Caleres, Inc. Q2 FY2026 earnings call

• Brand Portfolio Strength: Broad-based gains across wholesale, direct-to-consumer, and international channels. International sales grew over 50% sequentially and high teens organically, representing a key growth vector.
• Sam Edelman Performance: Delivered mid-teens sales growth, becoming the #9 dollar volume brand in women's fashion footwear. Strong performance in flats, pumps, and loafers, with positive reception for the new men's line launch.
• Stuart Weitzman Progress: Made meaningful progress toward its 2026 break-even goal. Full-price sell-through improved despite DTC pressure from lower outlet activity. International business, particularly in China, showed rapid resurgence under new leadership.
• Allen Edmonds Growth: Net sales increased low teens, driven by wholesale and strong demand for dress shoes and loafers. The premium 'Reserve Collection' more than doubled in sales.
• Naturalizer Momentum: Sales rose high single digits with profitability outpacing revenue growth. Creative partnerships and textured materials drove consumer engagement and attracted younger demographics.
• Famous Footwear Challenges: Sales pressured by a delayed back-to-school season and a shift away from lifestyle athletic products. Management is pivoting assortment to focus on performance athletic, fashion, and higher-demand brands.
• Strategic Execution: Calaris continues to leverage shared capabilities in product, sourcing, and digital. Inventory positioning at Famous Footwear has improved through reduced receipts and targeted clearance events.

The company reported consolidated sales of $695 million, up 5.6% year-over-year. The Brand Portfolio segment drove growth with organic sales increasing 8.2% (up 23.6% including Stuart Weitzman) and an operating margin of 10.5% (13% excluding Stuart Weitzman). Gross margins for the Brand Portfolio were 49.1%, up 880 basis points. Famous Footwear sales declined 6.3% with comparable sales down 5.9%, resulting in an operating margin of 1.4% and gross margins of 42.7%, down 100 basis points due to promotional activity in lifestyle athletic.

• Q3 Consolidated Sales: Expected to increase low single digits.
• Q3 Brand Portfolio Sales: Expected to grow mid to high single digits.
• Q3 Famous Footwear Sales: Expected to decline low single digits.
• Q3 Consolidated Gross Margin: Expected to improve 150 to 200 basis points year-over-year.
• Q3 Adjusted EPS: Raised guidance range to $0.62–$0.70 from previous estimates.
• FY 2026 Consolidated Sales: Expected to grow low to mid single digits.
• FY 2026 Brand Portfolio Sales: Expected to grow low double digits (mid single digits organically).
• FY 2026 Famous Footwear Sales: Expected to decline low to mid single digits.
• FY 2026 Adjusted EPS: Maintained guidance range of $1.50–$1.65.

• Tariff Uncertainty: Management anticipates new tariffs replacing prior IEPA refunds in Q3, creating cost uncertainty. Sourcing strategies remain flexible to mitigate this risk.
• Inventory Management: Famous Footwear faced excess and aged inventory in lifestyle athletic categories, requiring aggressive clearance that pressured gross margins.
• Consumer Shifts: A significant shift away from lifestyle athletic products during the back-to-school season negatively impacted Famous Footwear trends.
• Operational Timing: Delayed tax-free events and Labor Day timing obscured typical seasonal sales patterns, complicating quarterly performance visibility.

Q: Ashley Owens asked for domestic organic growth metrics for the Brand Portfolio and retailer order book sentiment. / A: Jay Schmidt noted international sales are <10% of total, leaving significant runway, but did not isolate specific North America growth rates. He stated the order book is consistent with Q3 guidance without volatility, suggesting retailers are running businesses strongly based on current sell-through data.

Q: Ashley Owens queried the magnitude of lifestyle athletic declines and the cadence of margin pressure in Q3/Q4. / A: Management indicated lifestyle athletic softness persisted through August but improved slightly quarter-to-date. CFO Dan Karpel confirmed margin pressure will likely continue in line with Q2 levels (~100 bps decline) as the company manages promotional activity to clear softer athletic inventory while maintaining price discipline on other categories.

Q: Mitch Cummings asked if consumers are shifting from 'key items' to broader silhouettes and how this benefits the portfolio. / A: CEO Jay Schmidt explained demand remains bifurcated; major icons like Birkenstock still drive huge volumes, but other fashion segments see more diverse silhouette adoption. This trend supports the Brand Portfolio’s strength in offering varied, trend-right newness alongside enduring classics.

Q: Dana Telsey requested updates on Stuart Weitzman’s integration path to break-even and Flair store performance differences. / A: Schmidt reported Stuart Weitzman is fully integrated on platforms with a balanced global assortment, showing strength in dress shoes and boots. Regarding Flair stores, management observed that premium brands and products outperform there, though they await full post-back-to-school data to assess athletic vs. non-athletic split nuances.