Core Viewpoint - Pomerantz LLP is investigating potential securities fraud and unlawful business practices involving Caleres, Inc. and its officers or directors, following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - Caleres reported first-quarter 2025 sales of $614.2 million, marking a 6.8% decline year-over-year, which was acknowledged by the CFO as below expectations [3]. - The company suspended its guidance for 2025 due to uncertainty in the market environment [3]. - Following the financial report, Caleres's stock price decreased by $3.00 per share, or 18.32%, closing at $13.38 per share on May 29, 2025 [3]. Legal Investigation - Pomerantz LLP is actively investigating claims on behalf of investors regarding potential securities fraud by Caleres [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 [4].

Group 1 - Sales declined across both Brand Portfolio and Famous Footwear, indicating a potential downturn in consumer demand [1] - Inventories increased significantly, particularly within the brand segment, which may suggest overstocking or reduced sales velocity [1] - Bad debt expenses and customer-related issues were highlighted, indicating potential challenges in credit management and customer payment behaviors [1]

Group 1 - Caleres, Inc. announced its intention to acquire Stuart Weitzman in February, which generated surprise and interest in the deal [1] - The investing group "Value In Corporate Events" focuses on providing members with opportunities related to IPOs, mergers & acquisitions, earnings reports, and corporate capital allocation changes [2] - The group covers approximately 10 major events each month, aiming to identify the best investment opportunities [2]

Financial Performance - Caleres' sales were $614 million, a decrease of 6.8% compared to Q1 2024[6,8] - Gross margin was 45.4%, down 150 bps versus Q1 2024[8] - Adjusted EPS was $0.22[6,8] - Inventory was up 8.1% compared to Q1 2024[8] - Total debt was $295 million[8] - Adjusted EBITDA for the trailing twelve months was $188 million, compared to $259 million in the prior year[8] Segment Performance - Famous Footwear sales were $328 million, down 6.3% year-over-year, with comparable sales down 4.6%[12] - Brand Portfolio sales were $295 million, down 6.9% versus Q1 2024[9] - Famous Footwear gross margin was 45.3%, down 80 bps year-over-year[13] - Brand Portfolio gross margin was 43.8%, down 280 bps versus Q1 2024[9] Additional Financial Data - Net earnings attributable to Caleres Inc was $6943 thousand[19] - Adjusted net earnings attributable to Caleres Inc was $7409 thousand[19]

