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Friday saw KeyBanc Capital Markets maintain a Sector Weight rating on Caleres (NYSE: NYSE:CAL) stock, which has seen its shares decline over 56% in the past six months to $13.38. The firm’s analyst, Ashley Owens, noted that Caleres faced a challenging first quarter with results falling short of the company’s most recent guidance. According to InvestingPro analysis, the stock appears undervalued at current levels, trading at a P/E ratio of just 6.8x. The footwear retailer also made the decision to withdraw its financial guidance for fiscal year 2025.
Caleres reported that the first quarter was impacted by tariffs that were higher than anticipated, affecting their near-term sourcing strategy. Despite these challenges, the company maintains a healthy gross profit margin of 44.5% and has demonstrated resilience with 55 consecutive years of dividend payments. The company is in the process of optimizing its sourcing to mitigate these impacts. However, this optimization is expected to continue to pressure margins, and Caleres plans to implement selective price increases to manage these costs. For deeper insights into Caleres’ financial health and future prospects, InvestingPro subscribers can access comprehensive analysis and additional ProTips.
Despite these challenges, there were positive developments within the company. Caleres’ Lead Brands, which include names like Famous Footwear and Allen Edmonds, performed well, outshining the broader portfolio. The company generated $2.68 billion in revenue over the last twelve months, and analysts remain optimistic about its profitability outlook for the current fiscal year. Moreover, the addition of Stuart Weitzman as the newest Lead Brand is set to be finalized in the summer of 2025, which could potentially bolster the company’s brand portfolio.
Furthermore, Caleres observed some positive trends in the first quarter, including improved momentum in both retail and international markets. These areas of growth could present long-term opportunities for the company, especially in their Brand Portfolio (BP (NYSE:BP)) and international segments.
In conclusion, while acknowledging the difficult macroeconomic environment, KeyBanc Capital Markets sees long-term potential in Caleres’ strategic brand positioning and international expansion. However, the firm remains cautious, maintaining a Sector Weight rating due to the current pressures faced by the company.
In other recent news, Caleres Inc. reported its first-quarter 2025 earnings, which fell short of expectations. The company’s earnings per share were $0.22, missing the forecasted $0.37, and revenue was $614.2 million, slightly below the anticipated $622.92 million. The company experienced a 6.8% year-over-year decline in revenue, reflecting challenges within the retail sector. Due to ongoing uncertainties, particularly related to tariffs, Caleres has suspended its full-year guidance. Despite these difficulties, the company remains focused on cost management and sourcing strategies.
Additionally, Caleres is optimistic about the growth potential of its international business and the upcoming back-to-school season. The company is also planning to acquire Stuart Weitzman, viewing the brand as a strategic fit due to its premium positioning and strong direct-to-consumer presence. In terms of brand performance, the Sam Edelman brand showed growth both domestically and internationally. Analyst firms such as Telsey Advisory Group and Loop Capital Markets have shown interest in the company’s strategic maneuvers and the potential impact of the Jordan brand launch on future sales.
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