CALERES Earnings Plunge 96% Amid Rising Costs, Stuart Weitzman Buy

TL;DR

**CALERES's earnings are in the toilet, and while the Stuart Weitzman acquisition is a bold move, the rising debt and costs make this a risky bet for now.**

AI Summary

CALERES INC reported a significant decline in net earnings for the thirteen weeks ended November 1, 2025, plummeting to $1.4 million from $41.1 million in the prior year, a decrease of 96.5%. For the thirty-nine weeks, net earnings fell to $14.4 million from $102.2 million, an 85.9% drop. This substantial decline occurred despite a 6.6% increase in net sales for the thirteen-week period, reaching $790.1 million, though thirty-nine-week net sales decreased by 1.0% to $2.06 billion. The company's gross profit for the thirteen weeks increased slightly to $329.9 million from $327.0 million, but for the thirty-nine weeks, it decreased to $894.4 million from $946.9 million. A major factor impacting profitability was a sharp rise in selling and administrative expenses, which increased by 15.9% to $311.3 million for the thirteen weeks and by 5.5% to $847.5 million for the thirty-nine weeks. Restructuring and other special charges also surged to $6.7 million for the thirteen weeks, up from $1.6 million. The company completed the acquisition of the Stuart Weitzman business for $108.9 million on August 4, 2025, funded by revolving credit, aiming to strengthen its luxury footwear portfolio. Total assets increased to $2.08 billion from $1.95 billion year-over-year, driven by higher inventories and the acquisition. Borrowings under the revolving credit agreement significantly increased to $355.0 million from $238.5 million. The company is also selling its corporate headquarters campus in Clayton, Missouri, with components classified as property and equipment held for sale at $16.8 million.

Why It Matters

This filing reveals a challenging period for CALERES, with a dramatic drop in net earnings despite a quarterly sales increase, largely due to escalating selling and administrative expenses and restructuring charges. The acquisition of Stuart Weitzman, a luxury brand, represents a strategic pivot to enhance its portfolio and global market position, but its integration and profitability will be critical for future performance. Investors should scrutinize whether the Stuart Weitzman acquisition can offset the current profitability pressures and justify increased debt. Employees may face uncertainty given the restructuring charges and the sale of the corporate campus. Customers could see shifts in brand focus and product offerings as CALERES integrates Stuart Weitzman into its Brand Portfolio segment, potentially intensifying competition in the luxury footwear market.

Risk Assessment

Risk Level: high — The risk level is high due to a 96.5% decline in net earnings for the thirteen weeks ended November 1, 2025, from $41.1 million to $1.4 million, and an 85.9% drop for the thirty-nine weeks, from $102.2 million to $14.4 million. This significant profitability erosion is coupled with a substantial increase in borrowings under the revolving credit agreement, rising to $355.0 million from $238.5 million year-over-year, indicating increased financial leverage.

Analyst Insight

Investors should exercise caution and closely monitor CALERES's integration of Stuart Weitzman and its ability to control escalating operating expenses. Await clearer signs of profitability improvement and debt reduction before considering new positions, as current trends suggest significant headwinds.

Financial Highlights

revenue

$2.06B

operating Margin

1.6%

total Assets

$2.08B

total Debt

$355.0M

net Income

$14.4M

gross Margin

43.4%

cash Position

$33.96M

revenue Growth

-1.0%

Key Numbers

• $1.4M — Net earnings for thirteen weeks ended Nov 1, 2025 (Decreased 96.5% from $41.1 million year-over-year)
• $14.4M — Net earnings for thirty-nine weeks ended Nov 1, 2025 (Decreased 85.9% from $102.2 million year-over-year)
• $790.1M — Net sales for thirteen weeks ended Nov 1, 2025 (Increased 6.6% from $740.9 million year-over-year)
• $2.06B — Net sales for thirty-nine weeks ended Nov 1, 2025 (Decreased 1.0% from $2.08 billion year-over-year)
• $311.3M — Selling and administrative expenses for thirteen weeks ended Nov 1, 2025 (Increased 15.9% from $268.7 million year-over-year)
• $6.7M — Restructuring and other special charges for thirteen weeks ended Nov 1, 2025 (Increased from $1.6 million year-over-year)
• $108.9M — Purchase price for Stuart Weitzman acquisition (Completed on August 4, 2025, funded by revolving credit)
• $355.0M — Borrowings under revolving credit agreement as of Nov 1, 2025 (Increased from $238.5 million as of Nov 2, 2024)
• $678.2M — Inventories, net as of Nov 1, 2025 (Increased from $585.9 million as of Nov 2, 2024)
• $16.8M — Property and equipment, held for sale as of Nov 1, 2025 (Represents corporate headquarters campus)

