Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 1, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |-----------------------------------------------------------------------------------------|----------------------------------------------------|------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended November 2, 2019 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to _____________ Commission file number: 1-2191 CALERES, INC. (Exact name of registrant as specified in its charter) New York ( ...

PART I FINANCIAL INFORMATION [ITEM 1 FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201%20FINANCIAL%20STATEMENTS) The unaudited condensed consolidated financial statements detail the company's financial position and performance [CONDENSED CONSOLIDATED BALANCE SHEETS](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Metric ($ thousands) | Metric | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Total Assets | $2,644,393 | $1,693,645 | $1,838,568 | | Total Liabilities | $2,019,715 | $956,451 | $1,203,133 | | Total Equity | $624,678 | $737,194 | $635,435 | - Lease right-of-use assets and lease obligations were recognized for the first time in August 2019 due to the adoption of **ASC 842**, significantly impacting the balance sheet[5](index=5&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EARNINGS) Metric ($ thousands) | Metric | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $752,485 | $706,612 | $1,430,239 | $1,338,754 | | Gross Profit | $305,944 | $293,101 | $585,780 | $568,023 | | Operating Earnings | $37,804 | $32,143 | $54,673 | $55,090 | | Net Earnings Attributable to Caleres, Inc. | $25,341 | $23,646 | $34,424 | $40,858 | | Basic EPS | $0.61 | $0.55 | $0.83 | $0.95 | | Diluted EPS | $0.61 | $0.55 | $0.82 | $0.94 | - For the thirteen weeks ended August 3, 2019, **net sales increased by 6.5%** and **diluted EPS increased by 10.9%** compared to the prior year[7](index=7&type=chunk) - For the twenty-six weeks ended August 3, 2019, **net sales increased by 6.8%**, but **diluted EPS decreased by 12.8%** compared to the prior year[7](index=7&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Metric ($ thousands) | Metric | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings | $25,227 | $23,611 | $34,312 | $40,791 | | Other Comprehensive Income (Loss), net of tax | $435 | $(704) | $175 | $(1,599) | | Comprehensive Income Attributable to Caleres, Inc. | $25,809 | $22,999 | $34,620 | $39,324 | [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Metric ($ thousands) | Metric | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $116,578 | $91,007 | | Net cash used for investing activities | $(30,189) | $(38,303) | | Net cash used for financing activities | $(74,044) | $(13,706) | | Increase in cash and cash equivalents | $12,401 | $38,837 | | Cash and cash equivalents at end of period | $42,601 | $102,884 | - **Net cash provided by operating activities increased by $25.6 million**, primarily due to a smaller increase in inventory and a larger decrease in receivables[214](index=214&type=chunk) - **Net cash used for financing activities increased by $60.3 million**, mainly due to more share repurchases and **$35.0 million in net repayments** under the revolving credit agreement[217](index=217&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=7&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Note 1 Basis of Presentation](index=7&type=section&id=Note%201%20Basis%20of%20Presentation) - The company's business is seasonal, with the **third fiscal quarter traditionally accounting for a substantial portion of annual earnings**[15](index=15&type=chunk) - Prior period amounts were reclassified to conform to current presentation, with **no impact on net earnings** attributable to Caleres, Inc[16](index=16&type=chunk) [Note 2 Impact of New Accounting Pronouncements](index=7&type=section&id=Note%202%20Impact%20of%20New%20Accounting%20Pronouncements) - Adopted **ASC 842 (Leases)** in Q1 2019 using a modified retrospective approach, recording **$729.2 million in operating lease right-of-use assets** and **$791.7 million in lease liabilities**, along with a **$13.4 million cumulative-effect adjustment** to retained earnings[17](index=17&type=chunk) - Anticipates **ASU 2016-13 (Credit Losses)** adoption in Q1 2020 will not materially impact consolidated financial statements due to historically insignificant trade receivable credit losses[18](index=18&type=chunk) [Note 3 Acquisitions](index=8&type=section&id=Note%203%20Acquisitions) - Acquired a controlling interest in Blowfish, LLC on July 6, 2018, for an estimated **$28.8 million**, expanding into the sneaker and casual lifestyle market[23](index=23&type=chunk)[24](index=24&type=chunk) Blowfish Malibu Contribution | Blowfish Malibu Contribution | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 3, 2019 | Acquisition Date - Aug 4, 2018 | | :--- | :--- | :--- | :--- | | Net Sales (consolidated) | $14.2 million | $30.4 million | $2.5 million | | Net Loss (consolidated) | $(0.4) million | $(0.2) million (Net Income) | Immaterial | - Acquired Vionic on October 18, 2018, for **$360.7 million**, funded by revolving credit, to expand into the contemporary comfort footwear category[28](index=28&type=chunk)[29](index=29&type=chunk) Vionic Contribution | Vionic Contribution | 13 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 3, 2019 | | :--- | :--- | :--- | | Net Sales (consolidated) | $46.8 million | $100.0 million | | Net Loss (consolidated) | $(1.4) million | $(2.7) million | [Note 4 Revenues](index=11&type=section&id=Note%204%20Revenues) - Revenue is recognized when control of merchandise is transferred, typically at the point of sale for retail or shipment for wholesale[39](index=39&type=chunk) Revenue Source ($ thousands) | Revenue Source | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Retail stores | $424,562 | $444,595 | $781,454 | $825,635 | | Landed wholesale | $158,031 | $127,365 | $329,784 | $261,017 | | E-commerce - Company websites | $63,933 | $52,312 | $131,410 | $108,736 | | Total Net Sales | $752,485 | $706,612 | $1,430,239 | $1,338,754 | Contract Balance ($ thousands) | Contract Balance | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Loyalty programs liability | $16,929 | $14,780 | $14,637 | | Returns reserve | $13,417 | $10,774 | $13,841 | [Note 5 Earnings Per Share](index=13&type=section&id=Note%205%20Earnings%20Per%20Share) EPS Metric | EPS Metric | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.61 | $0.55 | $0.83 | $0.95 | | Diluted EPS | $0.61 | $0.55 | $0.82 | $0.94 | - The company repurchased **1,530,478 shares** during the thirteen weeks ended August 3, 2019, and **1,530,478 shares** during the twenty-six weeks ended August 3, 2019, under its share repurchase programs[55](index=55&type=chunk) [Note 6 Restructuring and Other Initiatives](index=14&type=section&id=Note%206%20Restructuring%20and%20Other%20Initiatives) - Incurred **$0.6 million (Q2 2019)** and **$0.9 million (YTD 2019)** in Vionic integration-related costs, primarily for severance[56](index=56&type=chunk) - Incurred **$1.9 million in restructuring costs (YTD 2019)** for the Carlos brand exit, including inventory markdowns and severance[58](index=58&type=chunk) - Incurred **$1.9 million (Q2 2018)** and **$3.7 million (YTD 2018)** for men's business integration and reorganization costs[60](index=60&type=chunk) [Note 7 Business Segment Information](index=15&type=section&id=Note%207%20Business%20Segment%20Information) - Changed segment presentation in Q1 2019 to include intersegment sales within Brand Portfolio, with eliminations in "Eliminations and Other" category[61](index=61&type=chunk) Segment Performance ($ thousands) | Segment Performance | Famous Footwear (Q2 2019) | Brand Portfolio (Q2 2019) | Eliminations & Other (Q2 2019) | Total (Q2 2019) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $419,841 | $359,575 | $(26,931) | $752,485 | | Operating Earnings (Loss) | $31,542 | $13,898 | $(7,636) | $37,804 | | Segment Assets | $1,095,457 | $1,427,002 | $121,934 | $2,644,393 | Segment Performance ($ thousands) | Segment Performance | Famous Footwear (YTD 2019) | Brand Portfolio (YTD 2019) | Eliminations & Other (YTD 2019) | Total (YTD 2019) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $772,006 | $700,625 | $(42,392) | $1,430,239 | | Operating Earnings (Loss) | $42,355 | $26,827 | $(14,509) | $54,673 | [Note 8 Inventories](index=16&type=section&id=Note%208%20Inventories) Inventory Component ($ thousands) | Inventory Component | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Raw materials | $18,785 | $17,697 | $19,128 | | Work-in-process | $446 | $799 | $745 | | Finished goods | $772,833 | $697,209 | $663,298 | | Inventories, net | $792,064 | $715,705 | $683,171 | [Note 9 Goodwill and Intangible Assets](index=16&type=section&id=Note%209%20Goodwill%20and%20Intangible%20Assets) Asset Type ($ thousands) | Asset Type | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Total intangible assets, net | $300,835 | $227,503 | $307,366 | | Total goodwill | $245,275 | $134,546 | $242,531 | | Goodwill and intangible assets, net | $546,110 | $362,049 | $549,897 | - Vionic acquisition added **$144.7 million in intangible assets** and **$151.3 million in goodwill**; Blowfish Malibu acquisition added **$17.6 million in intangible assets** and **$5.0 million in goodwill**[66](index=66&type=chunk) - Amortization expense for intangible assets was **$3.2 million (Q2 2019)** and **$6.5 million (YTD 2019)**[68](index=68&type=chunk) - **No goodwill or indefinite-lived intangible asset impairment charges** were recorded in Q2 or YTD 2019 or 2018[69](index=69&type=chunk)[70](index=70&type=chunk) [Note 10 Leases](index=17&type=section&id=Note%2010%20Leases) - Adopted **ASC 842** in Q1 2019, recognizing lease right-of-use assets and lease liabilities on the balance sheet[71](index=71&type=chunk) Lease Metrics (as of Aug 3, 2019) | Lease Metrics | Value | | :--- | :--- | | Lease right-of-use assets | $723,415 | | Current lease obligations | $(143,202) | | Noncurrent lease obligations | $(649,100) | | Weighted-average remaining lease term | 7.0 years | | Weighted-average discount rate | 4.0% | Lease Expense (26 Weeks Ended Aug 3, 2019) | Lease Expense | Amount ($ thousands) | | :--- | :--- | | Operating lease expense | $92,312 | | Variable lease expense | $23,483 | | Short-term lease expense | $2,077 | | Total lease expense | $117,725 | [Note 11 Long-term and Short-term Financing Arrangements](index=20&type=section&id=Note%2011%20Long-term%20and%20Short-term%20Financing%20Arrangements) - Maintains a revolving credit facility with a borrowing capacity of up to **$500.0 million** (option to increase by $250.0 million), maturing January 18, 2024[77](index=77&type=chunk) Credit Facility Status (as of Aug 3, 2019) | Credit Facility Status | Amount ($ millions) | | :--- | :--- | | Borrowings outstanding | $300.0 | | Letters of credit outstanding | $10.5 | | Total additional