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 decreased 0.1% excluding Stuart Weitzman.
• Earnings: Loss of $0.36 per diluted share; loss of $0.06 per diluted share when excluding Stuart Weitzman.
• Gross Margin: 42.9%, down 10 basis points year-over-year; Brand Portfolio gross margin at 41.6%, down 130 basis points due to tariffs and markdowns.
• SG&A Expenses: Increased by 18.3% to $310 million, primarily due to Stuart Weitzman expenses.
• Operating Loss: $11.6 million; operating margin at -1.7%. Excluding Stuart Weitzman, operating earnings were $0.5 million (0.1% margin).
• Full Year Performance: Total sales increased 1.3%, but organic sales declined 2.5%. Adjusted earnings per diluted share for the year were $0.61.

2. Strategic Updates and Business Highlights

• Brand Portfolio: Organic sales increased 1.5%, with lead brands contributing nearly 60% of sales. Strong performance in owned e-commerce and international markets.
• Famous Footwear: Comp sales increased 0.1% despite a total sales decline of 1.2%. E-commerce sales grew double digits for the third consecutive quarter.
• Stuart Weitzman Integration: Successfully completed integration onto Caleres platforms, with plans to achieve breakeven by 2026.
• New Initiatives: Continued focus on elevating brand experiences, with successful Flair remodels and enhanced product assortments driving market share gains.

3. Forward Guidance and Outlook

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

4. Bad News, Challenges, or Points of Concern

• Sales Volatility: Concerns about potential volatility in sales and bottom line were noted, though not significantly impacting Q4 results.
• Tariff Impact: Continued pressure from tariffs affecting gross margins, with a 40 basis point impact noted in the Brand Portfolio.
• Geopolitical Risks: Ongoing geopolitical tensions, particularly in the Middle East, could affect business operations, although the region represents less than 1% of total business.
• Famous Footwear Performance: Slight decline in overall sales and comp store sales, with women's categories underperforming.

5. Notable Q&A Insights

• Sales Volatility: Management acknowledged some volatility but indicated that strong performance in other areas offset concerns.
• Gross Margin Recovery: Discussion on expected improvements in gross margins, particularly in the Brand Portfolio, with a focus on tariff mitigation and product mix.
• Market Share Gains: Notable gains in market share were attributed to lead brands and successful product launches, particularly during the holiday season.
• Stuart Weitzman Breakeven Plan: Confidence expressed in achieving breakeven for Stuart Weitzman by 2026, with significant operational changes already implemented.

Overall, Caleres, Inc. demonstrated resilience in Q4 2025, with strategic initiatives positioning the company for recovery in 2026 despite facing challenges related to tariffs and geopolitical risks.