Key Players & Entities

• CALERES INC (company) — registrant
• Stuart Weitzman (company) — acquired business
• Tapestry, Inc. (company) — seller of Stuart Weitzman
• Brand Investment Holding Limited (company) — joint venture partner
• Gemkell Group (company) — parent group of Brand Investment Holding
• CLT Brand Solutions (company) — joint venture
• New York Stock Exchange (regulator) — exchange where common stock is registered
• Financial Accounting Standards Board (regulator) — issuer of accounting standards
• SEC (regulator) — Securities and Exchange Commission
• Clayton, Missouri (person) — location of corporate headquarters campus for sale

FAQ

Risk Factors

• Increased Debt Burden [high — financial]: Borrowings under the revolving credit agreement significantly increased to $355.0 million as of November 1, 2025, up from $238.5 million in the prior year. This increase was partly to fund the $108.9 million acquisition of Stuart Weitzman, indicating a reliance on debt financing which could increase financial risk.
• Rising Selling and Administrative Expenses [high — operational]: Selling and administrative expenses surged by 15.9% to $311.3 million for the thirteen weeks ended November 1, 2025, and by 5.5% to $847.5 million for the thirty-nine weeks. This significant increase outpaced net sales growth in the thirteen-week period and contributed to the sharp decline in net earnings.
• Inventory Management Challenges [medium — operational]: Inventories, net increased to $678.2 million as of November 1, 2025, from $585.9 million in the prior year. While some of this increase may be attributed to the Stuart Weitzman acquisition, a substantial rise in inventory can signal potential issues with sales velocity or obsolescence.
• Increased Restructuring Charges [medium — operational]: Restructuring and other special charges rose sharply to $6.7 million for the thirteen weeks ended November 1, 2025, from $1.6 million in the prior year. This indicates ongoing or new initiatives that are impacting profitability and operational efficiency.
• Declining Thirty-Nine Week Sales [medium — market]: Despite a 6.6% increase in net sales for the thirteen weeks ended November 1, 2025, net sales for the thirty-nine weeks decreased by 1.0% to $2.06 billion. This suggests a potential slowdown in overall demand or market challenges impacting longer-term sales performance.
• Significant Net Earnings Decline [high — financial]: Net earnings plummeted by 96.5% to $1.4 million for the thirteen weeks ended November 1, 2025, and by 85.9% for the thirty-nine weeks to $14.4 million. This dramatic drop, despite increased short-term sales, highlights severe profitability issues.

Industry Context

Caleres operates in the highly competitive footwear retail industry, facing challenges from both traditional brick-and-mortar retailers and e-commerce giants. The industry is characterized by shifting consumer preferences, the need for agile inventory management, and increasing pressure on margins due to promotional activity and rising costs. The acquisition of Stuart Weitzman signals a strategic move to bolster its presence in the higher-margin luxury segment.

Regulatory Implications

The company must comply with various financial reporting regulations, including GAAP. Increased debt levels and significant operating expense growth could attract scrutiny from lenders and investors regarding financial health and operational efficiency. Any misstatement or failure to comply with reporting standards could lead to penalties.

What Investors Should Do

1. [object Object]
2. [object Object]
3. [object Object]
4. [object Object]

Key Dates

• 2025-11-01: End of thirteen and thirty-nine week periods — Reporting period for the significant decline in net earnings and increase in selling and administrative expenses.
• 2025-08-04: Acquisition of Stuart Weitzman — Acquisition funded by revolving credit, contributing to increased debt and assets, aimed at strengthening luxury portfolio.
• 2024-11-02: Prior year reporting date — Benchmark for year-over-year comparisons, showing a substantial decrease in net earnings and increase in borrowings.

Glossary

Restructuring and other special charges, net

Costs incurred due to significant organizational changes, such as layoffs, facility closures, or integration of acquired businesses, net of any gains or losses from related asset disposals. (These charges increased significantly to $6.7 million for the thirteen weeks, impacting profitability.)

Lease right-of-use assets

Assets recognized under accounting standards for leases, representing the right to use an underlying asset for the lease term. (These assets, along with lease obligations, are a significant component of the balance sheet, reflecting the company's store footprint.)

Goodwill and intangible assets, net

Represents the excess of the purchase price of an acquired company over the fair value of its identifiable net assets, and other identifiable intangible assets like brand names. (These assets increased to $203.1 million, likely due to the Stuart Weitzman acquisition.)

