Blowfish Malibu, reflecting the strength in their business, Diane mentioned earlier.

Our adjusted earnings per share excluding these items was $0.78 and includes a $0.07 gross impact and a $0.03 net impact in the quarter related to the tariffs that went into effect September 1. Consolidated sales for the quarter of $792.4 million were up 2.1% year-over-year. Famous Footwear delivered a strong third quarter, reflecting significant progress on our product assortment and marketing initiatives. Our same-store sales were up 2.5% for the quarter, reflecting another strong back-to-school season and are up 1.1% for the first nine months of the year. Total sales at Famous Footwear were $446.6 million, down 0.5% as we operated 47 fewer doors versus the prior year and ended the third quarter with 960 total doors.

Our Brand Portfolio total sales were up 4.9% year-over-year in the quarter, including two additional months of Vionic sales in 2019, as well as the planned reduction in Allen Edmonds sales. As Diane mentioned, our brands gained market share and performed exceptionally well at our retail partners, with sequential improvements throughout the quarter.

Let's turn to consolidated gross profit and margin. For the third quarter, consolidated gross profit of $319.8 million was up 2.9%, and our reported gross margin came in at 40.4%, up approximately 40 basis points from the prior year, with contribution from both Famous Footwear and Brand Portfolio. For Famous Footwear, third quarter gross margin of 41% was up approximately 30 basis points year-over-year. The margin improvement we experienced in Q2 continued as the team effectively manage their inventory, allowing them to resist the temptation to increase the level of promotion in the marketplace.

Brand Portfolio reported gross margin of 37.2% in the third quarter, up approximately 30 basis points from the prior year, including the benefit associated with purchase accounting year-over-year. Our consolidated SG&A expense for the third quarter was up 3.7%, including the additional two months of Vionic.

SG&A represented approximately 34.7% of sales, an increase of approximately 50 basis points from the prior year. Famous Footwear expense was down $2.5 million year-over-year, reflecting lower fixed expenses as they operated 47 fewer doors. At Brand Portfolio, expense was up reflecting the incremental two months of Vionic and the variable cost of distribution, driven by a higher mix of loose pair ship this year versus last.

Our depreciation and amortization for the third quarter of $16.2 million was up 2.6% versus the prior year, primarily due to the additional trademark amortization related to our Vionic acquisition. Our third quarter operating earnings were $43.5 million or 5.5% of sales. Our adjusted operating earnings of $44.4 million were down 5.3% year-over-year and represented 5.6% of sales. At Famous Footwear, third quarter operating earnings of $27.7 million represented 6.2% of sales and reflected higher gross margins and lower expenses as mentioned earlier.

Our Famous Footwear operating earnings were up 13.4% year-over-year. For the Brand Portfolio, third quarter operating earnings were $19.4 million or 5.4% of sales. Our adjusted operating margin was down approximately 200 basis points versus the same quarter a year ago, reflecting the Vionic amortization and an increase in variable cost of distribution related to the higher mix of drop ship business year-over-year.

Our net interest expense for the third quarter of $10.6 million was up $6.3 million from a year ago, reflecting the fair value adjustment associated with the Blowfish mandatory purchase obligation and the use of our revolving credit facility to finance the October 2018 acquisition of Vionic. Our third quarter tax rate was 21.9%. Our adjusted EBITDA for the quarter was $63.5 million or 8% of sales. And our adjusted EBITDA for the first nine months of 2019 was $165 million with adjusted EBITDA margin of 7.4% of sales. Our capital expenditures were $11.4 million for the third quarter and down approximately $5.8 million year-over-year.

Now turning to our balance sheet, we ended the quarter with $52.5 million of cash and equivalents. Our outstanding borrowings under our revolving credit facility were $295 million at quarter end, down from $335 million at year-end and $350 million a year ago following our 2018 acquisition of Vionic. We bought back an additional $1.2 million of common stock in the third quarter and returned nearly $40 million to shareholders in the first nine months of 2019.