borrowing availability | $189.5 | - Issued **$200.0 million** aggregate principal amount of **6.25% Senior Notes** due August 15, 2023[83](index=83&type=chunk) - The company was **in compliance with all covenants and restrictions** under both the Credit Agreement and Senior Notes as of August 3, 2019[81](index=81&type=chunk)[85](index=85&type=chunk) [Note 12 Shareholders' Equity](index=22&type=section&id=Note%2012%20Shareholders'%20Equity) Accumulated Other Comprehensive Loss ($ thousands) | Accumulated Other Comprehensive Loss | Balance at May 4, 2019 | Balance at Aug 3, 2019 | | :--- | :--- | :--- | | Foreign Currency Translation | $(908) | $(896) | | Pension and Other Postretirement Transactions | $(30,660) | $(30,199) | | Derivative Financial Instrument Transactions | $(305) | $(310) | | Total Accumulated Other Comprehensive (Loss) Income | $(31,873) | $(31,405) | [Note 13 Share-Based Compensation](index=23&type=section&id=Note%2013%20Share-Based%20Compensation) Share-Based Compensation Expense ($ millions) | Share-Based Compensation Expense | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total Expense | $3.2 | $4.5 | $6.5 | $8.1 | - Granted **52,684 restricted shares (Q2 2019)** and **450,234 restricted shares (YTD 2019)** with varying vesting terms[92](index=92&type=chunk) - Granted performance share awards for a targeted **180,000 shares (YTD 2019)**, vesting based on financial performance over three years[93](index=93&type=chunk) [Note 14 Retirement and Other Benefit Plans](index=24&type=section&id=Note%2014%20Retirement%20and%20Other%20Benefit%20Plans) Net Periodic Benefit Income ($ thousands) | Net Periodic Benefit Income | Pension (13 Weeks Ended Aug 3, 2019) | Other Postretirement Benefits (13 Weeks Ended Aug 3, 2019) | Pension (26 Weeks Ended Aug 3, 2019) | Other Postretirement Benefits (26 Weeks Ended Aug 3, 2019) | | :--- | :--- | :--- | :--- | :--- | | Service cost | $1,755 | $0 | $3,609 | $0 | | Interest cost | $3,680 | $15 | $7,405 | $30 | | Expected return on assets | $(6,967) | $0 | $(13,859) | $0 | | Total net periodic benefit income | $(886) | $(9) | $(1,636) | $(24) | [Note 15 Risk Management and Derivatives](index=26&type=section&id=Note%2015%20Risk%20Management%20and%20Derivatives) - Uses derivative financial instruments (forward contracts) to hedge foreign currency exposures, designating them as cash flow hedges[100](index=100&type=chunk)[102](index=102&type=chunk) Notional Amount of Forward Contracts (U.S. $ equivalent in thousands) | Notional Amount of Forward Contracts | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Total financial instruments | $19,570 | $44,155 | $33,929 | Effect of Derivative Instruments on Earnings (13 Weeks Ended Aug 3, 2019) | Effect of Derivative Instruments on Earnings | (Loss) Gain Recognized in OCL on Derivatives | Loss Reclassified from Accumulated OCL into Earnings | | :--- | :--- | :--- | | Net sales | $(22) | $(5) | | Cost of goods sold | $63 | $(16) | | Selling and administrative expenses | $(150) | $(66) | [Note 16 Fair Value Measurements](index=28&type=section&id=Note%2016%20Fair%20Value%20Measurements) - Uses a three-level fair value hierarchy based on observability of inputs, maximizing observable inputs[107](index=107&type=chunk)[108](index=108&type=chunk) - Mandatory purchase obligation for Blowfish Malibu is a **Level 3 fair value measurement**, sensitive to earnings projections and discount rate[117](index=117&type=chunk) Asset (Liability) ($ thousands) | Asset (Liability) | Total (Aug 3, 2019) | Level 1 (Aug 3, 2019) | Level 2 (Aug 3, 2019) | Level 3 (Aug 3, 2019) | | :--- | :--- | :--- | :--- | :--- | | Non-qualified deferred compensation plan assets | $7,949 | $7,949 | $0 | $0 | | Derivative financial instruments, net | $(358) | $0 | $(358) | $0 | | Mandatory purchase obligation - Blowfish Malibu | $(9,772) | $0 | $0 | $(9,772) | Debt Fair Value ($ thousands) | Debt Fair Value | Carrying Value (Aug 3, 2019) | Fair Value (Aug 3, 2019) | | :--- | :--- | :--- | | Borrowings under revolving credit agreement | $300,000 | $300,000 | | Long-term debt | $200,000 | $205,500 | [Note 17 Income Taxes](index=31&type=section&id=Note%2017%20Income%20Taxes) Effective Tax Rate | Effective Tax Rate | 13 Weeks Ended Aug 3, 2019 | 13 Weeks Ended Aug 4, 2018 | 26 Weeks Ended Aug 3, 2019 | 26 Weeks Ended Aug 4, 2018 | | :--- | :--- | :--- | :--- | :--- | | Consolidated ETR | 23.7% | 25.3% | 24.1% | 24.4% | - Q2 2018 included **$0.2 million in discrete tax benefits** from share-based compensation, which would have resulted in a **26.0% ETR** without them[124](index=124&type=chunk) - No deferred taxes provided on unremitted earnings of foreign subsidiaries considered indefinitely reinvested[126](index=126&type=chunk) [Note 18 Commitments and Contingencies](index=32&type=section&id=Note%2018%20Commitments%20and%20Contingencies) - Involved in environmental remediation at the Redfield site in Colorado, with cumulative expenditures of **$30.8 million** through August 3, 2019[131](index=131&type=chunk)[133](index=133&type=chunk) Redfield Site Remediation Reserve (as of Aug 3, 2019) | Redfield Site Remediation Reserve | Amount ($ millions) | | :--- | :--- | | Total reserve | $9.6 | | Off-site remediation | $5.0 | | On-site remediation | $4.6 | | On-site remediation liability (undiscounted) | $14.0 | - Legal proceedings and litigation arising in the ordinary course of business are **not expected to have a material adverse effect**[136](index=136&type=chunk) [Note 19 