Accumulated other comprehensive loss

A component of shareholders' equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension adjustments that have not yet been realized. (This account shows a loss of $26.7 million, indicating potential unrealized impacts on equity.)

Noncontrolling interests

Represents the portion of equity in a subsidiary that is not attributable to the parent company. (This indicates Caleres has subsidiaries where other parties hold an ownership stake.)

Year-Over-Year Comparison

Compared to the prior year's filing, Caleres Inc. has experienced a dramatic deterioration in profitability, with net earnings falling by over 90% for both the thirteen and thirty-nine-week periods. This occurred despite a modest increase in net sales for the thirteen-week period, highlighting a significant increase in operating expenses, particularly selling and administrative costs, and higher restructuring charges. Total assets have grown, driven by inventory increases and the Stuart Weitzman acquisition, which also led to a substantial rise in borrowings under the revolving credit agreement, increasing financial leverage.

Key Financial Figures

• $0.01 — egistered Common Stock - par value of $0.01 per share CAL New York Stock Exchan

Filing Documents

• cal-20251101x10q.htm (10-Q) — 3505KB
• cal-20251101xex3d2.htm (EX-3.2) — 122KB
• cal-20251101xex31d1.htm (EX-31.1) — 11KB
• cal-20251101xex31d2.htm (EX-31.2) — 11KB
• cal-20251101xex32d1.htm (EX-32.1) — 7KB
• 0000014707-25-000086.txt ( ) — 14264KB
• cal-20251101.xsd (EX-101.SCH) — 61KB
• cal-20251101_cal.xml (EX-101.CAL) — 84KB
• cal-20251101_def.xml (EX-101.DEF) — 254KB
• cal-20251101_lab.xml (EX-101.LAB) — 558KB
• cal-20251101_pre.xml (EX-101.PRE) — 403KB
• cal-20251101x10q_htm.xml (XML) — 3524KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Earnings 4 Condensed Consolidated Statements of Comprehensive Income 5 Condensed Consolidated Statements of Cash Flows 6 Condensed Consolidated Statements of Shareholders' Equity 7 Notes to Condensed Consolidated Financial Statements 8 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4

Controls and Procedures

Controls and Procedures 41 PART II 42 Item 1

Legal Proceedings

Legal Proceedings 42 Item 1A

Risk Factors

Risk Factors 42 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 43 Item 3 Defaults Upon Senior Securities 43 Item 4 Mine Safety Disclosures 43 Item 5 Other Information 43 Item 6 Exhibits 45 Signature 46 2 Table of Contents

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1 FINANCIAL STATEMENTS CALERES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ($ thousands) November 1, 2025 November 2, 2024 February 1, 2025 Assets Current assets: Cash and cash equivalents $ 33,963 $ 33,685 $ 29,636 Receivables, net 180,842 176,080 155,905 Inventories, net 678,214 585,877 565,241 Income taxes 8,053 6,404 13,668 Property and equipment, held for sale 16,777 16,777 16,777 Prepaid expenses and other current assets 63,161 51,484 55,282 Total current assets 981,010 870,307 836,509 Prepaid pension costs 81,455 78,799 78,463 Lease right-of-use assets 573,318 589,141 564,330 Property and equipment, net 191,071 176,428 175,213 Deferred income taxes 5,149 4,176 4,826 Goodwill and intangible assets, net 203,155 195,033 192,274 Other assets 43,764 42,055 43,139 Total assets $ 2,078,922 $ 1,955,939 $ 1,894,754 Liabilities and Equity Current liabilities: Borrowings under revolving credit agreement $ 355,000 $ 238,500 $ 219,500 Trade accounts payable 214,651 258,258 237,038 Income taxes 14,923 18,054 6,425 Lease obligations 126,132 117,523 127,522 Other accrued expenses 213,564 174,095 167,448 Total current liabilities 924,270 806,430 757,933 Other liabilities: Noncurrent lease obligations 479,971 506,336 479,524 Income taxes — 2,464 2,464 Deferred income taxes 32,763 12,683 31,772 Other liabilities 16,588 21,720 17,112 Total other liabilities 529,322 543,203 530,872 Equity: Common stock 339 336 336 Additional paid-in capital 196,784 186,924 190,320 Accumulated other comprehensive loss ( 26,652 ) ( 28,779 ) ( 34,022 ) Retained earnings 446,280 439,803 442,390 Total Caleres, Inc. shareholders' equity 616,751 598,284 599,024 Noncontrolling interests 8,579 8,022 6,925 Total equity 625,330 606,306 605,949 T