Caleres Q3 profit plunges on margin pressure

Core Insights - Caleres completed the acquisition of Stuart Weitzman for $120.2 million in August 2023, which is expected to impact future earnings significantly [1][6] - The footwear brand reported net sales of $790.1 million for the 13 weeks ending November 1, 2025, marking a 6.6% increase from $740.9 million in the same period last year [1] - Direct-to-consumer sales represented approximately 71% of total net sales in the reported quarter [1] Financial Performance - Gross profit for Caleres increased to $329.9 million in Q3, up from $326.9 million in the prior year, but gross margin decreased by 230 basis points to 41.8% [2] - SG&A expenses rose to $311.3 million, accounting for 39.4% of net sales, an increase of 310 basis points from the previous year, largely due to costs associated with Stuart Weitzman [3] - GAAP net earnings fell sharply to $2.4 million, or $0.07 per diluted share, compared to $41.4 million, or $1.19 per diluted share, in the prior-year period [4] Inventory and Outlook - Inventory at the end of the quarter was $678.2 million, an increase of $92 million year-over-year, with Stuart Weitzman contributing $77 million to this total [5] - For the remainder of fiscal 2025, the company anticipates ongoing tariff headwinds affecting gross margin and expects GAAP loss per diluted share between $0.13 and $0.18, with adjusted earnings per diluted share between $0.55 and $0.60, factoring in dilution from Stuart Weitzman [6] - The company plans to transition the Stuart Weitzman business to its systems and address aged inventory, aiming for long-term growth and profitability starting in fiscal 2026 [7]