Financial Information for the Company and its Subsidiaries](index=33&type=section&id=Note%2019%20Financial%20Information%20for%20the%20Company%20and%20its%20Subsidiaries) - Senior notes are fully and unconditionally guaranteed by subsidiaries that are guarantors under the revolving credit facility[137](index=137&type=chunk) Consolidated Balance Sheet ($ thousands) | Consolidated Balance Sheet | Parent (Aug 3, 2019) | Guarantors (Aug 3, 2019) | Non-Guarantors (Aug 3, 2019) | Total (Aug 3, 2019) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $2,854,455 | $2,320,301 | $1,017,044 | $2,644,393 | | Total Liabilities | $2,231,026 | $1,054,327 | $769,786 | $2,019,715 | | Total Equity | $623,429 | $1,265,974 | $247,258 | $624,678 | Consolidated Earnings ($ thousands) | Consolidated Earnings | Parent (13 Weeks Ended Aug 3, 2019) | Guarantors (13 Weeks Ended Aug 3, 2019) | Non-Guarantors (13 Weeks Ended Aug 3, 2019) | Total (13 Weeks Ended Aug 3, 2019) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $208,248 | $532,882 | $82,745 | $752,485 | | Net earnings attributable to Caleres, Inc. | $25,341 | $13,286 | $18,753 | $25,341 | [ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=40&type=section&id=ITEM%202%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, condition, and results for the second quarter and six months ended August 3, 2019 [OVERVIEW](index=40&type=section&id=OVERVIEW) [Financial Highlights](index=40&type=section&id=Financial%20Highlights) Metric (Q2 2019 vs Q2 2018) | Metric | 2019 Amount ($ millions) | 2018 Amount ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $752.5 | $706.6 | +6.5% | | Consolidated Gross Profit | $305.9 | $293.1 | +4.4% | | Consolidated Operating Earnings | $37.8 | $32.1 | +17.6% | | Consolidated Net Earnings Attributable to Caleres, Inc. | $25.3 | $23.6 | +7.2% | | Diluted EPS | $0.61 | $0.55 | +10.9% | - Acquisitions of Vionic and Blowfish Malibu contributed **$46.8 million** and **$11.7 million**, respectively, to consolidated net sales in Q2 2019[148](index=148&type=chunk) [Recent Developments](index=40&type=section&id=Recent%20Developments) - U.S. Administration announced **15% tariffs** on List 4a products from China effective September 1, 2019, impacting approximately **60%** of the company's branded products sourced from China[156](index=156&type=chunk)[157](index=157&type=chunk) - Mitigation strategies include diversifying production away from China (**40% of branded products now sourced outside China**) and working with factory partners to reduce costs[157](index=157&type=chunk) - A prolonged trade war and further tariff escalation may result in **lower gross margins**[157](index=157&type=chunk) [CONSOLIDATED RESULTS](index=41&type=section&id=CONSOLIDATED%20RESULTS) [Net Sales](index=41&type=section&id=Net%20Sales) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $752.5 | $706.6 | $45.9 | +6.5% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,430.2 | $1,338.8 | $91.4 | +6.8% | - **Brand Portfolio net sales increased by $54.6 million (17.9%)** in Q2 2019, driven by Vionic and Blowfish Malibu acquisitions, partially offset by a **9.3% decrease in same-store sales**[159](index=159&type=chunk) - **Famous Footwear net sales decreased by $9.7 million (2.2%)** in Q2 2019, due to a smaller store base, but **same-store sales improved by 1.5%**[159](index=159&type=chunk) [Gross Profit](index=41&type=section&id=Gross%20Profit) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $305.9 | $293.1 | $12.8 | +4.4% | 40.7% | 41.5% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $585.8 | $568.0 | $17.8 | +3.1% | 41.0% | 42.4% | - Gross profit rate decreased due to a difficult retail environment, a higher mix of e-commerce sales (lower margins), and incremental costs from purchase accounting adjustments and the Carlos brand exit[162](index=162&type=chunk)[166](index=166&type=chunk) [Selling and Administrative Expenses](index=42&type=section&id=Selling%20and%20Administrative%20Expenses) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $267.5 | $258.9 | $8.6 | +3.4% | 35.6% | 36.7% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $529.6 | $509.0 | $20.6 | +4.0% | 37.0% | 38.0% | - Increase driven by Vionic and Blowfish Malibu acquisitions, partially offset by lower cash and share-based incentive compensation and reduced store rent/facilities expenses[168](index=168&type=chunk) [Restructuring and Other Special Charges, Net](index=42&type=section&id=Restructuring%20and%20Other%20Special%20Charges%2C%20Net) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Restructuring and Other Special Charges, Net | $0.6 | $2.1 | $1.5 | $3.9 | - Q2 2019 charges were for Vionic integration and Carlos brand exit; Q2 2018 charges were for men's business reorganization and Blowfish Malibu acquisition[170](index=170&type=chunk) [Operating Earnings](index=42&type=section&id=Operating%20Earnings) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $37.8 | $32.1 | $5.7 | +17.6% | 5.0% | 4.5% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $54.7 | $55.1 | $(0.4) | -0.8% | 3.8% | 4.1% | [Interest Expense, Net](index=42&type=section&id=Interest%20Expense%2C%20Net) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest Expense, Net | $7.4 | $3.6 | $3.8 | +105.1% | Metric ($ millions) | Metric | YTD 2019 | YTD 2018 | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest Expense, Net | $14.7 | $7.3 | $7.4 | +102.2% | - Higher interest expense driven by increased borrowings for Vionic acquisition and **$0.4 million (Q2 2019) / $0.5 million (YTD 2019)** accretion from Blowfish Malibu mandatory purchase obligation[173](index=173&type=chunk)[174](index=174&type=chunk) [Other Income, Net](index=43&type=section&id=Other%20Income%2C%20Net) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income, Net | $2.7 | $3.1 | $(0.4) | -13.9% | Metric ($ millions) | Metric | YTD 2019 | YTD 2018 | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income, Net | $5.2 | $6.2 | $(1.0) | -14.6% | [Income Tax Provision](index=43&type=section&id=Income%20Tax%20Provision) Metric | Metric | Q2 2019 ETR | Q2 2018 ETR | YTD 2019 ETR | YTD 2018 ETR | | :--- | :--- | :--- | :--- | :--- | | Consolidated Effective Tax Rate | 23.7% | 25.3% | 24.1% | 24.4% | - Q2 2018 included **$0.2 million in discrete tax benefits** from share-based compensation, which would have resulted in a **26.0% ETR** without them[178](index=178&type=chunk) [Net Earnings Attributable to Caleres, Inc.](index=43&type=section&id=Net%20Earnings%20Attributable%20to%20Caleres%2C%20Inc.) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Attributable to Caleres, Inc. | $25.3 | $23.6 | $34.4 | $40.9 | [FAMOUS FOOTWEAR](index=43&type=section&id=FAMOUS%20FOOTWEAR) [Net Sales](index=43&type=section&id=Famous%20Footwear%20Net%20Sales) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $419.8 | $429.5 | $(9.7) | -2.2% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $772.0 | $792.9 | $(20.9) | -2.6% | - **Same-store sales increased by 1.5%** in Q2 2019 and **0.4% YTD 2019**[180](index=180&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) - Store base decreased, resulting in a **$15.8 million sales decrease** from new/closed stores in Q2 2019 and **$23.3 million YTD 2019**[180](index=180&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) - Sales to Famously You Rewards members accounted for approximately **77% of net sales** in Q2 2019[182](index=182&type=chunk) [Gross Profit](index=44&type=section&id=Famous%20Footwear%20Gross%20Profit) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $182.3 | $187.1 | $(4.8) | -2.6% | 43.4% | 43.6% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $335.0 | $352.3 | $(17.3) | -4.9% | 43.4% | 44.4% | - Gross profit rate declined due to a competitive selling environment, a higher mix of lower margin products, and increased freight expenses from e-commerce growth[184](index=184&type=chunk)[185](index=185&type=chunk) [Selling and Administrative Expenses](index=44&type=section&id=Famous%20Footwear%20Selling%20and%20Administrative%20Expenses) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $150.8 | $153.9 | $(3.1) | -2.0% | 35.9% | 35.9% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $292.6 | $297.2 | $(4.6) | -1.5% | 37.9% | 37.5% | - Decrease in expenses driven by lower rent and facilities due to a smaller store base, partially offset by higher marketing for new television advertising and the Rewards program launch[186](index=186&type=chunk)[187](index=187&type=chunk) [Operating Earnings](index=44&type=section&id=Famous%20Footwear%20Operating%20Earnings) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $31.5 | $33.2 | $(1.7) | -5.1% | 7.5% | 7.7% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $42.4 | $55.1 | $(12.7) | -23.1% | 5.5% | 6.9% | [BRAND PORTFOLIO](index=44&type=section&id=BRAND%20PORTFOLIO) [Net Sales](index=45&type=section&id=Brand%20Portfolio%20Net%20Sales) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $359.6 | $305.0 | $54.6 | +17.9% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $700.6 | $588.5 | $112.1 | +19.0% | - Vionic and Blowfish Malibu acquisitions contributed **$47.0 million** and **$12.6 million**, respectively, to Q2 2019 net sales growth, and **$101.8 million** and **$32.0 million**, respectively, to YTD 2019 net sales growth[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - **Same-store sales declined 9.3%** in Q2 2019 and **8.9% YTD 2019**, impacted by a difficult and promotional retail environment[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Unfilled wholesale order position increased by **$26.8 million (10.2%) to $290.1 million** at August 3, 2019, driven by acquisitions[196](index=196&type=chunk) - Announced new brands (Veronica Beard, Zodiac relaunch) and a joint venture with Gemkell Group for distribution in Greater China (Naturalizer, Sam Edelman)[197](index=197&type=chunk) [Gross Profit](index=46&type=section&id=Brand%20Portfolio%20Gross%20Profit) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $124.8 | $108.3 | $16.5 | +15.3% | 34.7% | 35.5% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $251.7 | $217.1 | $34.6 | +15.9% | 35.9% | 36.9% | - Gross profit rate decreased due to the promotional retail environment and incremental cost of goods sold from purchase accounting inventory adjustments and the Carlos brand exit[198](index=198&type=chunk)[199](index=199&type=chunk) - Tariffs on Chinese imports pose a risk to future gross margins, though the company is mitigating impacts by diversifying sourcing (**40% outside China**)[201](index=201&type=chunk) [Selling and Administrative Expenses](index=46&type=section&id=Brand%20Portfolio%20Selling%20and%20Administrative%20Expenses) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $110.9 | $90.6 | $20.3 | +22.5% | 30.8% | 29.7% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling and Administrative Expenses | $224.3 | $186.2 | $38.1 | +20.5% | 32.0% | 31.6% | - Increase driven by higher expenses associated with