Financial Data and Key Metrics Changes - The company reported second quarter sales of $658.5 million, a decline of 3.6% year over year, with sales trends improving sequentially in both segments [24][10] - Adjusted earnings per share were $0.35, down from $0.85 in the previous year [30] - Consolidated gross margin was 43.4%, down 20 basis points compared to last year, driven by lower margins in both segments [26] Business Segment Data and Key Metrics Changes - Brand Portfolio sales declined 3.5%, with lead brands growing about 1% in North America and 3.6% globally [25][11] - Famous Footwear sales were down 4.9%, with comparable sales declining 3.4% [25][19] - The Brand Portfolio experienced gross margin pressure due to tariffs and markdown reserves, while Famous Footwear's gross margin was 43.7%, down 130 basis points [26][27] Market Data and Key Metrics Changes - International sales increased by double digits, and the company gained market share in women's fashion footwear [6][11] - E-commerce sales for Famous Footwear were up double digits, particularly in May and July [19] - The company gained 0.6 points of kids market share in shoe chains during the quarter [22] Company Strategy and Development Direction - The company completed structural cost savings initiatives expected to deliver annualized savings of $15 million, with half of that coming this year [7] - The acquisition of Stuart Weitzman was completed, adding a new lead brand to the portfolio, with a focus on operational efficiency and profitability post-transition [8][9] - Strategic focuses include ongoing tariff mitigation, expense and capital discipline, and integrating Stuart Weitzman while fueling lead brands and Famous Footwear [23] Management's Comments on Operating Environment and Future Outlook - Management noted headwinds due to market uncertainty but highlighted improved sales trends and market share gains [5] - The tariff environment remains uncertain, with expectations of continued gross margin pressure in the second half of the year [17][33] - Management expressed confidence in executing strategic plans to improve financial performance and drive shareholder value [23] Other Important Information - The company expects to finalize purchase accounting for Stuart Weitzman and provide more information on its impact in the next earnings call [35] - Inventory at quarter end was $693 million, up 4.9% year over year, with a 2% increase in Famous and an 8.6% increase in Brand Portfolio [31] Q&A Session Summary Question: Can you provide insights on August performance and any shifts in the women's business? - Management noted improved traffic and conversion in brick-and-mortar stores, with flat average unit retails (AURs) [38] - The product assortment shift positively impacted sales, particularly with the launch of Jordan [39] Question: What are the expectations for gross margins moving forward? - Management anticipates less headwind from promotions in the back half of the year, with continued pressure from tariffs [41][42] Question: What is the expected impact of the Stuart Weitzman acquisition on sales and EBIT? - Management is not providing specific details at this time, as purchase accounting is still being finalized [46][47] Question: How is the consumer health of Famous Footwear and Brand Portfolio customers? - Management observed that consumers continue to prefer highly demanded national brands, with strong performance in back-to-school sales [60][61] Question: What mitigation tactics for tariffs are being employed? - The company is selectively passing through price increases and negotiating with factory partners for cost savings [64][66]

Financial Performance - Q2 2025 - Sales decreased to $659 million, a 3.6% decrease compared to $683 million in 2Q24[19, 16] - Adjusted Earnings Per Share (EPS) decreased to $0.35, compared to $0.85 in 2Q24[19, 16] - Gross margin was 43.4%, down 210 bps compared to 2Q24[19] - Inventory increased by 5% compared to 2Q24[19] - Adjusted EBITDA was $163 million[19] Segment Performance - **Famous Footwear:** Sales were $400 million, down 4.9% year-over-year, with comparable sales down 3.4%[26] Gross margin was 43.7%, down 130 bps year-over-year[26] - **Brand Portfolio:** Sales were $276 million, down 3.5% compared to 2Q24, including a $10 million impact from tariffs[21] Gross margin was 40.3%, down 240 bps compared to 2Q24[22] Outlook - Famous Footwear expects comparable sales to be up 1% in August, down low-single digits in September and October[30] - The Brand Portfolio expects Q3 gross margin to be down similar to Q2, with Q4 trends improving as mitigation strategies benefit[30] Strategic Initiatives - The company achieved $15 million in annualized, structural savings[14] - The company is partnering with a consulting firm to explore additional structural cost savings across the portfolio[30]

Financial Performance - Caleres Inc. reported quarterly earnings of $0.35 per share, missing the Zacks Consensus Estimate of $0.51 per share, and down from $0.85 per share a year ago, representing an earnings surprise of -31.37% [1] - The company posted revenues of $658.52 million for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 1.21%, but down from $683.32 million year-over-year [2] - Over the last four quarters, Caleres has surpassed consensus EPS estimates just once and topped consensus revenue estimates only once [2] Stock Performance - Caleres Inc. shares have declined approximately 35.5% since the beginning of the year, contrasting with the S&P 500's gain of 9.6% [3] - The current Zacks Rank for Caleres is 5 (Strong Sell), indicating expectations for the stock to underperform the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.02 on revenues of $757.5 million, and for the current fiscal year, it is $2.00 on revenues of $2.73 billion [7] - The outlook for the Shoes and Retail Apparel industry, where Caleres operates, is currently in the top 32% of Zacks industries, suggesting potential for better performance compared to lower-ranked industries [8]

[Executive Summary](index=1&type=section&id=Executive%20Summary) Caleres achieved Q2 2025 sales improvements and market share gains, completed cost savings, and acquired Stuart Weitzman, enhancing its premium and direct-to-consumer focus [Q2 2025 Performance Highlights](index=1&type=section&id=Q2%202025%20Performance%20Highlights) Caleres experienced sequential sales improvements in both business segments during Q2 2025, achieving market share gains in women's fashion footwear and shoe chains, and noting strength in Lead Brands and direct-to-consumer channels, despite overall market uncertainty - Sales trends improved sequentially in both segments of the business[2](index=2&type=chunk) - Achieved market share gains in women's fashion footwear and in shoe chains[2](index=2&type=chunk) - Experienced strength in Lead Brands, Brand Portfolio direct-to-consumer channels, and international[2](index=2&type=chunk) - Saw significant improvement in sales trends at Famous Footwear in July and continuing through August[2](index=2&type=chunk) [Strategic Developments](index=1&type=section&id=Strategic%20Developments) The company successfully completed structural cost savings initiatives, projected to yield $15 million in annualized savings, and strategically acquired Stuart Weitzman post-quarter end, aligning with its focus on premium, direct-to-consumer, and international business expansion - Completed previously announced structural cost savings initiatives, expected to deliver annualized savings of **$15 million**[3](index=3&type=chunk)[4](index=4&type=chunk) - Completed the acquisition of Stuart Weitzman shortly after quarter-end, adding a new Lead Brand that aligns with the strategic focus on premium, direct-to-consumer, and international business[3](index=3&type=chunk)[4](index=4&type=chunk) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Results) Caleres experienced a consolidated sales decline and reduced gross margins in Q2 2025, with both segments facing challenges, while strategically increasing borrowings for the Stuart Weitzman acquisition and enhancing credit flexibility [Consolidated Financial Overview](index=1&type=section&id=Consolidated%20Financial%20Overview) Caleres