Shares of Caleres Inc. dipped over 9 percent in pre-market trading on Thursday as the footwear company reported second quarter earnings below analyst expectations.
The St. Louis-based company said net earnings in the second quarter of fiscal 2025 were $6.71 million, or 20 cents per diluted share, down from $29.96 million, or 85 cents per diluted share, in the second quarter of 2024. Net sales totaled $658.52 million, down 3.6 percent from $683.32 million the same time last year.
While revenue slightly beat analyst expectations — market watchers predicted net sales of $656.48 million — Caleres missed on earnings per share. According to Yahoo Finance, analysts were looking for 56 cents a share in the second quarter.
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By segment, Famous Footwear saw net sales decrease 4.9 percent, with comparable sales down 3.4 percent in the second quarter. Caleres’ brand portfolio division reported a net sales decline of 3.5 percent in the period.
Jay Schmidt, president and chief executive officer of Caleres, said in a statement on Thursday that while the company experienced headwinds due to market uncertainty, it demonstrated “strength and resilience” this quarter.
“Sales trends improved sequentially in both segments of our business, and we saw market share gains in women’s fashion footwear and in shoe chains,” Schmidt said. “We experienced strength in lead brands, our brand portfolio direct-to-consumer channels, and international. We also saw significant improvement in trends at Famous Footwear in July and continuing through August.”
Just after the quarter ended, the company completed the acquisition of Stuart Weitzman, adding a new lead brand to its portfolio.
The deal was initially disclosed in February. At the time, the agreement was for Caleres to buy the brand for $105 million. The transaction at the close was for $120.2 million. The higher amount represents a reimbursement of $11.5 million in cash that Tapestry left in a connected Spanish entity, along with working capital in the form of inventory and accounts receivable, being transferred over. Excluding the cash reimbursement, the transaction value is $108.7 million.
Looking ahead, Caleres said it will continue to suspend annual guidance given broader economic uncertainty.
In the meantime, the company noted that for the month of August, Famous Footwear same-store comparable sales were up 1 percent and brand portfolio sales, excluding Stuart Weitzman, were up low-single digits.
Caleres said it expects ongoing gross margin pressure in its brand portfolio from tariffs for the balance of the year. It also anticipates third quarter gross margin in its brand portfolio, excluding Stuart Weitzman, to be down similar to second quarter, with improvement in the fourth quarter as it realizes more of the benefit from mitigation strategies.
Schmidt added: “Longer term, we will continue looking for ways to leverage our greatest capabilities across our portfolio, and we are confident in our ability to execute our strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders.”