Our consolidated inventory position at the end of the third quarter was $644.6 million, down $53.6 million year-over-year or almost 8%. At Famous Footwear we ended the quarter with inventory down 3.4% year-over-year and for our Brand Portfolio, our inventories were down 12.6% year-over-year, as the teams effectively balanced inventory in-house and that our partners, ensuring quality and freshness of inventory in the channel. We're particularly pleased with these results in light of our retail partners increasingly ordering closer to need. This is requiring us to carefully balance our ability to take advantage of opportunities with our commitment to managing our inventory risk. Our year-to-date operating cash flow was $145.7 million, up 54% over the same period last year.

As Diane mentioned, we're narrowing the top end of our EPS guidance range by $0.05 to $2.35 per share to $2.40 per share, to reflect the net impact from tariffs in the third and fourth quarter. We believe we are well positioned to win in the long-term with our growth strategies in our business model. In doing so, we will continue to broaden the reach and power of our brands and products, strengthen our connection with consumers and accelerate innovation of our capabilities and operation.

Now, I'd like to turn the call over to the operator for Q&A.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Rick Patel with Needham Company.

Rick Patel -- Needham & Company -- Analyst

Hey, good afternoon guys and congrats on the positive comp momentum for back-to-school.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Rick.

Rick Patel -- Needham & Company -- Analyst

So my question is on the Brand Portfolio. With 3Q sales coming up a little bit softer guidance for this year of low-teens, implies that the fourth quarter is going to be up in the low double-digit ballpark. Given that you've now lapped the Vionic acquisition and inventories were also down double-digits at the Brand Portfolio. Can you give us -- help give us comfort around this acceleration like other timing ships coming into play here, new wholesale relationships? Any context there would be great.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Sure. Rick, it's Diane. And here is it's kind of how we think about the brand portfolio in the fourth quarter. I think, in the third quarter, we really saw an acceleration as we move through the third quarter. So August -- September was better than August, October was better than September and actually our sell-through rates even as we're into November, which suggest that, that kind of growth rate that we're forecasting for the fourth quarter is certainly possible. Our inventory and our foot acceleration has been terrific.

Our positioning in terms of our ability to satisfy our direct to consumer and our loose pair business is right on track, with respect to that on our drop ship. And I really believe that with the current trends that we're seeing going into the fourth quarter, we feel pretty good about that business.

On the other side, on the Famous side, again the same kind of thing, we're seeing the trends continue to improve. We're very pleased about -- and excited about our holiday plans. We're adding TV back to the media mix in for three weeks and the fourth quarter here at Famous and those trends continue to look good. Now it doesn't mean we don't always have our work cut out for us, and we got to make sure that we continue to drive our business. But as we look at all the trends in our business, right now, we feel like we are in great shape. And last year, we were actually a little light on our inventory and our ability to satisfy boot demands. And this year we're in much better position. So, I think that that would be a piece of it. Ken, I don't know if you'd like -- couple of points...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, I know, I guess, as we go in, I think when we look at that low double-digit, and if you go in and you look at Q1 where we were up all in a little over 20%. Brand Portfolio in Q2 was up around 18% and then Q3 call it roughly 5%. It can actually be flat in Q4 and still be up 10% for the year. So just, I know you had mentioned double-digit for the quarter, but we're running well ahead of that as we had three quarters where we had the benefit year-over-year of the Vionic sales.

Rick Patel -- Needham & Company -- Analyst

Got it. And then a question on your initial thoughts for 2020. So, when you look at the range for earnings estimates out there, it's very wide. I was hoping if you can give us some preliminary thoughts on how we should be thinking about the model? Your long-term algorithm is for low single-digit top line growth and double-digit EPS growth. Do you see this happening in 2020? Or is it too early to make that call, especially in the -- given the curveball of tariffs? Any color there would be great.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Well, I think obviously, it's tough to give any kind of 2020 guidance at this point in time. But what we laid out at our Investor Day in terms of what our intentions were and our aspirations in our growth rate, we would grow at or better than market. It would be low single-digit top line growth, and that we were really looking at continuing to drive double-digit operating margin. Those long-term guide posted and guidelines that we put out there has not really changed. Can't really say, yeah, what 2020 is going to look like, we will certainly do that in March.

