Caleres Q2 Earnings Miss Estimates, Sales Decline 3.6% Y/Y

Core Insights - Caleres, Inc. reported second-quarter fiscal 2025 results with net sales of $658.5 million, a 3.6% year-over-year decline, but exceeding the Zacks Consensus Estimate of $651 million. Adjusted earnings per share were 35 cents, missing the estimate of 51 cents and down from 85 cents in the same quarter last year [1][3][11] Financial Performance - Gross profit decreased 8.1% year over year to $285.8 million, with gross margin contracting 210 basis points to 43.4%, attributed to tariff-related expenses, selective promotions, and increased markdown provisions [4][11] - SG&A expenses rose 0.5% year over year to $269.7 million, increasing as a percentage of net sales by 170 basis points to 41% due to sales deleverage. Adjusted EBITDA fell 44% to $32.1 million, with the adjusted EBITDA margin decreasing 350 basis points to 4.9% [5][11] Segment Performance - The Famous Footwear segment's net sales declined 4.9% to $399.6 million, surpassing the consensus estimate of $395 million, with comparable sales down 3.4%. The segment gained market share in shoe chains and the kids' category [6][8] - The Brand Portfolio's sales decreased 3.5% to $275.6 million, exceeding the consensus estimate of $271 million, with comparable sales up 3.9%. The segment gained market share in women's fashion footwear [8][11] Strategic Initiatives - The company completed $15 million in structural cost savings initiatives and finalized the acquisition of Stuart Weitzman, enhancing its premium, direct-to-consumer, and international focus [2][12] - Direct-to-consumer sales accounted for approximately 75% of overall quarterly sales [9] Financial Health - Caleres ended the quarter with $191.5 million in cash and cash equivalents and $387.5 million in borrowings under its revolving credit agreement. Total shareholders' equity was $621.9 million [12] Outlook - The company will continue to withhold annual guidance amid ongoing uncertainty, with gross margin pressure in the Brand Portfolio expected to persist through year-end. For the third quarter, a similar decline in Brand Portfolio gross margin (excluding Stuart Weitzman) is anticipated, with improvements expected in the fourth quarter [13]