reported a 3.6% decline in consolidated sales to $658.5 million for Q2 2025, with gross margin decreasing by 210 basis points to 43.4%. Net earnings attributable to Caleres, Inc. significantly dropped to $6.7 million, or $0.20 per diluted share, compared to $29.96 million, or $0.85 per diluted share, in the prior year, though adjusted EPS was $0.35 Consolidated Sales and Profitability (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------- | :---------- | :---------- | :----------- | | Reported Consolidated Sales (in millions) | $658.5 | $683.3 | -3.6% | | Gross Profit (in millions) | $285.8 | $310.9 | -8.1% | | Gross Margin (%) | 43.4% | 45.5% | -210 bps | | SG&A (in millions) | $269.7 | $268.3 | +0.5% | | SG&A as % of Net Sales (%) | 41.0% | 39.3% | +170 bps | | Net Earnings (in millions) | $6.7 | $30.0 | -77.7% | | Earnings Per Diluted Share ($) | $0.20 | $0.85 | -76.5% | | Adjusted Net Earnings (in millions) | $11.7 | $30.0 | -61.0% | | Adjusted Earnings Per Diluted Share ($) | $0.35 | $0.85 | -58.8% | - Gross margin decline was attributed to tariff-related costs, selective promotions, and higher provision for inventory markdowns, partially offset by growth in higher-margin direct-to-consumer channels within Brand Portfolio[4](index=4&type=chunk)[5](index=5&type=chunk) - SG&A as a percentage of net sales increased by **170 basis points**, reflecting deleverage on lower sales[5](index=5&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) Both Famous Footwear and Brand Portfolio segments experienced sales declines and reduced gross margins in Q2 2025 compared to the prior year, with Brand Portfolio also facing tariff impacts [Famous Footwear Segment](index=1&type=section&id=Famous%20Footwear%20Segment) Famous Footwear segment saw **$399.6 million** net sales, a **4.9%** decline, and a **130 bps** gross margin drop, with July sales trends improving Famous Footwear Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------- | :---------- | :---------- | :----------- | | Net Sales (in millions) | $399.6 | $420.3 | -4.9% | | Comparable Sales (%) | -3.4% | -2.9% | -0.5 ppt | | Gross Margin (%) | 43.7% | 45.0% | -130 bps | | Operating Earnings (in millions) | $18.6 | $34.4 | -46.0% | - Experienced meaningful improvement in sales trends in July[4](index=4&type=chunk) [Brand Portfolio Segment](index=1&type=section&id=Brand%20Portfolio%20Segment) Brand Portfolio segment reported **$275.6 million** net sales, a **3.5%** decline, and a **240 bps** gross margin drop, impacted by tariffs, but gained women's fashion footwear market share Brand Portfolio Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------- | :---------- | :---------- | :----------- | | Net Sales (in millions) | $275.6 | $285.5 | -3.5% | | Gross Margin (%) | 40.3% | 42.7% | -240 bps | | Operating Earnings (in millions) | $6.6 | $23.6 | -71.9% | - Sales decline included approximately **$10 million** in tariff impact[4](index=4&type=chunk) - Achieved gains in women's fashion footwear market share and strong performance from Lead Brands[4](index=4&type=chunk) - Direct-to-consumer sales represented approximately **75%** of total net sales for the consolidated business[5](index=5&type=chunk) [Key Financial Position and Liquidity Indicators](index=3&type=section&id=Key%20Financial%20Position%20and%20Liquidity%20Indicators) Caleres ended Q2 2025 with increased inventory levels and significantly higher borrowings under its revolving credit facility, primarily to pre-position cash for the Stuart Weitzman acquisition, while also enhancing financial flexibility through an amended credit agreement Key Financial Position (Q2 2025 vs Q2 2024) | Metric | August 2, 2025 | August 3, 2024 | Change (YoY) | | :---------------------------------- | :------------- | :------------- | :----------- | | Inventory, net (in millions) | $693.3 | $661.1 | +4.9% | | Borrowings under revolving credit agreement (in millions) | $387.5 | $146.5 | +164.5% | | Cash and cash equivalents (in millions) | $191.5 | $51.8 | +270.0% | | Total Assets (in millions) | $2,152.2 | $2,020.0 | +6.5% | | Total Liabilities (in millions) | $1,530.3 | $1,406.5 | +8.8% | - Increased borrowings reflect pre-positioned cash for the Stuart Weitzman acquisition[11](index=11&type=chunk) [Capital Allocation and Fiscal Outlook](index=3&type=section&id=Capital%20Allocation%20Update) Caleres focuses on growth and shareholder returns, enhanced credit flexibility, and suspended fiscal 2025 guidance due to market uncertainty, despite positive August sales trends [Capital Allocation Strategy](index=3&type=section&id=Capital%20Allocation%20Strategy) Caleres is focused on investing in value-driving growth opportunities and returning cash to shareholders through dividends. The company enhanced its financial flexibility by amending its credit agreement, extending its maturity to June 2030, and increasing its borrowing capacity to $700 million, with an accordion feature up to $950 million - Capital allocation priorities are to continue to fund its dividend and to invest in value-enhancing growth vectors[6](index=6&type=chunk) - Entered into an amendment of its credit agreement, extending the senior secured asset-based revolving credit facility to June 2030[6](index=6&type=chunk) - Increased borrowing capacity under the agreement by **$200 million** to **$700 million**, with an accordion feature allowing an increase to **$950 million**[6](index=6&type=chunk) [Fiscal 2025 Outlook](index=3&type=section&id=Fiscal%202025%20Outlook) Due to environmental uncertainty, Caleres has suspended its annual guidance for Fiscal 2025. However, August trends showed positive comparable sales for Famous Footwear and low-single-digit growth for Brand Portfolio (excluding Stuart Weitzman), with ongoing gross margin pressure from tariffs expected for Brand Portfolio through Q3, improving in Q4 - Annual guidance is suspended due to uncertainty in the environment[7](index=7&type=chunk) August 2025 Sales Trends | Segment | Performance | | :-------------------- | :------------------------------------------------ | | Famous Footwear | Same-store comparable sales up 1% | | Brand Portfolio (ex-Stuart Weitzman) | Sales up low-single digits | - Expect ongoing gross margin pressure in Brand Portfolio from tariffs for the balance of the year, with third-quarter Brand Portfolio gross margin expected to be down similar to the second quarter, with improvement in the fourth quarter[7](index=7&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section clarifies GAAP and non-GAAP financial measures for business insights and presents a Safe Harbor Statement on forward-looking statements and risks [Definitions and Non-GAAP Financial Measures](index=3&type=section&id=Definitions%20and%20Non-GAAP%20Financial%20Measures) This section clarifies the company's use of both GAAP and non-GAAP financial measures, such as EBITDA and adjusted earnings, explaining that non-GAAP metrics are provided to offer additional insights into underlying business trends by excluding certain items not indicative of core operating results - The company's financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures and metrics[10](index=10&type=chunk) - Non-GAAP measures include earnings before interest, taxes, depreciation and amortization (EBITDA), and estimated/future operating earnings, net earnings, and earnings per diluted share, adjusted to exclude certain gains, charges, and recoveries[10](index=10&type=chunk) - Management believes these non-GAAP measures help identify underlying trends and provide useful information by excluding items that may not be indicative of core operating results[10](index=10&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) The Safe Harbor Statement advises that the press release contains forward-looking statements subject to various risks and uncertainties, including changes in trade policies, consumer demands, inflation, supply chain disruptions, and intense competition, which could cause actual results to differ materially from expectations - This press release contains certain forward-looking statements and expectations regarding the company's future performance and the performance of its