And right now, that our position hasn't changed and we're just finishing off this year and paying attention to controlling what we can and driving our business.

Rick Patel -- Needham & Company -- Analyst

Thanks very much. Good luck this holiday.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thank you.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Rick.

Operator

Your next question comes from the line of Laura Champine with Loop Capital.

Laura Champine -- Loop Capital -- Analyst

Thanks for taking my question. When we look at the tariff impact, moving from $0.03 this quarter, $0.02 next quarter. Is that just because next quarter is seasonally lighter in terms of sales? Are there things you're doing to mitigate the tariffs that, and if you could give us any kind of comment on what the run rate you think we'll see in 2020 assuming status quo?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, Laura, the Q3, when we looked at the gross impact of $0.07, we were not able to have much of an impact on price. I mean, by the time, those tariffs went into effect. Most of those quarters were booked for the quarter. So, when we look, there is a little bit of price that is going to be able to help us in Q4. And then as we move into 2020, we would expect the ability to offset most of the rest of that from a price standpoint. So, it's really consistent with what we had said before over the long-term. We don't expect this to have a negative impact, but in the short-term, where it went into effect immediately and we had lots of orders that were already booked, we were only able to pull a couple of the levers.

As we look forward, we will continue to evaluate just different countries where we are -- where we're producing goods and making sure we can maintain quality and speed. And then we would hope that we could execute a few more of our actions to mitigate more of it.

Laura Champine -- Loop Capital -- Analyst

Understood. Thank you.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Laura.

Operator

Your next question comes from the line of Chris Svezia with Wedbush.

Christopher Svezia -- Wedbush Securities -- Analyst

Good afternoon, everyone and thanks for taking my questions. I guess, first, I just wanted go to Famous Footwear for a moment. Can you, Diane, any color about how comps progressed throughout the quarter at all -- was it pretty consistent in that 2.5% and...

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yeah. No, it was actually very strong in August, a little weaker in September and then came back again in October. So, it was -- it kind of ran at the gamut, Chris, in the quarter.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. And where you need a reference to boots being a driver with that. And just not the quarter that pickup in October where both -- boots inflected?

Diane Sullivan -- Chairman, President and Chief Executive Officer

It was really pretty consistent throughout the quarter, but obviously, really October it did really start to kick in. But it was really the weather pattern, as you know, and the quarter was a little bit unusual and that August was so warm, so we had an opportunity on early boots selling to be good and sandals were still good and the athletic was positive. And as we flip to October as the weather change boots kicked in again, so it was -- it worked out very nicely. The team did a great job of making sure we had the inventory position, where we needed it to. And we've always done so well on our sport lifestyle categories and that was no different this quarter. So it was really a nice balance, I think assortment right brands, right sales really across the Board and a nice kids business too.

Christopher Svezia -- Wedbush Securities -- Analyst

Right. And on the -- Ken for you, just I guess the tariff piece is really just that incremental 5%, is that really what the -- what's new here in the guidance, just to be clear?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Well, there is the incremental five and then there was just the impact in Q3 of not being able to offset all of the incremental 15% [Phonetic].

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. All right. And then on the -- so your fourth quarter implies $0.60 to $0.65 in earnings, is that my math right? Just maybe walk -- during north of $10 million in EBIT growth. So I'm curious just walk through if you can sort of the puts and takes, so it was to look forward to drive that level of increase if you could?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, I mean, I think when we look at the momentum we've got going in, obviously, we talked about on the Brand Portfolio, the boot selling, the inventory we don't -- we're not carrying excess inventory that we feel like we're going to have to push through at lower margins. So, we're expecting to see some nice margin expansion in Q4 across the Brand Portfolio. The e-commerce momentum, we sequentially saw that grow as we move throughout the quarter. And so we're expecting that to continue in the Q4. And then I think from a Famous Footwear standpoint, we had a great back-to-school season. We finished the quarter really strong, really happy with all three athletic boots and sandals, all were contributing to the growth. So we feel really good about that. And we had the margin actually expand at Famous Footwear by 30 some odd basis points. And so all of that kind of leads to some incremental earnings power in Q4 over last year.