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q1 2025 were $0.22, down from $0.88 in the previous year [29] - Total sales for Q1 2025 were $614.2 million, a decline of 6.8% year over year, which was below expectations of a 5% to 6% decline [26][27] - Consolidated gross margin decreased to 45.4%, down 150 basis points compared to last year [27] - Operating earnings were $12.2 million, resulting in an operating margin of 2% [28] Business Segment Data and Key Metrics Changes - Brand Portfolio sales declined by 6.9%, with gross margin at 43.8%, down 280 basis points due to lower initial margins and higher markdown reserves [27][28] - Famous Footwear sales decreased by 6.3%, with comparable sales down 4.6%, but e-commerce sales increased by 2.5% [20][21] - The Brand Portfolio's lead brands, including Sam Edelman and Allen Edmonds, represented about 60% of sales and 80% of operating earnings [12] Market Data and Key Metrics Changes - The Brand Portfolio gained market share in women's fashion footwear despite overall sales declines [11] - Famous Footwear gained 0.5 points of market share in shoe chains within the kids category [21] Company Strategy and Development Direction - The company plans to reduce SG&A expenses by $15 million annually through structural cuts [7][34] - An acquisition of Stuart Weitzman is expected to enhance the company's premium positioning and direct-to-consumer presence [19] - The company is focusing on optimizing sourcing strategies and managing inventory levels in response to tariff impacts [9][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment and emphasized the need to drive growth and profitability [6][7] - There is cautious optimism regarding back-to-school preparations, with no major cancellations reported [40] - The company is suspending guidance due to the volatile environment but is seeing improving retail trends [33][34] Other Important Information - Inventory levels increased by 8.1% year over year, with a significant portion attributed to the upcoming launch of the Jordan brand [30] - Cash flow from operations was negative $5.7 million due to lower net income and higher inventory levels [30] Q&A Session Summary Question: How are you thinking about the prices of your portfolio brands moving into the summer and fall? - The company is making selective price increases, starting with fall receipts, and is managing this in real-time with key partners [38][39] Question: What adjustments are being made for the $15 million in strategic expense cutting? - The reductions are permanent and structural, expected to begin in the third quarter, with $7.5 million in savings for the back half of the year [43][44] Question: How is the Jordan launch performing? - Early trends for the Jordan launch are encouraging, with strong sell-throughs in men's and boys' categories [56][57] Question: What is the impact of tariffs on the business? - The company is managing tariff-related challenges through factory concessions and selective price increases, but the situation remains fluid [32][60] Question: How should we think about inventory reserves and customer credit issues moving forward? - The company believes it has adequately reserved for spring product markdowns and is closely monitoring customer credit ratings [62][63]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $0.22, with first quarter sales declining 6.8% year over year [8][26] - Consolidated gross margin was 45.4%, down 150 basis points compared to last year, driven by lower margins in both segments [26] - Operating earnings were $12.2 million, with an operating margin of 2% [28] Business Segment Data and Key Metrics Changes - Brand Portfolio sales declined 6.9%, while Famous Footwear sales were down 6.3% with comparable sales down 4.6% [20][26] - The Brand Portfolio gross margin was 43.8%, down 280 basis points due to lower initial margins and higher markdown reserves [26] - Famous gross margin was 45.3%, down 80 basis points due to increased promotional days and higher freight costs [26] Market Data and Key Metrics Changes - The company gained market share in women's fashion footwear despite overall sales declines [11] - Famous Footwear saw a 0.5 point market share gain in the kids category, with kids penetration at 21% [21] Company Strategy and Development Direction - The company is focused on controlling costs, optimizing sourcing strategies, and reducing SG&A expenses by $15 million annually [7][34] - The planned acquisition of Stuart Weitzman is seen as a strategic fit, enhancing the company's premium positioning and direct-to-consumer presence [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment and emphasized the need to drive growth and profitability [6][7] - The company is cautiously optimistic about back-to-school sales and believes it is well-positioned to gain market share [24][40] Other Important Information - Inventory levels increased by 8.1% year over year, with a significant build for the Jordan brand launch [30] - Cash flow from operations was negative $5.7 million due to lower net income and higher inventory levels [30] Q&A Session Summary Question: How are you thinking about the prices of your portfolio brands moving into the summer and fall? - The company is making selective price increases and managing them in real-time with key partners [38][39] Question: Do you see the weaker brand portfolio brands being restructured or exited? - The company is reviewing its brand portfolio but has no immediate plans for restructuring [40] Question: Is Famous Footwear prepared for back-to-school? - The company is in a good position for back-to-school with no major cancellations reported [41] Question: What adjustments are being made for the $15 million in strategic expense cuts? - The reductions are permanent and structural, expected to begin in the third quarter [43][44] Question: Can you provide more context on the Jordan launch? - The Jordan launch is new, and while initial trends are encouraging, significant marketing will ramp up closer to back-to-school [46][57] Question: How are tariffs impacting your plans? - The company is currently maintaining its sourcing strategy and will adjust as necessary based on tariff developments [48][49] Question: How should we think about inventory reserves and customer credit issues moving forward? - The company believes it has adequately reserved for inventory markdowns and is closely monitoring customer credit ratings [62]

Core Insights - Caleres Inc. reported quarterly earnings of $0.22 per share, missing the Zacks Consensus Estimate of $0.37 per share, and down from $0.88 per share a year ago, representing an earnings surprise of -40.54% [1] - The company posted revenues of $614.22 million for the quarter, missing the Zacks Consensus Estimate by 1.09%, and down from $659.2 million year-over-year [2] - Caleres Inc. shares have declined approximately 29.3% year-to-date, contrasting with the S&P 500's gain of 0.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.82 on revenues of $675.67 million, and for the current fiscal year, it is $2.80 on revenues of $2.69 billion [7] - The estimate revisions trend for Caleres Inc. is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Shoes and Retail Apparel industry, to which Caleres belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, suggesting a challenging environment [8] - Another company in the same industry, Nike, is expected to report a significant decline in earnings, with a projected EPS of $0.11, down 89.1% year-over-year, and revenues expected to decrease by 15.4% from the previous year [9]

