Caleres(CAL) - 2026 Q1 - Earnings Call Transcript

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]