brands[12](index=12&type=chunk) - Such statements are subject to various risks and uncertainties that could cause actual results to differ materially[12](index=12&type=chunk) - Key risks include changes in United States and international trade policies (including tariffs), changing consumer demands, inflationary pressures, supply chain disruptions, rapidly changing consumer preferences, intense competition, and cybersecurity threats[12](index=12&type=chunk) - Detailed information relating to such factors is available under the caption Risk Factors in Item 1A of the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q[13](index=13&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=SCHEDULE%201) The condensed consolidated financial statements present Caleres' Q2 2025 performance, detailing earnings declines, increased inventory and borrowings, and shifts in cash flow activities [Statements of Earnings](index=6&type=section&id=Statements%20of%20Earnings) The condensed consolidated statements of earnings detail Caleres' financial performance for the thirteen and twenty-six weeks ended August 2, 2025, and August 3, 2024, showing declines in net sales, gross profit, operating earnings, and net earnings year-over-year Consolidated Statements of Earnings (Thirteen Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Net sales (in thousands) | $658,519 | $683,317 | | Cost of goods sold (in thousands) | $372,724 | $372,439 | | Gross profit (in thousands) | $285,795 | $310,878 | | Operating earnings (in thousands) | $9,292 | $42,529 | | Net earnings attributable to Caleres, Inc. (in thousands) | $6,713 | $29,958 | | Diluted earnings per common share ($) | $0.20 | $0.85 | Consolidated Statements of Earnings (Twenty-Six Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Net sales (in thousands) | $1,272,740 | $1,342,515 | | Cost of goods sold (in thousands) | $708,251 | $722,542 | | Gross profit (in thousands) | $564,489 | $619,973 | | Operating earnings (in thousands) | $20,876 | $85,288 | | Net earnings attributable to Caleres, Inc. (in thousands) | $13,656 | $60,898 | | Diluted earnings per common share ($) | $0.40 | $1.73 | [Balance Sheets](index=7&type=section&id=Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of Caleres' financial position as of August 2, 2025, and August 3, 2024, indicating an increase in total assets and liabilities, notably a significant rise in borrowings under the revolving credit agreement Consolidated Balance Sheet (As of) | Metric | August 2, 2025 | August 3, 2024 | | :---------------------------------- | :------------- | :------------- | | Cash and cash equivalents (in thousands) | $191,494 | $51,753 | | Inventories, net (in thousands) | $693,282 | $661,146 | | Total current assets (in thousands) | $1,099,418 | $939,700 | | Total assets (in thousands) | $2,152,228 | $2,019,985 | | Borrowings under revolving credit agreement (in thousands) | $387,500 | $146,500 | | Total current liabilities (in thousands) | $1,015,087 | $860,423 | | Total liabilities and equity (in thousands) | $2,152,228 | $2,019,985 | | Total equity (in thousands) | $621,944 | $613,484 | [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows for the twenty-six weeks ended August 2, 2025, show a significant increase in cash provided by financing activities, primarily due to higher borrowings, while cash provided by operating activities decreased compared to the prior year Consolidated Statements of Cash Flows (Twenty-Six Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :---------------------------------- | :------------- | :------------- | | Net cash provided by operating activities (in thousands) | $41,646 | $115,696 | | Net cash used for investing activities (in thousands) | $(34,072) | $(21,808) | | Net cash provided by (used for) financing activities (in thousands) | $154,221 | $(63,426) | | Increase in cash and cash equivalents (in thousands) | $161,858 | $30,395 | | Cash and cash equivalents at end of period (in thousands) | $191,494 | $51,753 | [Non-GAAP Reconciliations and Metrics](index=9&type=section&id=SCHEDULE%204) This section provides reconciliations of GAAP to adjusted financial measures and calculations of EBITDA and leverage ratios, offering a clearer view of core operational performance and financial health [GAAP to Adjusted Net Earnings and EPS](index=9&type=section&id=GAAP%20to%20Adjusted%20Net%20Earnings%20and%20EPS) This section reconciles GAAP net earnings and diluted EPS to adjusted figures for the thirteen and twenty-six weeks, and trailing twelve months, by excluding specific charges such as Stuart Weitzman acquisition costs and expense reduction initiatives, providing a clearer view of core operational performance GAAP to Adjusted Net Earnings and EPS (Thirteen Weeks Ended) | Metric | GAAP (Aug 2, 2025) | Adjusted (Aug 2, 2025) | GAAP (Aug 3, 2024) | Adjusted (Aug 3, 2024) | | :---------------------------------- | :------------------- | :--------------------- | :------------------- | :--------------------- | | Net earnings attributable to Caleres, Inc. (in thousands) | $6,713 | $11,730 | $29,958 | $29,958 | | Diluted earnings per common share ($) | $0.20 | $0.35 | $0.85 | $0.85 | - Adjustments for the thirteen weeks ended August 2, 2025, include Stuart Weitzman acquisition and integration costs (**$1,678 thousand** after tax) and expense reduction initiatives (**$3,339 thousand** after tax)[18](index=18&type=chunk) GAAP to Adjusted Net Earnings and EPS (Twenty-Six Weeks Ended) | Metric | GAAP (Aug 2, 2025) | Adjusted (Aug 2, 2025) | GAAP (Aug 3, 2024) | Adjusted (Aug 3, 2024) | | :---------------------------------- | :------------------- | :--------------------- | :------------------- | :--------------------- | | Net earnings attributable to Caleres, Inc. (in thousands) | $13,656 | $19,138 | $60,898 | $60,898 | | Diluted earnings per common share ($) | $0.40 | $0.56 | $1.73 | $1.73 | [Segment Adjusted Operating Earnings](index=10&type=section&id=Segment%20Adjusted%20Operating%20Earnings) This section reconciles GAAP operating earnings to adjusted operating earnings for the Famous Footwear and Brand Portfolio segments for both the thirteen and twenty-six weeks, isolating the impact of specific charges like acquisition and expense reduction initiatives to show segment-level adjusted performance Segment Adjusted Operating Earnings (Thirteen Weeks Ended Aug 2, 2025) | Segment | GAAP Operating Earnings (in thousands) | Charges/Other Items (in thousands) | Adjusted Operating Earnings (in thousands) | | :---------------- | :---------------------- | :-------------------- | :-------------------------- | | Famous Footwear | $18,551 | $123 | $18,674 | | Brand Portfolio | $6,649 | $1,792 | $8,441 | | Consolidated | $9,292 | $6,756 | $16,048 | Segment Adjusted Operating Earnings (Twenty-Six Weeks Ended Aug 2, 2025) | Segment | GAAP Operating Earnings (in thousands) | Charges/Other Items (in thousands) | Adjusted Operating Earnings (in thousands) | | :---------------- | :---------------------- | :-------------------- | :-------------------------- | | Famous Footwear | $23,525 | $123 | $23,648 | | Brand Portfolio | $24,064 | $1,792 | $25,856 | | Consolidated | $20,876 | $7,383 | $28,259 | [EBITDA and Debt/EBITDA Leverage Ratio Calculation](index=14&type=section&id=EBITDA%20and%20Debt%2FEBITDA%20Leverage%20Ratio%20Calculation) This section provides the calculation of EBITDA and Adjusted EBITDA for the thirteen weeks and trailing twelve months, along with the Debt/EBITDA leverage ratio, highlighting a significant increase in the leverage ratio from 0.6 to 2.7 year-over-year EBITDA and Adjusted EBITDA (Thirteen Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | EBITDA (in thousands) | $25,302 | $57,209 | | EBITDA margin (%) | 3.8% | 8.4% | | Adjusted EBITDA (in thousands) | $32,058 | $57,209 | | Adjusted EBITDA margin (%) | 4.9% | 8.4% | EBITDA and Adjusted EBITDA (Trailing Twelve Months Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | EBITDA (in thousands) | $145,461 | $240,737 | | EBITDA margin (%) | 5.5% | 8.6% | | Adjusted EBITDA (in thousands) | $162,727 | $245,193 | | Adjusted EBITDA margin (%) | 6.1% | 8.8% | Debt/EBITDA Leverage Ratio | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Borrowings under revolving credit agreement (in thousands) | $387,500 | $146,500 | | EBITDA (trailing twelve months, in thousands) | $145,461 | $240,737 | | Debt/EBITDA (x) | 2.7 | 0.6 |