Christopher Svezia -- Wedbush Securities -- Analyst

Got it. Just to remind me, here does the -- I think there was some buy on it cost fourth quarter last year and...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, a year ago, we had $0.10 of dilution from Vionic a year ago, $0.08 of that in Q4. So that was in our Q4 numbers a year ago.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. Well, last one from me just go back to the Brand Portfolio on the outlook. I don't know, can you walk through if you did flat, you are still about 10% growth on the year. I'm just trying to understand in one regard, it seems like you're saying there are some acceleration potentially from this 5% in Q3. Is that fair to think that maybe Q4 could be stronger from a growth rate perspective or no, I'm just trying to gain...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

So I guess and part of I think what Rick was pointing out. So in Q3 this year we had three months of Vionic versus one month of Vionic a year ago. And so when we go back to Q2 we had three months of Vionic this year versus no months of Vionic a year ago. Q4, we'll have three months against three months. So a lot of what we had seen early on in terms of the outsized growth was coming from the Vionic condition, so that equates to an apples-to-apples in Q4.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay, so not to beat this to death, so you're expecting more organic growth, so Vionic you're lapping pretty much everything at this point, I think the Allen Edmonds are still supposed to be down. Potentially, it's now just mean the core business is actually accelerating to some degree...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Well, Edmons actually, in Q4, if you remember, we made the decision to pull back on the level of promotion a year ago. And so we begin lapping that decision in Q4.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. All right. That's all I have for now. Thank you and all the best to you.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Chris.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thanks, Chris.

Operator

Your next question comes from the line of Steve Marotta with CL King Associates.

Steven L. Marotta -- CL King & Associates -- Analyst

Good evening, Diane and Ken. What are the specific expectations for Famous Footwear comp in the fourth quarter as well as trend quarter-to-date?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

The trend quarter-to-date -- I think we said about year-to-date. We said we are 1.1% year-to-date. Yeah, we're not going to provide quarter-to-date or Q4 expectations. I mean what we tried to say was we had 2.5% and in Q3, we saw good momentum, as we were kind of coming through the quarter, had a very strong October and all the seasonal fall categories seem to be selling well.

Steven L. Marotta -- CL King & Associates -- Analyst

That's helpful. And you mentioned also that the new DC is fully automated. When do you feel it will run at peak efficiency?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Well, we're ramping. And so, we start to see here in Q4 some of the labor come out and we would expect to be coming down that learning curve going into 2020. So, we'll provide an update on kind of what we think that's going to look like when we do our year-end report and give our guidance.

Diane Sullivan -- Chairman, President and Chief Executive Officer

And we would certainly expect that to continue for a period of time.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Right.

Diane Sullivan -- Chairman, President and Chief Executive Officer

We expect some benefits and some productivity gains next year, but we certainly won't be done at that point in time. There is a lot more to, as we even increase the demand of our e-com business and all of that, that's going to help the productivity there as well.

Steven L. Marotta -- CL King & Associates -- Analyst

Sure. One more question as it pertains to Famous Footwear's promotional cadence through the holiday season to differ materially at all from last year?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yeah. Great question, Steve. We actually even in the third quarter, our promotional cadence shift a little bit during the quarter, but if you looked at the total amount of days where we were promoting, it was pretty consistent. And that's very much of what we're planning to do in December as well, little bit of shift of some of our activities. We're not going to have one of the friends and family events. We're putting our investment back into the TV and the media. We think that was the right way to go. The consumer really responded well. And so, balancing out a little bit of what we're doing in the fourth quarter, but not materially more promotional at all. We'll see how it all goes, but right now, the plan is to continue kind of our pattern that we developed early in the third quarter.

Steven L. Marotta -- CL King & Associates -- Analyst

Excellent. Very helpful. Thank you.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Steve.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thanks, Steve.