the Vionic and Blowfish Malibu acquisitions[202](index=202&type=chunk)[203](index=203&type=chunk) [Restructuring and Other Special Charges, Net](index=46&type=section&id=Brand%20Portfolio%20Restructuring%20and%20Other%20Special%20Charges%2C%20Net) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Restructuring and Other Special Charges, Net | $0.0 | $1.8 | $0.6 | $3.4 | - Q2 2018 charges were related to men's business integration and reorganization; YTD 2019 charges were primarily for the Vionic acquisition[204](index=204&type=chunk) [Operating Earnings](index=46&type=section&id=Brand%20Portfolio%20Operating%20Earnings) Metric | Metric | Q2 2019 ($ millions) | Q2 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $13.9 | $15.9 | $(2.0) | -12.6% | 3.9% | 5.2% | Metric | Metric | YTD 2019 ($ millions) | YTD 2018 ($ millions) | Change ($ millions) | Change (%) | % of Net Sales (2019) | % of Net Sales (2018) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Earnings | $26.8 | $27.5 | $(0.7) | -2.6% | 3.8% | 4.7% | [ELIMINATIONS AND OTHER](index=46&type=section&id=ELIMINATIONS%20AND%20OTHER) Metric ($ millions) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Operating Loss | $(7.6) | $(17.0) | $(14.5) | $(27.5) | - Selling and administrative expenses decreased due to lower cash and share-based incentive compensation plans and reduced expenses for cash-equivalent restricted stock units[208](index=208&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=47&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) [Borrowings](index=47&type=section&id=Borrowings) Metric ($ millions) | Metric | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Borrowings under revolving credit agreement | $300.0 | $0.0 | $335.0 | | Long-term debt | $198.2 | $197.7 | $197.9 | | Total debt | $498.2 | $197.7 | $532.9 | - **Total debt increased by $300.5 million** from August 4, 2018, to August 3, 2019, mainly due to Vionic acquisition funding[209](index=209&type=chunk) [Credit Agreement](index=47&type=section&id=Credit%20Agreement) - Revolving credit facility has a **$500.0 million capacity** (with option for $250.0 million increase) and matures January 18, 2024[211](index=211&type=chunk) Credit Facility Status (as of Aug 3, 2019) | Credit Facility Status | Amount ($ millions) | | :--- | :--- | | Borrowings outstanding | $300.0 | | Letters of credit outstanding | $10.5 | | Total additional borrowing availability | $189.5 | - The company was **in compliance with all covenants and restrictions** under the Credit Agreement as of August 3, 2019[211](index=211&type=chunk) [$200 Million Senior Notes](index=47&type=section&id=%24200%20Million%20Senior%20Notes) - Issued **$200.0 million** aggregate principal amount of **6.25% Senior Notes** due August 15, 2023, guaranteed by subsidiaries[212](index=212&type=chunk) - The company was **in compliance with all covenants and restrictions** relating to the Senior Notes as of August 3, 2019[213](index=213&type=chunk) [Working Capital and Cash Flow](index=47&type=section&id=Working%20Capital%20and%20Cash%20Flow) Metric ($ millions) | Metric | Aug 3, 2019 | Aug 4, 2018 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Working capital (deficit) surplus | $(28.3) | $437.8 | $123.1 | | Current ratio | 0.97:1 | 1.73:1 | 1.14:1 | | Debt-to-capital ratio | 44.4% | 21.1% | 45.6% | - Working capital and current ratio decreased primarily due to **ASC 842 adoption** (adding **$143.2 million in current operating lease obligations**) and higher borrowings for the Vionic acquisition[219](index=219&type=chunk) Cash Flow Activity (26 Weeks Ended) | Cash Flow Activity | Aug 3, 2019 ($ millions) | Aug 4, 2018 ($ millions) | Change ($ millions) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $116.6 | $91.0 | +$25.6 | | Net cash used for investing activities | $(30.2) | $(38.3) | +$8.1 | | Net cash used for financing activities | $(74.0) | $(13.7) | -$(60.3) | - Cash used for financing activities increased due to more share repurchases and **$35.0 million in net repayments** under the revolving credit agreement[217](index=217&type=chunk) - Declared and paid dividends of **$0.07 per share** in Q2 2019 and 2018, with future dividends expected[221](index=221&type=chunk) [CONTRACTUAL OBLIGATIONS](index=48&type=section&id=CONTRACTUAL%20OBLIGATIONS) - Contractual obligations include purchase obligations, operating and finance lease commitments, long-term debt, interest, minimum license commitments, financial instruments, mandatory purchase obligation (Blowfish Malibu), and retirement benefits[222](index=222&type=chunk) - **No material changes** to contractual obligations since February 2, 2019, other than normal course of business fluctuations[223](index=223&type=chunk)[224](index=224&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=49&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - **No material changes** to critical accounting policies and estimates since February 2, 2019, other than the adoption of ASC 842[225](index=225&type=chunk) [RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=49&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) - Information on recently issued accounting pronouncements and their impact is detailed in Note 2 to the condensed consolidated financial statements[226](index=226&type=chunk) [FORWARD-LOOKING STATEMENTS](index=49&type=section&id=FORWARD-LOOKING%20STATEMENTS) - Forward-looking statements are subject to risks and uncertainties, including changing consumer demands, fashion