Core Viewpoint - Caleres has officially completed the acquisition of luxury footwear brand Stuart Weitzman for a total transaction value of $120.2 million, which includes cash compensation and adjustments for other operating capital [1] Group 1: Acquisition Details - The total transaction amount for the acquisition is $120.2 million [1] - The acquisition includes cash compensation and adjustments for other operating capital [1] Group 2: Brand Performance - Stuart Weitzman is known for its elegant and modern design style, making it a popular choice in the market [1] - The brand achieved sales of $220 million over the past 12 months, indicating strong performance in the high-end footwear market [1]

Group 1 - Tapestry, Inc. has completed the sale of the Stuart Weitzman brand to Caleres [1] - Caleres is a leading consumer-focused footwear brand management company [1][5] - The transaction involved financial advisory from Morgan Stanley for Tapestry and BofA Securities for Caleres [2] Group 2 - Tapestry, Inc. is a modern luxury lifestyle brand company based in New York, with brands including COACH and kate spade [3] - Stuart Weitzman, founded in 1986, is known for its craftsmanship and design, empowering women with its brand message [4] - Caleres has a portfolio of well-known brands and operates nearly 1,000 retail stores, along with a strong online presence [5]

Core Insights - Pomerantz LLP is investigating claims on behalf of investors of Caleres, Inc. regarding potential securities fraud or unlawful business practices by the company and its officers [1] - Caleres reported a first-quarter 2025 sales figure of $614.2 million, which is a 6.8% decline year-over-year, and the CFO acknowledged this was below expectations [3] - Following the disappointing financial results, Caleres's stock price dropped by $3.00 per share, or 18.32%, closing at $13.38 per share on May 29, 2025 [3] - The company has suspended its guidance for 2025 due to uncertainty in the business environment [3] Company Overview - Caleres, Inc. is a publicly traded company listed on the NYSE under the ticker symbol CAL [1] - The company is currently facing scrutiny from investors and legal investigations related to its business practices [1] Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4]

Company Overview - Caleres, Inc. (CAL) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Oct 17, 2025 $42.50 Call option [1] - The company currently holds a Zacks Rank of 5 (Strong Sell) within the Shoes and Retail Apparel industry, which is positioned in the bottom 12% of the Zacks Industry Rank [3] Analyst Sentiment - Over the past 60 days, no analysts have increased their earnings estimates for Caleres for the current quarter, while two analysts have revised their estimates downwards [3] - The Zacks Consensus Estimate for the current quarter has decreased from 85 cents per share to 51 cents per share during this period [3] Options Market Insights - The high implied volatility suggests that options traders are anticipating a significant price movement for Caleres, which could indicate an upcoming event that may lead to a substantial rally or sell-off [2][4] - Options traders often seek to capitalize on high implied volatility by selling premium, aiming for the underlying stock to not move as much as expected by expiration [4]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents Caleres, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1 FINANCIAL STATEMENTS (Unaudited)](index=3&type=section&id=ITEM%201%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Caleres, Inc., including the balance sheets, statements of earnings, comprehensive income, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity | Metric ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :------------------- | :---------- | :---------- | :------------------- | :--------- | | Total Assets | 1,907,696 | 1,861,110 | 46,586 | 2.5% | | Total Current Assets | 846,392 | 805,336 | 41,056 | 5.1% | | Inventories, net | 573,615 | 530,570 | 43,045 | 8.1% | | Cash and cash equivalents | 33,139 | 30,709 | 2,430 | 7.9% | | Total Liabilities | 1,294,792 | 1,284,081 | 10,711 | 0.8% | | Total Current Liabilities | 770,256 | 764,365 | 5,891 | 0.8% | | Borrowings under revolving credit agreement | 258,500 | 191,000 | 67,500 | 35.3% | | Total Equity | 612,904 | 577,029 | 35,875 | 6.2% | [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This statement reports the company's financial performance over a period, showing revenues, expenses, and net earnings | Metric ($ thousands, except per share amounts) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Net sales | 614,221 | 659,198 | (44,977) | (6.8)% | | Gross profit | 278,694 | 309,095 | (30,401) | (9.8)% | | Gross margin | 45.4% | 46.9% | (1.5 ppt) | | | Selling and administrative expenses | 266,483 | 266,337 | 146 | 0.1% | | Operating earnings | 11,584 | 42,758 | (31,174) | (72.9)% | | Net earnings attributable to Caleres, Inc. | 6,943 | 30,939 | (23,996) | (77.6)% | | Diluted earnings per common share | $0.21 | $0.88 | ($0.67) | (76.1)% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net earnings and other comprehensive income items, reflecting changes in equity from non-owner sources | Metric ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Net earnings | 5,946 | 30,798 | (24,852) | (80.7)% | | Foreign currency translation adjustment | 5,808 | (830) | 6,638 | N/A | | Pension and other postretirement benefits adjustments | 1,088 | 1,140 | (52) | (4.6)% | | Other comprehensive loss, net of tax | 6,896 | 310 | 6,586 | 2124.5% | | Comprehensive income attributable to Caleres, Inc. | 13,792 | 31,322 | (17,530) | (56.0)% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash inflows and outflows from operating, investing, and financing activities over a period | Metric ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | | :------------------- | :------------------------------- | :------------------------------- | :------------------- | | Net cash (used for) provided by operating activities | (5,657) | 36,074 | (41,731) | | Net cash used for investing activities | (21,146) | (10,326) | (10,820) | | Net cash provided by (used for) financing activities | 30,277 | (16,359) | 46,636 | | Increase in cash and cash equivalents | 3,503 | 9,351 | (5,848) | | Cash and cash equivalents at end of period | 33,139 | 30,709 | 2,430 | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement outlines changes in the company's equity components, including net earnings, dividends, and stock repurchases | Metric ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :------------------- | :---------- | :---------- | :------------------- | :--------- | | Total Equity | 612,904 | 577,029 | 35,875 | 6.2% | | Net earnings (loss) | 5,946 | 30,798 | (24,852) | (80.7)% | | Dividends paid | (2,362) | (2,442) | 80 | (3.3)% | | Acquisition of treasury stock | (5,051) | (15,070) | 10,019 | (66.5)% | | Contributions by noncontrolling interests | 1,750 | — | 1,750 | N/A | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details and explanations supporting the condensed consolidated financial statements, clarifying accounting policies and specific items [Note 1 Basis of Presentation and General](index=8&type=section&id=Note%201%20Basis%20of%20Presentation%20and%20General) This note outlines the basis for preparing the unaudited condensed consolidated financial statements, including the consolidation of subsidiaries, the seasonal nature of the business, and the use of estimates. It also details the accounting for noncontrolling interests, the supplier finance program, and the classification of property held for sale - The company's business is seasonal, with historically higher earnings in the third fiscal quarter, though recent years show a more even distribution. Interim results may not predict full-year outcomes[16](index=16&type=chunk) - The company consolidates CLT Brand Solutions, a 50/50 joint venture in China with Brand Investment Holding, on a one-month