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CI

CALERES INC (CAL)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 (13 weeks ended May 3, 2025) came in below expectations: net sales $614.2M (-6.8% YoY) and adjusted diluted EPS $0.22; management suspended guidance amid tariff-driven sourcing disruption, higher inventory reserves, and bad-debt charges .
  • EPS missed Wall Street consensus by ~$0.15 and revenue missed by ~$7.8M, with explicit drivers including ~$1.9M gross margin impact from sourcing moves, ~$2.3M incremental markdown reserves, and ~$3.1M bad debt write-downs; SG&A deleveraged to 43.4% of sales .
  • Positive offsets: Famous Footwear comps improved sequentially (Feb weak; March/April better), DTC represented ~70% of sales, and international growth was strong; structural cost actions target $15M annualized SG&A savings ($7.5M in 2H 2025) .
  • Stock reaction catalyst: tariff volatility and guidance suspension increase uncertainty; near-term narrative hinges on tariff mitigation, sourcing migration out of China to ≤10% dollars in 2H 2025, back-to-school momentum (Jordan launch), and realized SG&A savings .

What Went Well and What Went Wrong

What Went Well

  • International and DTC traction: “improving momentum at retail and growth in our strategically important international business,” with DTC ~70% of sales .
  • Lead brands resilience: Sam Edelman domestic growth and double-digit international growth; Vionic walking category +100% YoY with new styles; Allen Edmonds new studio stores outperform by 300–400 bps .
  • Famous Footwear sequential improvement and brand slate: e-commerce +2.5%; early Jordan launch encouraging with rollout to all doors for back-to-school; kids penetration 21% with market share gains .

What Went Wrong

  • Tariff and sourcing disruption: paused China production after early April executive order; cancellation/relocation costs reduced gross margin by ~$1.9M .
  • Elevated inventory and reserves: inventory up 8.1% YoY; markdown reserves impacted profit by ~$2.3M; bad-debt write-downs ~+$3.1M .
  • Margin compression: consolidated gross margin down 150 bps YoY to 45.4%; BP gross margin down 280 bps; SG&A deleverage to 43.4% of sales .

Financial Results

Consolidated results and estimates comparison

MetricQ3 2025Q4 2025Q1 2026 (Actual)Q1 2026 (Consensus*)
Revenue ($USD Millions)$740.9 $639.2 $614.2 $622.1*
Diluted EPS ($)$1.19 $0.15 $0.21 $0.365*
Adjusted Diluted EPS ($)$1.23 $0.33 $0.22 —
Gross Margin %44.1% 43.0% 45.4% —
EBITDA Margin %9.6% 3.2% 4.6% —

Values retrieved from S&P Global.*

Segment breakdown (Q1 2026)

SegmentNet Sales ($USD Millions)Gross Margin %Operating Earnings ($USD Millions)Adjusted Operating Earnings ($USD Millions)Comparable Sales %Stores (End of Period)
Famous Footwear$327.7 45.3% $5.0 $5.0 -4.6% 835
Brand Portfolio$295.4 43.8% $17.4 $17.4 -1.2% 115
Eliminations & Other$(8.9) n/m $(10.8) $(10.2) ——
Consolidated$614.2 45.4% $11.6 $12.2 —950 total

KPIs (Q1 2026)

KPIQ3 2025Q4 2025Q1 2026
Direct-to-Consumer (% of sales)72% ~73% ~70%
Inventory ($USD Millions)$585.9 $565.2 $573.6
Inventory YoY Change+5% +4.5% vs 2023 +8.1% YoY
Borrowings (ABL) ($USD Millions)$238.5 $219.5 $258.5
Debt/EBITDA (TTM) (x)1.0 1.1 1.5
E-commerce Growth (Famous)——+2.5%
Kids Penetration (Famous)——21%
Share Repurchases (Q1)——300k shares @ $16.81 avg