trends, intense competition, political/economic conditions, tariffs, inventory management, cybersecurity threats, and acquisition challenges[227](index=227&type=chunk) [ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=49&type=section&id=ITEM%203%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) There have been no material changes in the company's quantitative and qualitative information about market risk - **No material changes** in quantitative and qualitative information about market risk since February 2, 2019[230](index=230&type=chunk) [ITEM 4 CONTROLS AND PROCEDURES](index=49&type=section&id=ITEM%204%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - CEO and CFO concluded that **disclosure controls and procedures were effective** at the reasonable assurance level as of August 3, 2019[231](index=231&type=chunk) - **No material changes** in internal controls over financial reporting during the quarter ended August 3, 2019[232](index=232&type=chunk) PART II OTHER INFORMATION [ITEM 1 LEGAL PROCEEDINGS](index=50&type=section&id=ITEM%201%20LEGAL%20PROCEEDINGS) Ordinary course legal proceedings are not expected to have a material adverse effect on the company's financial position - Legal proceedings and litigation in the ordinary course of business are **not expected to have a material adverse effect** on results of operations or financial position[233](index=233&type=chunk) [ITEM 1A RISK FACTORS](index=50&type=section&id=ITEM%201A%20RISK%20FACTORS) The primary new risk factor is the imposition of tariffs on products imported from China, which could reduce gross profits - **No material changes** to risk factors since February 2, 2019, except for the added risk of tariffs[235](index=235&type=chunk) - Imposition of **15% tariffs** on products from China (effective Sept 1, 2019, for List 4a) may result in higher product costs and decreased gross profits, as approximately **60% of branded footwear is sourced from China**[236](index=236&type=chunk)[237](index=237&type=chunk) [ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=50&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased common stock during the second quarter under its publicly announced repurchase programs Fiscal Period (Q2 2019) | Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | Purchased as Part of Publicly Announced Program | Maximum Number of Shares that May Yet be Purchased Under the Program | | :--- | :--- | :--- | :--- | :--- | | May 5, 2019 - June 1, 2019 | 4,518 | $20.54 | — | 2,257,851 | | June 2, 2019 - July 6, 2019 | 1,530,478 | $19.60 | 1,530,478 | 727,373 | | July 7, 2019 - August 3, 2019 | — | — | — | 727,373 | | Total | 1,534,996 | $19.60 | 1,530,478 | 727,373 | - The Board of Directors approved an additional **5,000,000 share repurchase program** subsequent to quarter-end[240](index=240&type=chunk) [ITEM 3 DEFAULTS UPON SENIOR SECURITIES](index=51&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities during the period - **No defaults** upon senior securities[241](index=241&type=chunk) [ITEM 4 MINE SAFETY DISCLOSURES](index=51&type=section&id=ITEM%204%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - **Not applicable**[242](index=242&type=chunk) [ITEM 5 OTHER INFORMATION](index=51&type=section&id=ITEM%205%20OTHER%20INFORMATION) There is no other information to report under this item - **None**[243](index=243&type=chunk) [ITEM 6 EXHIBITS](index=51&type=section&id=ITEM%206%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance and certification documents - Includes Restated Certificate of Incorporation, Bylaws, CEO/CFO certifications (302 and 906), and iXBRL documents[244](index=244&type=chunk) [SIGNATURE](index=52&type=section&id=SIGNATURE) The report was duly signed on behalf of the company by the Senior Vice President and Chief Financial Officer - Report signed by **Kenneth H. Hannah, Senior Vice President and Chief Financial Officer**, on September 11, 2019[250](index=250&type=chunk)

PART I FINANCIAL INFORMATION [Item 1 Financial Statements](index=4&type=section&id=Item%201%20Financial%20Statements) Q1 2019 unaudited financials show increased assets and liabilities due to ASC 842 and acquisitions, with lower net earnings Condensed Consolidated Statements of Earnings (Unaudited) | ($ thousands, except per share amounts) | Thirteen Weeks Ended May 4, 2019 | Thirteen Weeks Ended May 5, 2018 | | :--- | :--- | :--- | | **Net sales** | $677,754 | $632,142 | | **Gross profit** | $279,836 | $274,921 | | **Operating earnings** | $16,869 | $22,946 | | **Net earnings attributable to Caleres, Inc.** | $9,083 | $17,212 | | **Diluted earnings per common share** | $0.22 | $0.40 | Condensed Consolidated Balance Sheets Highlights (Unaudited) | ($ thousands) | May 4, 2019 | May 5, 2018 | February 2, 2019 | | :--- | :--- | :--- | :--- | | **Total current assets** | $887,312 | $864,327 | $976,447 | | **Lease right-of-use assets** | $735,282 | — | — | | **Goodwill** | $244,407 | $127,081 | $242,531 | | **Intangible assets, net** | $304,101 | $212,819 | $307,366 | | **Total assets** | $2,493,070 | $1,502,066 | $1,838,568 | | **Borrowings under revolving credit agreement** | $318,000 | — | $335,000 | | **Total current liabilities** | $911,300 | $437,663 | $853,336 | | **Noncurrent lease obligations** | $662,750 | — | — | | **Total liabilities and equity** | $2,493,070 | $1,502,066 | $1,838,568 | - The company adopted the new lease accounting standard ASC 842 in Q1 2019, resulting in the recognition of operating lease right-of-use