lag. Capital contributions to CLT were **$3.5 million in Q1 2025**, including **$1.8 million from Brand Investment Holding**, compared to no contributions in Q1 2024[19](index=19&type=chunk) CLT Brand Solutions ($ thousands) | CLT Brand Solutions ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Net sales | 7,210 | 5,722 | 1,488 | 26.0% | | Operating loss | (1,996) | (300) | (1,696) | 565.3% | - The company operates a voluntary supplier finance program, with **$11.8 million of accounts payable** subject to the program as of May 3, 2025, a decrease from **$16.0 million** a year prior[21](index=21&type=chunk)[23](index=23&type=chunk) - The main portion of the corporate headquarters campus in Clayton, Missouri, has been classified as property and equipment held for sale as of May 3, 2025, following agreements to sell components of the campus[24](index=24&type=chunk) [Note 2 Impact of New Accounting Pronouncements](index=9&type=section&id=Note%202%20Impact%20of%20New%20Accounting%20Pronouncements) The company is evaluating the impact of recently issued accounting pronouncements, including ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Income Statement Expenses). ASU 2023-09 is effective in fiscal year 2025 and is not expected to have a material impact, while ASU 2024-03 is effective for fiscal year 2027 annual disclosures and its impact is still being evaluated - ASU 2023-09 (Income Taxes) expands disclosure requirements for rate reconciliation and income taxes paid by jurisdiction, effective for the company in **fiscal year 2025**, with no material impact expected[25](index=25&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses) requires new tabular disclosures for certain income expenses, effective for the company's annual disclosures in **fiscal year 2027**, and its impact is currently being evaluated[26](index=26&type=chunk) [Note 3 Revenues](index=10&type=section&id=Note%203%20Revenues) Net sales decreased by 6.8% to $614.2 million for the thirteen weeks ended May 3, 2025, compared to the prior year, with declines across both Famous Footwear and Brand Portfolio segments. The note provides a detailed disaggregation of revenue by segment and source, along with information on contract balances Revenue Source ($ thousands) | Revenue Source ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :--------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Total direct-to-consumer sales | 428,672 | 453,124 | (24,452) | (5.4)% | | Wholesale - e-commerce | 63,107 | 67,787 | (4,680) | (6.9)% | | Wholesale - landed | 110,563 | 119,539 | (8,976) | (7.5)% | | Wholesale - first cost | 9,818 | 15,736 | (5,918) | (37.6)% | | Licensing and royalty | 1,919 | 2,865 | (946) | (33.0)% | | Net sales (Total) | 614,221 | 659,198 | (44,977) | (6.8)% | - The loyalty programs liability increased by **$6.3 million** due to points earned and decreased by **$5.5 million** due to expirations and redemptions during the thirteen weeks ended May 3, 2025[38](index=38&type=chunk) Contract Balance ($ thousands) | Contract Balance ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :----------------------------- | :---------- | :---------- | :------------------- | :--------- | | Customer allowances and discounts | 15,135 | 17,090 | (1,955) | (11.4)% | | Loyalty programs liability | 8,568 | 8,350 | 218 | 2.6% | | Returns reserve | 15,861 | 15,100 | 761 | 5.0% | | Gift card liability | 5,876 | 5,841 | 35 | 0.6% | | Allowance for expected credit losses | 10,264 | 8,101 | 2,163 | 26.7% | [Note 4 Earnings Per Share](index=12&type=section&id=Note%204%20Earnings%20Per%20Share) Basic and diluted earnings per common share attributable to Caleres, Inc. shareholders decreased significantly to $0.21 for the thirteen weeks ended May 3, 2025, from $0.88 in the prior year. The company repurchased 300,000 shares during the period, incurring an immaterial amount of excise taxes under the Inflation Reduction Act Earnings Per Share ($ thousands, except per share amounts) | Metric ($ thousands, except per share amounts) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Net earnings attributable to Caleres, Inc. | 6,943 | 30,939 | (23,996) | (77.6)% | | Basic earnings per common share | $0.21 | $0.88 | ($0.67) | (76.1)% | | Diluted earnings per common share | $0.21 | $0.88 | ($0.67) | (76.1)% | | Shares repurchased | 300,000 | 416,000 | (116,000) | (27.9)% | [Note 5 Restructuring and Other Special Charges](index=12&type=section&id=Note%205%20Restructuring%20and%20Other%20Special%20Charges) The company incurred $0.6 million in restructuring and other special charges during the first quarter of 2025, primarily for legal and related costs associated with the pending acquisition of Stuart Weitzman, expected to close in summer 2025. No such charges were incurred in the prior year - The company signed a definitive agreement to acquire Stuart Weitzman from Tapestry, Inc. for **$105 million**, expected to close in summer 2025, and incurred **$0.6 million** in related legal and other costs in Q1 2025[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 6 Business Segment Information](index=13&type=section&id=Note%206%20Business%20Segment%20Information) The company's operating earnings significantly decreased across both Famous Footwear and Brand Portfolio segments for the thirteen weeks ended May 3, 2025, compared to the prior year, reflecting overall lower net sales and gross profit Segment Performance ($ thousands) | Segment Performance ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | **Famous Footwear** | | | | | | Net sales | 327,676 | 349,553 | (21,877) | (6.3)% | | Gross Profit | 148,441 | 161,005 | (12,564) | (7.8)% | | Operating earnings | 4,974 | 16,855 | (11,881) | (70.5)% | | Segment assets | 877,642 | 868,729 | 8,913 | 1.0% | | **Brand Portfolio** | | | | | | Net sales | 295,395 | 317,211 | (21,816) | (6.9)% | | Gross Profit | 129,287 | 147,812 | (18,525) | (12.5)% | | Operating earnings | 17,415 | 41,425 | (24,010) | (57.9)% | | Segment assets | 861,984 | 827,645 | 34,339 | 4.1% | | **Total Operating Earnings** | 11,584 | 42,758 | (31,174) | (72.9)% | [Note 7 Inventories](index=15&type=section&id=Note%207%20Inventories) The company's net inventory balance increased to $573.6 million as of May 3, 2025, up 8.1% from $530.6 million a year prior, primarily driven by an increase in finished goods Inventory Component ($ thousands) | Inventory Component ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------- | :---------- | :------------------- | :--------- | | Raw materials | 14,736 | 13,521 | 1,215 | 9.0% | | Work-in-process | 617 | 608 | 9 | 1.5% | | Finished goods | 558,262 | 516,441 | 41,821 | 8.1% | | Inventories, net | 573,615 | 530,570 | 43,045 | 8.1% | [Note 8 Goodwill and Intangible Assets](index=15&type=section&id=Note%208%20Goodwill%20and%20Intangible%20Assets) Net goodwill and intangible assets decreased to $189.5 million as of May 3, 2025, from $200.6 million a year prior, primarily due to accumulated amortization of intangible assets. No goodwill or indefinite-lived intangible asset impairment charges were recorded during the period Asset Category ($ thousands) | Asset Category ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :--------------------------- | :---------- | :---------- | :------------------- | :--------- | | Total intangible assets, net | 184,559 | 195,595 | (11,036) | (5.6)% | | Total goodwill | 4,956 | 4,956 | 0 | 0.0% | | Goodwill and intangible assets, net | 189,515 | 200,551 | (11,036) | (5.5)% | | Accumulated amortization | (160,324) | (149,288) | (11,036) | 7.4% | - Amortization expense for intangible assets was **$2.8 million** for both the thirteen weeks ended May 3, 2025, and May 4, 2024. The company estimates future amortization expense to be approximately **$11.0 million** in 2025 and 2026[52](index=52&type=chunk) - No goodwill or indefinite-lived intangible asset impairment charges were recorded during the thirteen weeks ended May 3, 2025, or May 4, 2024[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 9 Leases](index=16&type=section&id=Note%209%20Leases) Total lease expense increased to $52.5 million for the thirteen weeks ended May 3, 2025, from $51.1 million in the prior year, with