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net Sales (FY)FY 2025Down 1% to Up 1% vs FY 2024 Guidance suspended Lowered/Suspended
GAAP EPS (FY)FY 2025$2.80–$3.20 Guidance suspended Lowered/Suspended
Q1 Net SalesQ1 2026Down 5%–6% Actual down 6.8% Slightly below guide
Q1 GAAP EPSQ1 2026$0.35–$0.40 Actual $0.21 Miss
SG&A SavingsFY 2025/Annualized—$15M annualized; $7.5M in 2H 2025 New program
DividendQuarterly$0.07/share (declared May 22, 2025) Continuing regular quarterly dividend Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2025)Previous Mentions (Q-1: Q4 2025)Current Period (Q1 2026)Trend
Tariffs/MacroChina weaker than planned; margin pressure expected Conservative FY 2025 view; mitigating newer tariffs Paused China production; sourcing costs hit GM (~$1.9M); broader reciprocal tariffs; expect ≤10% China sourcing dollars in 2H 2025 Heightened volatility; acceleration of China exit
Sourcing Strategy—75% BP sourcing outside China by 2H 2025 Further accelerate move out of China; manage new 10% global tariffs via concessions/mix/pricing Execution phase
Inventory DisciplineAnticipated pressure and actions to move excess inventory FY 2024 inventory +4.5% YoY Inventory +8.1% YoY; added markdown reserves (~$2.3M) Working down; expect better alignment by Q3
Cost ActionsExpense alignment in Q4 FY 2025 capex $50–$55M; cost focus Structural SG&A savings $15M annualized; $7.5M in 2H Scaling savings
Famous Footwear ProductLate receipts of key athletic in Q3 Softened in Q4 E-comm +2.5%; Jordan launched; comps improved in Mar/Apr Improving mix; back-to-school catalyst
Lead Brands PerformanceBP grew in Q3; market share gains Lead brands gaining share; sneaker penetration up Sam Edelman double-digit international; Vionic walking +100%; Allen Edmonds studio stores outperform Continued strength
GuidanceRevised lower in Q3 Set FY/Q1 2025 guidance Suspended guidance Uncertainty increased
International—Strategic focus and investments Double-digit international growth noted; DTC strength Positive momentum

Management Commentary

  • Jay Schmidt (CEO): “Operating earnings were pressured by lower gross margins, increased reserves, and costs to cancel and move inventory…we did experience improving momentum at retail and growth in our strategically important international business.”
  • Jay Schmidt (CEO): “We expect to decrease SG&A by $15 million on an annualized basis through structural expense cuts…we are confident in our ability to get back on track…”
  • Jack Calandra (CFO): “We paused all China production…now expect about 10% of our dollars sourced to come from China in the back half.”
  • Jay Schmidt (CEO): On Famous Footwear, “We launched Jordan in 147 stores in mid May…look forward to rolling the brand out to all stores for back to school.”

Q&A Highlights

  • Tariff impact and mitigation: Management outlined a three-pronged strategy (factory concessions, absorbing margin, select price increases) with lagged benefits; China exposure targeted to ~10% of dollars in 2H 2025 .
  • Inventory and reserves: Spring product reserves mostly taken; inventories expected elevated into Q2 end, normalizing by Q3 .
  • Famous Footwear back-to-school: Early Jordan results “encouraging,” full-door rollout mid-July; e-comm and traffic improving .
  • Structural SG&A savings: $15M annualized, starting in Q3, evenly split 3Q/4Q; external partner engaged to unlock further efficiencies into 2026 .
  • Wholesale fluidity: BP wholesale order book fluid with rebalancing sourcing mix and re-confirmations at higher prices; DTC up modestly .

Estimates Context

  • Q1 2026 vs consensus: Adjusted EPS $0.22 vs $0.365 consensus* (miss); revenue $614.2M vs $622.1M consensus* (miss). Primary EPS estimates count: 4; Revenue estimates count: 4*.
  • Forward consensus: Q2 2026 EPS $0.56* (actual $0.35), revenue $656.5M* (actual $658.5M); Q3 2026 EPS $0.85*, revenue $768.6M*; Q4 2026 EPS $0.27*, revenue $701.2M*; target price consensus ~$19* (2 estimates)*.
  • Adjustments likely: Street may reduce BP margin assumptions near term due to tariff lag and elevated markdowns; Famous comps improving into back-to-school support top-line stabilization, but vendor price increases may temper demand elasticity .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term earnings risk elevated: tariff volatility, sourcing migration costs, and lingering inventory clean-up weighed on Q1; guidance suspension underscores uncertainty .
  • Cost savings provide floor: $15M annualized SG&A cuts begin in Q3, with potential additional structural efficiencies into 2026 .
  • Category/brand momentum: Jordan launch, kids strength (21% mix), and athletic brand lineup should support Famous Footwear into back-to-school; lead brands remain growth/margin anchors .
  • Sourcing strategy pivot: accelerated move out of China (≤10% dollars 2H 2025) reduces medium-term tariff exposure but creates short-term margin friction .
  • Balance sheet watch: ABL borrowings rose to $258.5M; Debt/EBITDA moved to ~1.5x; inventory +8.1%—monitor normalization trajectory by Q3 .
  • Estimate risk: EPS/GM below plan in Q1 suggests cautious assumptions for BP margins in 2H; modest sales recovery evident in Q2 commentary but profit conversion lagging .
  • Trading lens: Stock likely sensitive to tariff headlines and back-to-school comp cadence; upside catalysts include visible SG&A savings realization, BP margin stabilization, and sustained Famous Footwear brand momentum .

Cross-References and Notes

  • Q1 2026 press release/8-K captured core results, segment detail, and non-GAAP reconciliations .
  • Prior quarter baselines: Q4 2025 and Q3 2025 press releases support trend analysis and prior guidance context .
  • Dividend confirmed at $0.07 per share (June 20, 2025 payment) .
  • Non-GAAP adjustments: Q1 adjusted EPS excludes $0.01 related to Stuart Weitzman acquisition/integration costs .