Last updated on June 26th, 2019 at 11:47 am
Last fall, the parent company of Allen Edmonds invested heavily in a relaunch of the men’s footwear brand with an eye toward broadening its appeal to more consumers, but after underwhelming results the company has decided to pull back on its promotional efforts.
Executives at Missouri-based Caleres Inc. said they had cut sales expectations for the Port Washington-based brand by as much as 20 percent.
“We took very quick and bold decisions and action through the fourth quarter to make sure that as we enter 2019 we really have the teams in the right positions to be thinking about a business that was 15 to 20 percent less in top line than where we were last year and really allow them frankly to do the right thing and to build that brand for the long-term,” said Diane Sullivan, president, chief executive officer and chairman of Caleres,
Cutting sales expectations prompted the company to record a $2.03 per share, or nearly $84 million, non-cash impairment charge for the brand’s trademark and restructuring costs. Ken Hannah, chief financial officer at Caleres, said the charge was a function of how the company accounted for the trademark when it acquired Allen Edmonds for $255 million in late 2016.
“This does not in any way reflect a change in our assessment of Allen Edmonds, its brand equity or consumer appeal,” Sullivan said.
The marketing campaign included a $3 million investment and featured Cleveland Browns quarterback Baker Mayfield. Sullivan said in November the effort had generated increased traffic to stores and online, but the company failed to convert those visits into sales at a high enough rate.
“We certainly had hoped that our proactive branding direct response TV effort in the third quarter would provide a means to offset at least the promotional pressure,” Sullivan said Thursday. “When it became evident that this could not shoulder the entire burden, we made the decision to reduce the level of promotional activity and lower our 2019 sales expectations.”
She also said the company had taken steps to match production capacity at its Port Washington factory to sales expectations.