cash paid for lease liabilities also increasing. The company recognized $30.3 million in new right-of-use assets and lease obligations from new or amended leases Lease Expense ($ thousands) | Lease Expense ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Operating lease expense | 40,577 | 40,023 | 554 | 1.4% | | Variable lease expense | 11,731 | 10,735 | 996 | 9.3% | | Short-term lease expense | 144 | 307 | (163) | (53.1)% | | Total lease expense | 52,452 | 51,065 | 1,387 | 2.7% | - Cash paid for lease liabilities increased to **$51.2 million** for the thirteen weeks ended May 3, 2025, from **$42.2 million** in the prior year[61](index=61&type=chunk) - The company recognized **$30.3 million** in right-of-use assets and lease obligations from new or amended leases during the thirteen weeks ended May 3, 2025[60](index=60&type=chunk) [Note 10 Financing Arrangements](index=17&type=section&id=Note%2010%20Financing%20Arrangements) The company's borrowings under its revolving credit facility increased to $258.5 million as of May 3, 2025, from $191.0 million a year prior, with $233.4 million in additional borrowing availability. The company expects to refinance its revolving credit facility in 2025 ahead of its October 2026 maturity - Borrowings under the revolving credit agreement increased to **$258.5 million** as of May 3, 2025, from **$191.0 million** as of May 4, 2024, an increase of **$67.5 million**[6](index=6&type=chunk)[68](index=68&type=chunk) - Total additional borrowing availability was **$233.4 million** as of May 3, 2025[68](index=68&type=chunk) - The company expects to refinance its revolving credit facility in **2025**, prior to its **October 2026** maturity[106](index=106&type=chunk)[141](index=141&type=chunk) [Note 11 Shareholders' Equity](index=18&type=section&id=Note%2011%20Shareholders'%20Equity) The accumulated other comprehensive loss decreased to $(27.2) million as of May 3, 2025, from $(34.1) million a year prior, primarily due to a positive foreign currency translation adjustment Accumulated Other Comprehensive Loss ($ thousands) | Component ($ thousands) | May 3, 2025 | May 4, 2024 | Change ($ thousands) | Change (%) | | :---------------------- | :---------- | :---------- | :------------------- | :--------- | | Foreign Currency Translation | (28) | (1,855) | 1,827 | (98.5)% | | Pension and Other Postretirement Benefits | (27,145) | (32,266) | 5,121 | (15.9)% | | Accumulated Other Comprehensive Loss | (27,173) | (34,121) | 6,948 | (20.4)% | [Note 12 Share-Based Compensation](index=18&type=section&id=Note%2012%20Share-Based%20Compensation) Share-based compensation expense decreased to $2.8 million for the thirteen weeks ended May 3, 2025, from $3.7 million in the prior year. The company granted 748,063 restricted shares and long-term incentive awards payable in cash with a target value of $6.7 million during the current period Share-based Compensation Expense ($ thousands) | Metric ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Share-based compensation expense | 2,843 | 3,710 | (867) | (23.4)% | - The company granted **748,063 restricted shares** with a graded vesting term of three years during the thirteen weeks ended May 3, 2025, compared to **303,285 shares** in the prior year[73](index=73&type=chunk) - Long-term incentive awards payable in cash for the 2025-2027 performance period were granted with a target value of **$6.7 million** and a maximum value of **$13.4 million**[75](index=75&type=chunk) [Note 13 Retirement and Other Benefit Plans](index=20&type=section&id=Note%2013%20Retirement%20and%20Other%20Benefit%20Plans) Total net periodic benefit expense for pension and other postretirement benefits increased to $773 thousand for the thirteen weeks ended May 3, 2025, from $411 thousand in the prior year, primarily due to higher service and interest costs, partially offset by expected return on assets Net Periodic Benefit Expense (Income) ($ thousands) | Component ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :---------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Service cost | 1,224 | 1,192 | 32 | 2.7% | | Interest cost | 3,621 | 3,732 | (111) | (3.0)% | | Expected return on assets | (5,556) | (6,076) | 520 | (8.6)% | | Amortization of actuarial loss (gain) | 1,477 | 1,539 | (62) | (4.0)% | | Total net periodic benefit expense (income) | 773 | 411 | 362 | 88.1% | [Note 14 Fair Value Measurements](index=20&type=section&id=Note%2014%20Fair%20Value%20Measurements) The company measures various assets and liabilities at fair value on a recurring basis, primarily using Level 1 inputs. Long-lived asset impairment charges totaled $277 thousand for the thirteen weeks ended May 3, 2025, mainly in the Famous Footwear segment - All recurring fair value measurements for non-qualified deferred compensation plan assets/liabilities, non-qualified restoration plan assets/liabilities, and non-employee director deferred compensation/RSUs are based on **Level 1 inputs** (quoted prices in active markets)[89](index=89&type=chunk) Impairment Charges ($ thousands) | Impairment Charges ($ thousands) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ thousands) | Change (%) | | :------------------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Famous Footwear | 277 | 195 | 82 | 42.1% | | Brand Portfolio | — | 50 | (50) | (100.0)% | | Total long-lived asset impairment charges | 277 | 245 | 32 | 13.1% | - The fair values of cash and cash equivalents, receivables, trade accounts payable, and borrowings under the revolving credit agreement approximate their carrying values due to their short-term nature (Level 1)[91](index=91&type=chunk) [Note 15 Income Taxes](index=23&type=section&id=Note%2015%20Income%20Taxes) The consolidated effective tax rate increased to 29.8% for the thirteen weeks ended May 3, 2025, from 23.0% in the prior year, primarily due to a discrete tax provision related to share-based compensation. The company continues to evaluate the potential impact of Pillar Two rules but does not expect a material impact Effective Tax Rate | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change (ppt) | | :----- | :------------------------------- | :------------------------------- | :----------- | | Effective Tax Rate | 29.8% | 23.0% | 6.8 | - The higher effective tax rate in Q1 2025 was driven by a discrete tax provision of approximately **$0.3 million** related to share-based compensation, compared to a discrete tax benefit of **$0.8 million** in Q1 2024[93](index=93&type=chunk) - The company does not expect the OECD's Pillar Two Global Anti-Base Erosion model rules, effective January 1, 2024, to have a material impact on its tax provision or effective tax rate[124](index=124&type=chunk) [Note 16 Commitments and Contingencies](index=23&type=section&id=Note%2016%20Commitments%20and%20Contingencies) The company is involved in environmental remediation activities at its Redfield site, with cumulative expenditures of $34.9 million through May 3, 2025, and a reserve of $9.1 million for anticipated future activities. The company also faces ordinary course litigation, not expected to have a material adverse effect - Cumulative expenditures for environmental remediation at the Redfield site reached **$34.9 million** through May 3, 2025[98](index=98&type=chunk) Environmental Remediation Reserve ($ thousands) | Environmental Remediation Reserve ($ thousands) | May 3, 2025 | | :---------------------------------------------- | :---------- | | Total reserve for anticipated future remediation | 9,100 | | - Off-site remediation | 4,700 | | - On-site remediation | 4,400 | - The company expects to spend approximately **$0.1 million** in 2025 and each of the following four years, and **$11.7 million** thereafter, for on-site remediation[98](index=98&type=chunk) - Management believes the outcome of current legal proceedings and litigation will not have a material adverse effect on the company's results of operations or financial position[102](index=102&type=chunk) [ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=25&type=section&id=ITEM%202%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations for the first quarter of 2025, highlighting key trends, segment performance, liquidity, and