Financial Performance - Reported sales for Q1 2025 were $614.2 million, down 6.8% year-on-year, and below expectations [3] - Famous Footwear sales decreased by 6.3%, with comparable sales down 4.6% compared to Q1 2024 [4] - Net earnings were $6.9 million, or $0.21 per diluted share, compared to $30.9 million, or $0.88 per diluted share in Q1 2024 [4] - The total net sales for the consolidated segment decreased to $614,221,000 in Q1 2025 from $659,198,000 in Q1 2024, reflecting a decline of approximately 6.8% [18] - For the thirteen weeks ended May 3, 2025, Caleres, Inc. reported net earnings of $6,943,000, a decrease from $30,939,000 for the same period in 2024, resulting in a diluted earnings per share of $0.21 compared to $0.88 [21] - Gross profit was $278.7 million, with a gross margin of 45.4%, down 150 basis points from the previous year [4] - Gross profit for the consolidated segment was $278,694,000, down from $309,095,000 in the prior year, leading to a gross margin of 45.4%, down from 46.9% [18] - Operating earnings for the consolidated segment were $11,584,000, significantly lower than $42,758,000 in the same quarter of 2024, resulting in an operating margin of 1.9% compared to 6.5% [18] - For the thirteen weeks ended May 3, 2025, Caleres, Inc. reported EBITDA of $28,051,000, down from $57,381,000 for the same period in 2024, reflecting a decrease in EBITDA margin from 8.7% to 4.6% [23] - Adjusted net earnings attributable to Caleres, Inc. for the thirteen weeks ended May 3, 2025, were $7,409,000, compared to $30,939,000 in the same period of 2024, with an adjusted diluted earnings per share of $0.22 [22] Expenses and Cost Management - SG&A expenses as a percentage of net sales increased to 43.4%, up 300 basis points year-on-year [4] - The company announced structural cost-cutting actions to reduce SG&A by $15 million on an annualized basis [3] - The company implemented expense reduction initiatives that resulted in a positive impact of $6,103,000 on earnings [19] - The adjusted operating earnings for the Famous Footwear segment were $12,211,000, down from $42,758,000 in the prior year [19] Debt and Borrowings - Borrowings under the asset-based revolving credit facility were $258.5 million, up $67.5 million from Q1 2024 [11] - Caleres, Inc. reported borrowings under the revolving credit agreement of $258,500,000, an increase from $191,000,000 in the previous year [23] - The debt/EBITDA leverage ratio increased to 1.5 from 0.8 year-over-year, indicating a higher level of debt relative to earnings [23] Inventory and Store Operations - Inventory increased by 8.1% compared to Q1 2024 [11] - The company ended the period with 950 company-operated stores, a slight decrease from 954 stores in the previous year [18] Market Outlook - The company has suspended guidance due to market uncertainty [6] - Total charges related to acquisition and integration costs for the Stuart Weitzman brand amounted to $627,000 for the quarter [19] Trailing Twelve Months Performance - For the trailing twelve months ended May 3, 2025, net earnings attributable to Caleres, Inc. were $83,259,000, a decrease from $167,603,000 in the previous year [23] - The trailing twelve months EBITDA was reported at $177,371,000, with a margin of 6.6%, down from $247,157,000 and 8.8% respectively [23] - The adjusted EBITDA for the trailing twelve months was $187,882,000, with an adjusted EBITDA margin of 7.0%, compared to $253,260,000 and 9.0% in the prior year [23]

Core Insights - Coveo's AI-Relevance platform is being utilized by leading brands such as Caleres, FleetPride, and Freedom Furniture to enhance online experiences, increase conversions, and create new growth opportunities [1][3][4] Company Summaries Caleres - Caleres is a multi-billion dollar shoe retailer with a history of over 140 years, known for brands like Famous Footwear and Dr. Scholls [5] - The company faced challenges with its search and discovery technology due to a complex catalog of over 600,000 SKUs, leading to inefficiencies in data access and manual processes [6] FleetPride - FleetPride is North America's largest distributor of truck and trailer parts, with over 4,000 experts across more than 300 locations [7] - The company struggled with its digital presence, particularly in providing customers with accurate part information, which was compounded by a siloed inventory system [8] Freedom Furniture - Freedom Furniture is a well-established brand in Australia and New Zealand, known for stylish home furnishings and a strong retail presence [9] - The company is undergoing a digital transformation by revamping its ecommerce platform and adopting AI-driven search to enhance customer experiences [10] Performance Metrics - Coveo's implementation has led to a 21% year-over-year increase in revenue and a 25% increase in conversion rates for its clients [11] - FleetPride reported a 7% increase in revenue per visit and a 9.6% increase in conversion rates [12] - Freedom Furniture achieved a 5.5% uplift in average order value and a 50% decrease in merchandising effort [13]

Group 1 - Eni (E) is a leading integrated energy player with a Zacks Consensus Estimate for current year earnings revised down by 15.2% over the last 60 days [1] - Caleres (CAL) is a footwear retailer and wholesaler, with its Zacks Consensus Estimate for current year earnings revised down by 13.2% over the last 60 days [1] - CPI Card Group (PMTS) specializes in financial card production and related services, with a Zacks Consensus Estimate for current year earnings revised down by 5.7% over the last 60 days [2]