Caleres’ second quarter results were met with a significant negative market reaction, reflecting investor concern over both margin compression and earnings performance. Management attributed the quarter’s challenges primarily to ongoing tariff disruptions, heightened promotional activity at Famous Footwear, and inventory markdowns. CEO Jay Schmidt described the environment as “dynamic and demanding,” highlighting that while lead brands such as Sam Edelman and Allen Edmonds showed resilience and market share gains, value-oriented brands and certain segments underperformed. Gross margins were pressured by higher tariff-related costs and clearance promotions, with Schmidt noting, “Sales trends improved sequentially in both segments, and we saw market share gains in both women's fashion footwear and in shoe chains.”
Is now the time to buy CAL? Find out in our full research report (it’s free).
Caleres (CAL) Q2 CY2025 Highlights:
- Revenue: $658.5 million vs analyst estimates of $656.5 million (3.6% year-on-year decline, in line)
- Adjusted EPS: $0.35 vs analyst expectations of $0.56 (37.5% miss)
- Adjusted EBITDA: $32.06 million vs analyst estimates of $44.85 million (4.9% margin, 28.5% miss)
- Operating Margin: 2.4%, down from 6.3% in the same quarter last year
- Market Capitalization: $527.3 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Caleres’s Q2 Earnings Call
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Ashley Owens (KeyBanc Capital Markets) asked about the drivers of Famous Footwear’s August comp growth and the impact of assortment shifts. CFO Jack Calandra cited improved traffic and conversion in both brick-and-mortar and online channels, and CEO Jay Schmidt credited new or expanded assortments, especially the Jordan launch, for sales momentum.
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Ashley Owens (KeyBanc Capital Markets) followed up on gross margin expectations, asking about promotional headwinds and plans for further discounts. Calandra responded that the company has moved past its most significant promotional cycle and expects less margin headwind going forward, with ongoing clearance markdowns but no major changes to promotional cadence.
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Mitch Kummetz (Seaport Research) inquired about the financial impact and integration timeline for Stuart Weitzman. SVP Liz Dunn explained that specific details are still in flux due to ongoing purchase accounting, but the goal is to complete the transition by January and achieve operational improvements next year.
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Mitch Kummetz (Seaport Research) asked for clarification on the quantifiable impact of order cancellations and delayed receipts in the Brand Portfolio segment. Calandra confirmed approximately $5 million each in cancellations and delayed receipts, with delayed receipts expected to benefit Q3.
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Dana Telsey (Telsey Advisory Group) questioned the progress and future of tariff mitigation strategies. Schmidt and Calandra outlined ongoing efforts including price increases, negotiations with suppliers, and structural cost savings, with additional savings expected in 2026 after further efficiency reviews.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be monitoring (1) the pace and effectiveness of tariff mitigation actions and the impact on gross margins, (2) the integration and operational performance of Stuart Weitzman, including cost synergies and sales trends, and (3) the progress of direct-to-consumer and international growth initiatives for lead brands. Execution on inventory management, promotional strategies, and ongoing cost reductions will also be important markers of success.
Caleres currently trades at $15.42, up from $14.96 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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