capital resources. It discusses the impact of macroeconomic factors, the Stuart Weitzman acquisition, and strategic initiatives [OVERVIEW](index=25&type=section&id=OVERVIEW) This overview summarizes Caleres, Inc.'s business, the Stuart Weitzman acquisition, macroeconomic impacts, and liquidity position - Caleres, Inc. is a global footwear company operating retail stores, e-commerce websites, and designing, developing, sourcing, manufacturing, and distributing footwear[103](index=103&type=chunk) - The company signed an agreement to acquire Stuart Weitzman for **$105 million**, expected to close in summer 2025, aiming to grow its Brand Portfolio segment with more global and direct-to-consumer reach[104](index=104&type=chunk) - Macroeconomic factors, including recent tariff announcements and lighter consumer traffic, negatively impacted Q1 2025 financial results, leading to lower net sales[105](index=105&type=chunk) - The company's liquidity position remains strong with **$33.1 million in cash and cash equivalents** and **$233.4 million in excess borrowing availability** as of May 3, 2025[106](index=106&type=chunk) Financial Highlight ($ millions, except per share) | Financial Highlight ($ millions, except per share) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ millions) | Change (%) | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :------------------ | :--------- | | Consolidated net sales | $614.2 | $659.2 | ($45.0) | (6.8)% | | Famous Footwear segment net sales | $327.7 | $349.6 | ($21.9) | (6.3)% | | Brand Portfolio segment net sales | $295.4 | $317.2 | ($21.8) | (6.9)% | | Gross profit | $278.7 | $309.1 | ($30.4) | (9.8)% | | Gross margin | 45.4% | 46.9% | (152 bps) | | | Operating earnings | $11.6 | $42.8 | ($31.2) | (72.9)% | | Diluted earnings per share | $0.21 | $0.88 | ($0.67) | (76.1)% | - Direct-to-consumer sales represented approximately **70% of consolidated net sales** in Q1 2025, up from **69% in Q1 2024**, and generally result in higher gross margins[111](index=111&type=chunk)[114](index=114&type=chunk) [CONSOLIDATED RESULTS](index=27&type=section&id=CONSOLIDATED%20RESULTS) This section details consolidated financial performance, including net sales, gross profit, operating earnings, and effective tax rate Consolidated Results ($ millions) | Metric ($ millions) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ millions) | Change (%) | | :------------------ | :------------------------------- | :------------------------------- | :------------------ | :--------- | | Net sales | $614.2 | $659.2 | ($45.0) | (6.8)% | | Cost of goods sold | $335.5 | $350.1 | ($14.6) | (4.2)% | | Gross profit | $278.7 | $309.1 | ($30.4) | (9.8)% | | Gross margin | 45.4% | 46.9% | (1.5 ppt) | | | Selling and administrative expenses | $266.5 | $266.3 | $0.2 | 0.1% | | Operating earnings | $11.6 | $42.8 | ($31.2) | (72.9)% | | Net earnings attributable to Caleres, Inc. | $6.9 | $30.9 | ($24.0) | (77.6)% | - Gross margin decreased due to lower merchandise margins, incremental costs from canceling and moving inventory out of China after tariff escalation, higher inventory markdowns, and increased freight costs from a higher mix of e-commerce sales[115](index=115&type=chunk) - Selling and administrative expenses increased slightly due to growth in international business, higher facilities costs (including depreciation from Famous Footwear store renovations to FLAIR concept), and increased IT expenses, partially offset by lower advertising and marketing[117](index=117&type=chunk) - The effective tax rate increased to **29.8% in Q1 2025** from **23.0% in Q1 2024**, driven by a discrete tax provision related to share-based compensation[123](index=123&type=chunk) [FAMOUS FOOTWEAR](index=29&type=section&id=FAMOUS%20FOOTWEAR) This segment experienced declines in net sales and operating earnings, despite increased e-commerce penetration and FLAIR store outperformance Famous Footwear Segment Performance ($ millions, except %) | Metric ($ millions, except %) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ millions) | Change (%) | | :---------------------------- | :------------------------------- | :------------------------------- | :------------------ | :--------- | | Net sales | $327.7 | $349.6 | ($21.9) | (6.3)% | | Comparable sales % change | (4.6)% | (2.3)% | (2.3 ppt) | | | Gross profit | $148.4 | $161.0 | ($12.6) | (7.8)% | | Gross margin | 45.3% | 46.1% | (0.8 ppt) | | | Selling and administrative expenses | $143.4 | $144.1 | ($0.7) | (0.5)% | | Operating earnings | $5.0 | $16.9 | ($11.9) | (70.5)% | - E-commerce sales penetration increased to **14% of net sales** in Q1 2025, up from **13% in Q1 2024**, despite an overall decline in traffic. The kids category continued to outperform[127](index=127&type=chunk) - The segment closed **11 stores** in Q1 2025, ending with **835 stores**. Sales to Famously You Rewards members accounted for **79% of net sales**, up from **78% in Q1 2024**[128](index=128&type=chunk) - **10 stores** were converted to the new FLAIR concept in Q1 2025, bringing the total to **44 FLAIR stores**, which continue to outperform traditional stores[130](index=130&type=chunk) [BRAND PORTFOLIO](index=30&type=section&id=BRAND%20PORTFOLIO) This segment saw decreased net sales and operating earnings, with increased direct-to-consumer sales and expanded international presence Brand Portfolio Segment Performance ($ millions, except %) | Metric ($ millions, except %) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ millions) | Change (%) | | :---------------------------- | :------------------------------- | :------------------------------- | :------------------ | :--------- | | Net sales | $295.4 | $317.2 | ($21.8) | (6.9)% | | Gross profit | $129.3 | $147.8 | ($18.5) | (12.5)% | | Gross margin | 43.8% | 46.6% | (2.8 ppt) | | | Selling and administrative expenses | $111.9 | $106.4 | $5.5 | 5.2% | | Operating earnings | $17.4 | $41.4 | ($24.0) | (57.9)% | - Direct-to-consumer sales represented **35% of net sales** in Q1 2025, up from **33% in Q1 2024**[133](index=133&type=chunk) - The segment expanded its international presence, with **54 stores in East Asia** (up from 38) and **116 international franchise locations** (up from 103) as of May 3, 2025[133](index=133&type=chunk) - Unfilled wholesale order position increased by **2.6% to $263.6 million** as of May 3, 2025[134](index=134&type=chunk) - Selling and administrative expenses increased due to international business growth, higher provision for expected credit losses, and increased salary and benefits, partially offset by lower marketing[136](index=136&type=chunk) [ELIMINATIONS AND OTHER](index=31&type=section&id=ELIMINATIONS%20AND%20OTHER) This section details intersegment eliminations and other charges, including restructuring costs for the Stuart Weitzman acquisition Eliminations and Other ($ millions) | Metric ($ millions) | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | Change ($ millions) | Change (%) | | :------------------ | :------------------------------- | :------------------------------- | :------------------ | :--------- | | Net sales | ($8.9) | ($7.6) | ($1.3) | 17.1% | | Gross profit | $1.0 | $0.3 | $0.7 | 233.3% | | Selling and administrative expenses | $11.1 | $15.8 | ($4.7) | (29.7)% | | Restructuring and other special charges, net | $0.6 | — | $0.6 | N/A | | Operating loss | ($10.7) | ($15.5) | $4.8 | (31.0)% | - The net sales elimination increased by **$1.3 million**, or **17.0%**, reflecting higher intersegment product sales from Brand Portfolio to Famous Footwear[139](index=139&type=chunk) - Selling and administrative expenses decreased by **$4.7 million**, primarily due to lower expenses for cash and share-based incentive compensation[139](index=139&type=chunk) - Restructuring and other special charges of **$0.6 million** were incurred for legal and related costs of the Stuart Weitzman acquisition[140](index=140&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=31&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's cash flows, debt obligations, working capital, and ability to meet future financial requirements - Total debt obligations increased by **$67.5 million to $258.5 million** as