Operator

[Operator Instructions] Your next question comes from the line of Tim Poser with Susquehanna.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Hi, it's Sam Poser. Thank you. I'm changing my name. A few questions. How many store -- what is -- how many store -- Jim Poser, I guess correct, actually. How many stores, Famous stores that you opened and closed in the quarter? And then what's your plan for store openings and closing for the full year?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Sam, we are looking that up.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

We'll get you the specifics. I think we said, we're 47 fewer.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yeah. So it looks like we opened in 19-12 [Phonetic], we closed 55 for a net loss of 43, so 94,900 [Phonetic] is our ending plan.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. But where are we now?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

960.

Diane Sullivan -- Chairman, President and Chief Executive Officer

960.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

960.

Samuel Poser -- Susquehanna Financial Group -- Analyst

I got that. How many did you open in the quarter? And how many did you closed in the quarter?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

We opened four and closed 17.

Diane Sullivan -- Chairman, President and Chief Executive Officer

We opened four and closed 17.

Samuel Poser -- Susquehanna Financial Group -- Analyst

And then how many more are you planning and opening again in -- for the full year, you're planning and opening how many?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Just one more in the fourth quarter.

Samuel Poser -- Susquehanna Financial Group -- Analyst

And that one opened already, I assume. That's New York, right?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yes.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yeah.

Samuel Poser -- Susquehanna Financial Group -- Analyst

And then, you're going to close like another 12 or 13?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Correct. Yeah.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay, thank you. And then what was the comp for the Brand Portfolio stores?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

It was negative five.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Exactly.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

And that was -- the planned reduction in Allen Edmonds, I think the Naturalizer piece was roughly flat.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. And then what about the 4B tariffs? You don't have, I don't know if you have that baked into your numbers or how you're thinking about that because some of your brands specifically Blowfish Malibu would be impacted by that fairly significantly probably also some of the Dr. Scholl's product and LifeStride. So how are you thinking about this 4B if that comes?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, we -- we have taken that into consideration based on what the current list for B in the 15%. So it's about 30% of our production in China. So 70% is -- was on List 4a, and there is about 30% of what we have coming out of China that was on 4B.

Samuel Poser -- Susquehanna Financial Group -- Analyst

But this 4b is almost entirely I would assume those three brands that I mentioned and I guess...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Right. And then any of the kids related product is also in there.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Got it. Can you tell us -- can you give us an idea of what the Vionic sales were in the quarter? They were up, down or how much they were up or down?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Well, they certainly were up to us, because we had an incremental two months. So in our resilience they were...

Samuel Poser -- Susquehanna Financial Group -- Analyst

Can you give us the number?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

They were up.

Diane Sullivan -- Chairman, President and Chief Executive Officer

They were certainly impacted in third quarter. Ken's looking at that. But as I was saying that work that we need to do with them on their core and replenishment categories, we needed to actually accelerate that kind of newness and freshness, that they were bringing to the market, Sam. And -- so we put -- spend a lot of time working with them on that, moving to four seasons a year, making sure that they were using all the capabilities that our sourcing team could bring to bear, to continue to drive some speed there. They need a little more freshness and newness added to their assortments. So, we're really pleased about the pace at which they're doing that, we really think that's going to be beneficial to them and to us, as we get into 2020. But they were certainly a little light in that core and replenishment sort of category during the third quarter.

Samuel Poser -- Susquehanna Financial Group -- Analyst

So how do we think about to get to a low double, I mean to get to low-teens for the year for Brand Portfolio, you need a low double-digit increase in the fourth quarter for Brand Portfolio? How do -- what are by brand or what is the key drivers that you haven't mentioned Sam Edelman at all today? Can you just give us some idea of what those key drivers sort of get to that? And how much of that is initial orders? And how much of that is fill in orders that you're counting on? I guess some of the initials will be January ship for spring. But...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, Sam, the -- so to get to a double-digit increase all in, at Brand Portfolio for the year, I mean, I think...