assets of **$729.2 million** and lease liabilities of **$791.7 million** as of February 3, 2019 A cumulative-effect adjustment to retained earnings of **$13.4 million** was also recorded[22](index=22&type=chunk) - The acquisition of Vionic in October 2018 for **$360.7 million** and a controlling interest in Blowfish Malibu in July 2018 significantly impacted the financials For Q1 2019, Vionic contributed **$53.1 million** and Blowfish contributed **$16.2 million** in consolidated net sales[30](index=30&type=chunk)[31](index=31&type=chunk)[35](index=35&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2019 sales increased from acquisitions, but operating earnings declined due to Famous Footwear issues and acquisition costs Q1 2019 vs Q1 2018 Consolidated Results Summary | ($ millions) | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | **Net sales** | $677.8 | $632.1 | | **Gross profit** | $279.8 | $274.9 | | **Gross Margin** | 41.3% | 43.5% | | **Operating earnings** | $16.9 | $22.9 | | **Operating Margin** | 2.5% | 3.6% | | **Net earnings** | $9.1 | $17.2 | - The acquisitions of Vionic and Blowfish Malibu were the primary drivers of sales growth, contributing **$53.1 million** and **$16.2 million** in consolidated net sales, respectively, in Q1 2019[147](index=147&type=chunk) - The Famous Footwear segment experienced a **3.1%** decline in sales, driven by a **1.0%** drop in same-store sales and a smaller store base, reflecting a difficult retail environment[158](index=158&type=chunk)[174](index=174&type=chunk) - The Brand Portfolio segment's net sales grew **20.3%**, primarily due to the Vionic and Blowfish acquisitions This was partially offset by lower sales from the Allen Edmonds and Dr Scholl's brands[181](index=181&type=chunk) - Total debt increased to **$516.0 million** from **$197.6 million** year-over-year, mainly due to borrowings under the revolving credit facility to fund the Vionic acquisition[189](index=189&type=chunk) - Working capital shifted to a deficit of **$24.0 million**, a decrease of **$450.7 million** from the prior year, primarily due to the adoption of ASC 842 which added **$136.0 million** of current operating lease obligations to liabilities[199](index=199&type=chunk)[201](index=201&type=chunk) [Item 3 Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures have occurred since the last Annual Report on Form 10-K - **No material changes** have occurred in market risk disclosures since the last Annual Report on Form 10-K[210](index=210&type=chunk) [Item 4 Controls and Procedures](index=46&type=section&id=Item%204%20Controls%20and%20Procedures) Disclosure controls were effective as of May 4, 2019, with ongoing review of newly acquired business controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of May 4, 2019[212](index=212&type=chunk) - The company is in the process of reviewing the internal controls of the recently acquired Blowfish Malibu and Vionic businesses[214](index=214&type=chunk) PART II OTHER INFORMATION [Item 1 Legal Proceedings](index=47&type=section&id=Item%201%20Legal%20Proceedings) Ordinary course legal proceedings are not expected to materially impact the company's financial position or operations - Management believes that pending legal proceedings from the ordinary course of business will **not have a material adverse effect** on the company's financials[215](index=215&type=chunk) [Item 1A Risk Factors](index=47&type=section&id=Item%201A%20Risk%20Factors) A new risk factor highlights potential adverse impacts on gross margins from proposed tariffs on China-sourced footwear - A new risk factor was disclosed regarding proposed tariffs of up to **25%** on U.S imports from China, including footwear[218](index=218&type=chunk) - Approximately **60%** of the company's footwear is sourced from China, making it significantly exposed to this tariff risk, which could increase costs and harm gross margins[218](index=218&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the program in Q1 2019, but shares were acquired for tax obligations - **No shares were repurchased** under the publicly announced program during Q1 2019[219](index=219&type=chunk)[221](index=221&type=chunk) - The company acquired **93,871 shares** from employees to satisfy tax withholding obligations for share-based awards[219](index=219&type=chunk) - As of May 4, 2019, **2,257,851 shares** were still authorized for repurchase Subsequent to the quarter-end, the company repurchased **780,060 shares** for **$15.1 million**[221](index=221&type=chunk) [Item 3 Defaults Upon Senior Securities](index=48&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - **None**[222](index=222&type=chunk) [Item 4 Mine Safety Disclosures](index=48&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable - **Not applicable**[222](index=222&type=chunk) [Item 5 Other Information](index=48&type=section&id=Item%205%20Other%20Information) No other information was reported for this item - **None**[222](index=222&type=chunk) [Item 6 Exhibits](index=49&type=section&id=Item%206%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications and XBRL data - Lists exhibits filed with the report, including Sarbanes-Oxley certifications and XBRL data[223](index=223&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) CALERES, INC. (Exact name of registrant as specified in its charter) 1 þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 2, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 1-2191 New York 43-0197190 (State or ot ...