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Introduction & Market Context
Caleres Inc (NYSE:CAL) released its first quarter 2025 earnings presentation on May 29, revealing a challenging period marked by declining sales and compressed margins. The footwear retailer, which operates brands including Famous Footwear, Sam Edelman, and Allen Edmonds, saw its stock plummet 15.14% to $13.90 following the announcement, approaching its 52-week low of $13.17.
The company reported an adjusted earnings per share of $0.22, significantly below analyst expectations of $0.37, while revenue fell 6.8% year-over-year to $614 million. This performance reflects broader challenges in the retail sector, including softening consumer demand and ongoing tariff uncertainties.
As shown in the following overview chart highlighting the company’s declining performance metrics:
Quarterly Performance Highlights
Caleres’ first quarter results demonstrated consistent pressure across all key financial metrics. Sales decreased 6.8% compared to the same period last year, while gross margin contracted 150 basis points to 45.4%. The company’s adjusted earnings per share of $0.22 represents a significant decline from $0.88 in the first quarter of 2024.
Despite these challenges, the company maintained its total debt at $259 million with no long-term debt, while inventory levels increased 8.1% compared to the previous year. The company’s trailing twelve-month adjusted EBITDA stood at $188 million, representing 7.0% of sales.
The following financial highlights summarize the company’s first quarter performance:
Segment Analysis
Caleres operates through two primary segments: Brand Portfolio and Famous Footwear, both of which experienced sales declines in the first quarter.
The Brand Portfolio segment, which includes Sam Edelman, Naturalizer, and Allen Edmonds, reported sales of $295 million, down 6.9% compared to the first quarter of 2024. Gross margin in this segment contracted significantly, down 280 basis points to 43.8%, while operating margin stood at 5.9%. Despite these challenges, the company managed to increase its market share in Women’s Fashion Footwear by 0.2%.
The following slide details the Brand Portfolio’s performance:
Famous Footwear, the company’s retail chain, experienced similar challenges with sales declining 6.3% year-over-year to $328 million, with comparable sales down 4.6%. Gross margin contracted 80 basis points to 45.3%. However, the segment maintained its competitive position, gaining 0.2 percentage points in market share within shoe chains. The Kids business was a relative bright spot, gaining 0.5 percentage points in market share and accounting for 22% of total business.
The following slide illustrates Famous Footwear’s quarterly performance:
Strategic Initiatives
In response to these challenges, Caleres outlined several strategic initiatives for 2025 aimed at improving performance and positioning the company for future growth.
A key focus is accelerating sourcing migration away from China, with a target to reduce China sourcing dollars to 10% or less in the second half of 2025. This initiative appears particularly important given the tariff uncertainties mentioned in the earnings call but not explicitly addressed in the presentation.
Additional strategic priorities include international expansion in underpenetrated markets, achieving $15 million in annualized structural cost savings, establishing new brand partnerships, elevating the assortment at Famous Footwear with new brands and premium products, and focusing on accessible luxury fashion.
The company’s key initiatives for 2025 are illustrated in the following slide:
Forward-Looking Statements
Notably absent from the presentation was updated guidance for the full year. According to the earnings call transcript, Caleres has suspended its full-year guidance due to ongoing tariff uncertainties, which could significantly impact the company’s sourcing strategy and cost structure.
Management expressed cautious optimism about the upcoming back-to-school season and highlighted the early promise of new brand launches, including the Jordan brand. However, they acknowledged the challenging retail environment and the need to remain nimble in response to evolving market conditions.
"We are confident in our ability to get back on track, execute our strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders," said Jay Schmidt, CEO, according to the earnings call transcript.
The suspension of guidance, combined with the significant earnings miss and declining performance metrics, contributed to the sharp decline in Caleres’ stock price following the earnings announcement. At current levels, the stock trades at approximately 4.6 times earnings, suggesting potential value if the company can successfully navigate the current challenges and execute on its strategic initiatives.
Full presentation:
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