Samuel Poser -- Susquehanna Financial Group -- Analyst

But you said low-teens, you said low-teens. You didn't say double. You said low-teens for the year. Or did I misunderstand? I thought you said low-teens for the year. And I think that's on your -- in your -- you're saying that you're expecting Brand Portfolio sales for the year to be up low teens that's on your...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Right, well, what we said was, just to back in to get to double-digit, it could be flat.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. But my question is what's driving, to get to low teens we need an 11% increase in the fourth quarter to get the 13%. So what is going to make that up? How much of it is fill-ins? What are the brands that you see really doing the heavy lifting there?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah. Most of that is we've seen throughout the year initial orders continue to be down year-over-year. I think in Q3 initial orders continue to be down double digit as was replenishment. So, the e-commerce related sales, the drop ship related sales, that's where the growth is coming. And I think we're starting to lap year-over-year -- some of the significant shifts in the initial order reductions. So, that's a bit of where you're seeing the growth. But it's all in newness fresh product. I think as Diane mentioned on, just what we're doing, Sam and Vionic are -- both of those brands have big core replenishment businesses, those -- there is a shift there in both of those to more fashion oriented product that's really where the consumer is going, and that's what driving the growth really across the entire Brand Portfolio.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. And then could you just tell me how much of your business is -- how much of your Brand Portfolio business is your own e-commerce business? Because that sounds like it's your in-house e-commerce, plus I guess, plus drop ship to -- and the drop ship model that you're doing with your wholesale partners that driving a lot of those business. So can you give us an idea of what percent either each one of those are or the combination of...

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yeah, well, let me give you a sort of a flavor for what third quarter was, Sam. About 30% -- 38% of all of our business was in some e-commerce related sale. Whether it was drop ship, e-com to other retailers, our own e-com and that grew substantially in the quarter. And we expect to see that kind of -- same kind of pattern that same kind of growth on the base that we had last year in the fourth quarter as well.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Right. But I mean you're also talking about sell-ins to Zappos for argument sake. What I'm talking -- when you're -- I'm not asking you about your own e-commerce, which is a sell-through number and your drop ship which is automatically an order from a consumer. So if you -- so what is that number? That actual out the door sale number as a percent, not what you're selling as a wholesale order to a like, like to famousfootwear.com. I mean, that you're selling, they do carry their own inventory and then you also do drop ships, so what's that drop ship flash?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, I think so year-to-date that is roughly 32% of our total direct-to-consumer.

Samuel Poser -- Susquehanna Financial Group -- Analyst

So that doesn't...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, our own -- our own.com.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Your own.com is 32% of the Brand Portfolio business right now?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Of the direct-to-consumer business for .com.

Samuel Poser -- Susquehanna Financial Group -- Analyst

All right. You're right. I'm going to -- I'm sorry to drive you crazy. You did $360 million in brand portfolio this quarter, of which, what percent was the combination of drop ship and your own e-commerce business which is telling you that like all that direct to -- it's all that would all be direct-to-consumer...

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, that's what Diane was mentioning, it was like 38% of...

Samuel Poser -- Susquehanna Financial Group -- Analyst

But does that include wholesale orders to Zappos? Or is that just what you're shipping to Zappos...

Diane Sullivan -- Chairman, President and Chief Executive Officer

No, the single care orders directly to the consumer.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. So it's 38%, so about 6% of your business is drop ship and then the other 32% is your own business. And how fast do you foresee that direct drop ship -- sorry the direct e-commerce business growing for the balance of the year and sort of down the road?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Well, the direct-to-consumer business has been growing at close to 30%. And...

Samuel Poser -- Susquehanna Financial Group -- Analyst

I'm talking about the e-commerce -- I'm talking about the e-commerce part of that?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Our e-commerce business has been growing at a similar rate.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Okay. And do you expect that, I mean looking ahead, I know you've not guiding the next year. But I mean, when you look ahead over the next few years, do you expect that growth to accelerate as you put more effort against it or is -- or not?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

We expected to continue. And yes, it would accelerate.

