CAL — Caleres, Inc.

Summary of Caleres Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Sales: $667 million, up 8.5% year-over-year; organic sales (excluding Stuart Weitzman) increased 1.4%.
• Brand Portfolio: Sales rose 5.8% organically and 20.6% including Stuart Weitzman.
• Famous Footwear: Sales decreased 2.5%, with comparable sales down 2.3%.
• Gross Margin: Consolidated gross margin at 47.3%, up 200 basis points; Brand Portfolio gross margin at 49%, up 520 basis points; Famous Footwear gross margin at 43.8%, down 150 basis points.
• Operating Earnings: $21.7 million with an operating margin of 3.3%.
• Earnings per Share: $0.38, compared to $0.22 in the prior year.
• Inventory: $609.1 million, up $35 million year-over-year, with organic inventory down $23 million.

2. Strategic Updates and Business Highlights

• Brand Portfolio Growth: Strong performance across lead brands, particularly Sam Edelman and Allen Edmonds, with significant market share gains in women's fashion footwear.
• Famous Footwear Initiatives: E-commerce sales increased nearly 10%, with a focus on elevating brand offerings and enhancing the shopping experience through FLAIR store formats.
• Stuart Weitzman Integration: Progress towards breakeven expected in fiscal 2026, with successful integration into Caleres' platforms and improved inventory management.
• New Centers of Expertise: Established to drive efficiency in international operations, specialty retail, digital marketing, and inventory management.

3. Forward Guidance and Outlook

• Q2 2026 Expectations: Consolidated sales expected to increase mid- to high-single digits; Brand Portfolio projected to grow mid-20s percent, while Famous Footwear sales anticipated to decline mid-single digits.
• Full Year 2026 Outlook: Consolidated sales expected to rise low to mid-single digits; Brand Portfolio sales projected to increase low double digits, while Famous Footwear sales are expected to decline low to mid-single digits.
• Gross Margin Guidance: Anticipated improvement of 220 to 260 basis points for the full year, driven by Brand Portfolio strength and tariff mitigation strategies.

4. Bad News, Challenges, or Points of Concern

• Famous Footwear Performance: Declining sales and comparable sales, particularly in March and April, attributed to a softer consumer environment and inflationary pressures.
• Tariff Uncertainty: Potential new tariffs expected in July 2026 could impact sourcing strategies and costs, with no guarantee on the recovery of previously paid tariffs.
• Increased SG&A Expenses: Up 10.2% year-over-year, primarily due to Stuart Weitzman-related costs, leading to a slight deleverage in SG&A as a percentage of sales.

5. Notable Q&A Insights

• Market Trends: Shift from sneakers to fashion footwear noted, with positive growth in dress and casual categories.
• Famous Footwear Strategy: Focus on brand elevation and targeted activations is expected to enhance sales, particularly during key shopping periods like back-to-school.
• Tariff and Freight Costs: Rising energy prices impacting freight costs are being monitored, with strategies in place to mitigate these effects.
• Management's Confidence: Despite challenges, management expressed optimism about the Brand Portfolio's momentum and the effectiveness of their strategic initiatives.

This summary encapsulates the key takeaways from Caleres' Q1 2026 earnings call, highlighting both the positive developments and the challenges faced by the company.