of May 3, 2025, from **$191.0 million** a year prior[142](index=142&type=chunk) - The company used **$5.0 million** from its revolving credit facility for share repurchases in Q1 2025, compared to **$15.1 million** in Q1 2024[142](index=142&type=chunk)[146](index=146&type=chunk) - Net cash used for operating activities was **$5.7 million** in Q1 2025, a **$41.8 million decrease** from cash provided in Q1 2024, primarily due to lower net earnings, increased inventory, and decreased trade accounts payable[145](index=145&type=chunk)[148](index=148&type=chunk) - Net cash provided by financing activities was **$30.3 million** in Q1 2025, a **$46.7 million increase** from cash used in Q1 2024, mainly due to higher net borrowings under the revolving credit agreement[146](index=146&type=chunk) Financial Ratios ($ millions) | Metric ($ millions) | May 3, 2025 | May 4, 2024 | February 1, 2025 | | :------------------ | :---------- | :---------- | :--------------- | | Working capital | $76.1 | $41.0 | $78.6 | | Current ratio | 1.10:1 | 1.05:1 | 1.10:1 | | Debt-to-capital ratio | 29.7% | 24.9% | 26.6% | - The company declared and paid dividends of **$0.07 per share** in Q1 2025 and Q1 2024 and expects to continue paying dividends[150](index=150&type=chunk) - The company believes its operating cash flows are sufficient to meet material cash requirements for at least the next 12 months[151](index=151&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms no material changes to critical accounting policies and estimates since the last fiscal year - No material changes to critical accounting policies and estimates since the last fiscal year[152](index=152&type=chunk) [RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=33&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to Note 2 for detailed information regarding recently issued accounting pronouncements - Refer to Note 2 for details on recently issued accounting pronouncements[153](index=153&type=chunk) [FORWARD-LOOKING STATEMENTS](index=33&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights risks including trade policies, consumer demand shifts, inflation, and supply chain disruptions affecting future performance - Forward-looking statements are subject to risks such as changes in trade policies (tariffs), changing consumer demands, inflationary pressures, supply chain disruptions, and intense competition[154](index=154&type=chunk) - The company relies heavily on third-party manufacturing in China and other countries, making it vulnerable to political and economic conditions or disruptions in inventory flow[154](index=154&type=chunk) [ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=33&type=section&id=ITEM%203%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes have occurred in the quantitative and qualitative information about market risk since the end of the most recent fiscal year - No material changes in quantitative and qualitative information about market risk since the end of the most recent fiscal year[155](index=155&type=chunk) [ITEM 4 CONTROLS AND PROCEDURES](index=33&type=section&id=ITEM%204%20CONTROLS%20AND%20PROCEDURES) The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of May 3, 2025. There have been no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at the reasonable assurance level as of May 3, 2025[158](index=158&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter ended May 3, 2025[159](index=159&type=chunk) [PART II OTHER INFORMATION](index=34&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers other important information, including legal proceedings, risk factors, equity security sales, and disclosures [ITEM 1 LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course legal proceedings and litigation, which management believes will not have a material adverse effect on its financial position or results of operations. Legal costs are expensed as incurred - Management believes current legal proceedings and litigation will not materially adversely affect the company's financial position or results of operations[160](index=160&type=chunk) - Legal costs associated with litigation are expensed as incurred[160](index=160&type=chunk) [ITEM 1A RISK FACTORS](index=34&type=section&id=ITEM%201A%20RISK%20FACTORS) No material changes to risk factors have occurred since the last fiscal year, except for an update on the adverse impact of changes in U.S. and international trade policies, including tariffs. The uncertainty surrounding tariffs poses significant risks to costs, margins, and supply chain management - No material changes to risk factors since the last fiscal year, except for the impact of changes in U.S. and international trade policies, including tariffs[162](index=162&type=chunk) - Recent U.S. tariffs on imported products and potential retaliatory tariffs pose significant risks, potentially increasing costs, reducing margins, and creating supply chain challenges[163](index=163&type=chunk) - Tariffs may lead to higher product pricing, potentially shifting customers to private-label or lower-cost alternatives[163](index=163&type=chunk) [ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=35&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased 300,000 shares of common stock under its 2022 stock repurchase program during the first quarter of 2025 at an average price of $16.41 per share, with 3,366,055 shares remaining authorized for repurchase Stock Repurchase Program (Q1 2025) | Fiscal Period (Q1 2025) | Total Number of Shares Purchased | Average Price Paid per Share | Purchased as Part of Publicly Announced Program | Maximum Number of Shares Yet to be Purchased | | :---------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------- | :------------------------------------------- | | Total | 494,535 | $16.41 | 300,000 | 3,366,055 | - The 2022 stock repurchase program authorized the repurchase of **7,000,000 shares**, with **3,366,055 shares** remaining authorized as of May 3, 2025[167](index=167&type=chunk) [ITEM 3 DEFAULTS UPON SENIOR SECURITIES](index=35&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities - No defaults upon senior securities[168](index=168&type=chunk) [ITEM 4 MINE SAFETY DISCLOSURES](index=35&type=section&id=ITEM%204%20MINE%20SAFETY%20DISCLOSURES) Not applicable - Not applicable[169](index=169&type=chunk) [ITEM 5 OTHER INFORMATION](index=35&type=section&id=ITEM%205%20OTHER%20INFORMATION) No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the thirteen weeks ended May 3, 2025 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q1 2025[170](index=170&type=chunk) [ITEM 6 EXHIBITS](index=36&type=section&id=ITEM%206%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including the Sale and Purchase Agreement for Stuart Weitzman, corporate governance documents, and certifications - Key exhibits include the Sale and Purchase Agreement for Stuart Weitzman, Restated Certificate of Incorporation, Bylaws, and various certifications (CEO, CFO)[172](index=172&type=chunk) [SIGNATURE](index=37&type=section&id=SIGNATURE) The report was signed on June 10, 2025, by Jack P. Calandra, Senior Vice President and Chief Financial Officer of Caleres, Inc - The report was signed by Jack P. Calandra, Senior Vice President and Chief Financial Officer, on June 10, 2025[177](index=177&type=chunk)

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Caleres, Inc. and its officers or directors, following disappointing financial results and a significant stock price drop [1][2]. Financial Performance - Caleres reported first-quarter 2025 sales of $614.2 million, which is a 6.8% decline year-over-year, and acknowledged that this result was below expectations [2]. - The company suspended its guidance for 2025 due to uncertainty in the market environment [2]. - Following the announcement, Caleres's stock price fell by $3.00 per share, or 18.32%, closing at $13.38 per share on May 29, 2025 [2]. Legal Investigation - Pomerantz LLP is representing investors in investigating claims against Caleres for possible securities fraud [1]. - The firm has a long history in corporate and securities class litigation, having recovered significant damages for victims of securities fraud and corporate misconduct [3].