Diane Sullivan -- Chairman, President and Chief Executive Officer

I mean that was the -- a significant part of the investment we made on the capabilities of being able to not just do obviously case that, but -- packs-- but single care is directly to consumer. And all the automation in our distribution facilities that's been the goal is to be able to make sure that we can address that specific consumer needs and demands going forward for growth.

Samuel Poser -- Susquehanna Financial Group -- Analyst

And Diane, I would assume that in the fourth quarter that number goes up, as there is more demand. I mean, that's just the nature of direct business that's there. And is that a higher margin business -- is having that instead of wholesale at higher margin?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yes, it is.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yes.

Samuel Poser -- Susquehanna Financial Group -- Analyst

On the EBIT, on the bottom line?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yes.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yes.

Samuel Poser -- Susquehanna Financial Group -- Analyst

Alright. Thanks very much and good luck. Thanks.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thank you, Sam.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Thanks, Sam.

Operator

And your last question comes from the line of Wayne Archambo with Monarch Partners.

Wayne Archambo -- Monarch Partners -- Analyst

Hi, good afternoon.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Hi, Wayne.

Wayne Archambo -- Monarch Partners -- Analyst

Hi, how are you?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Good. How are you?

Wayne Archambo -- Monarch Partners -- Analyst

So good. So with the sales up 2%, overall inventories down in the quarter. And I know, Sam, kind of get into a lot of details within these different pockets of your business. But is there an active strategy to manage working capital accounts will closely, are you actively bringing those inventories down or as part of that the net closures of 43 stores or is there an active strategy in place to manage inventory turns more efficiently?

Diane Sullivan -- Chairman, President and Chief Executive Officer

Yes, I mean we've been working at this now for a while. And clearly, we've been trying to follow much more of the speed model and bring product in much closer to the need. And making sure that we're not filling the pipeline up to early and responding more in-season and all of those things, Wayne, are been a key part of what we've -- what we think is going to be critical in terms of how we deliver, we grow and we deliver the kind of earnings we want to over the next couple of years.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, if you look at Wayne, our total inventory was down about 8%. So Famous with the fewer doors was down, I think 3.4%. The Brand Portfolio, which is where we were up at the end of last quarter and what we had said was that, we were working to shorten some product lifecycles and we're hoping to be down by the end of the year. So, we were able to work that through and Q3 and we ended up down year-over-year at about 12.6% in inventories in the Brand Portfolio. So that aligns us with where the consumer is going, which is more, more freshness, newness and that's aligned now really across the chain with kind of how the consumer is behaving.

Wayne Archambo -- Monarch Partners -- Analyst

And what we expect the net number, next calendar year to decline similar to the net negative 43 on the number of stores at Famous, would you see a continuation of that next year?

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, I mean we haven't finalized the net reduction in the store base, but in terms of when we think about that, as those stores are coming out, so is that associated inventory. So it's been pretty consistent.

Wayne Archambo -- Monarch Partners -- Analyst

Okay, great. Thanks guys. Happy holidays.

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Yeah, thanks Wayne.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Thank you too.

Wayne Archambo -- Monarch Partners -- Analyst

Thank you.

Operator

And there are no further questions at this time.

Diane Sullivan -- Chairman, President and Chief Executive Officer

Okay, thank you very much. Just to wrap up, we're really pleased with our ability to react quickly to the changes that we've seen in the environment. And it's -- see this is an important validation of our capabilities in our people and our model. We are always going to stay focused on operating with excellence and creating consistent profitable, sustainable growth over the longer term. And with that, I just like to wish everybody a happy Thanksgiving and we look forward to seeing many of you next week out in Market Week. Thanks.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Kenneth H. Hannah -- Senior Vice President and Chief Financial Officer

Diane Sullivan -- Chairman, President and Chief Executive Officer

Rick Patel -- Needham & Company -- Analyst

Laura Champine -- Loop Capital -- Analyst

Christopher Svezia -- Wedbush Securities -- Analyst

Steven L. Marotta -- CL King & Associates -- Analyst

Samuel Poser -- Susquehanna Financial Group -- Analyst

Wayne Archambo -- Monarch Partners -- Analyst

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