CAL — Caleres, Inc.

Summary of Caleres, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Sales: $695.1 million, up 8.7% year-over-year; organic sales (excluding Stuart Weitzman) decreased 0.1%.
• Earnings: Loss of $0.36 per diluted share; loss of $0.06 per share excluding Stuart Weitzman.
• Gross Margin: 42.9%, down 10 basis points year-over-year; Brand Portfolio gross margin was 41.6%.
• SG&A Expenses: Increased by $48.3 million (18.3%) to $310.0 million, primarily due to Stuart Weitzman expenses.
• Operating Loss: $11.6 million; operating margin was negative 1.7%.
• Full Year Performance: Total sales increased 1.3%, but organic sales declined 2.5%. Adjusted earnings per diluted share were $0.61.

2. Strategic Updates and Business Highlights:

• Brand Portfolio: Organic sales increased 1.5%, with lead brands contributing significantly (up 2% organically).
• Famous Footwear: Sales decreased 1.2%, but comp sales were slightly positive at 0.1%. The Flair remodels are driving growth, with plans to expand from 57 to 65-75 locations in 2026.
• Stuart Weitzman: Integrated successfully into Caleres operations; sales were $56.3 million for the quarter. The brand is expected to reach breakeven in 2026.
• Allen Edmonds and Naturalizer: Both brands showed strong performance across channels, with Allen Edmonds seeing broad-based growth.
• E-commerce Growth: Owned e-commerce continued to perform well, particularly for Sam Edelman and Naturalizer.

3. Forward Guidance and Outlook:

• 2026 Expectations: Described as a "build-back year" with modest organic sales growth and significant earnings recovery anticipated.
• Sales Growth: Expected to be low- to mid-single digits for the full year; Famous Footwear sales projected to be down low single digits.
• Gross Margin Improvement: Expected to increase by 140 to 180 basis points, driven by tariff mitigation strategies and improved brand mix.
• Earnings Guidance: GAAP earnings per diluted share projected between $1.31 and $1.61; adjusted earnings between $1.35 and $1.65.

4. Bad News, Challenges, or Points of Concern:

• Sales Volatility: Concerns about potential sales volatility due to external factors, including geopolitical risks and rising energy prices.
• Famous Footwear Performance: Despite some positive trends, overall sales were down, indicating challenges in the retail environment.
• Tariff Impact: Continued pressure from tariffs affecting gross margins, particularly in the Brand Portfolio.
• Geopolitical Risks: Ongoing conflicts, particularly in the Middle East, could disrupt business operations, although currently minimal impact was noted.

5. Notable Q&A Insights:

• Sales Performance: Jay Schmidt noted that strong performance in other areas offset concerns about volatility, particularly related to bad debt from Saks.
• Gross Margin Recovery: Discussion on how gross margins are expected to stabilize, with a focus on tariff mitigation and product mix improvements.
• Market Share Gains: The company gained market share in women's fashion footwear, driven by strong performance from lead brands.
• Stuart Weitzman: Confidence expressed in the brand's recovery trajectory, with significant changes already implemented to enhance profitability.

Overall, Caleres, Inc. demonstrated resilience in Q4 2025, with strategic initiatives showing promise for future growth, despite facing challenges related to market volatility and external economic pressures.