Caleres Inc.’s fourth quarter sales and earnings could see impact from the Saks Global bankruptcy.
That was the word from Dana Telsey, chief investment officer at Telsey Advisory Group (TAG). She noted that the company previously said a Saks Chapter 11 could result in up to a drag of 6-cents-a-share to fourth quarter EPS (earnings per share) and reaffirmed prior guidance. But there’s a chance the company could incur a restructuring charge not previously announced.
In the fourth quarter earnings report due out on Thursday, Telsey said she’s expecting EPS of 43 cents versus 33 cents year ago and consensus estimates of 38 cents. Topline, sales are expected to increase 6.4 percent year-over-year to $680 million versus consensus of $688 million. Famous Footwear sales are expected to contract 2.6 percent, although the brand portfolio is expected to grow 18 percent, driven by the Stuart Weitzman acquisition last August that is expected to contribute between $55 million to $60 million for the quarter.
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“Since the acquisition closed, fall deliveries improved year-over-year at wholesale and U.S. retail with dress and tall and short boots selling through at full price,” she wrote in a research not. “The systems integration is on track for the beginning of 2026 and reporting structures are in place for key functional areas.”
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The areas of concern has been the business in China, which saw “significant volatility in China’s DTC (direct-to-consumer) segment,” Telsey said, noting that a new leadership team was put in place in China. The brand is still expected to break even in 2026.
At Famous Footwear, the analyst noted that “early holiday results were encouraging,” adding that Caleres has said it plans to lean further into high-demand premium brands and prune weaker fashion labels to re-allocate open-to-buy. Top-performing labels at the chain included Jordan, Adidas, Birkenstock, New Balance, Brooks and Timberland.
Other areas of interest in the Caleres conference call after the earnings report include an update on tariffs and its progress on the CFO search.
In connection with tariffs, Telsey noted that Caleres said it expected to see a headwind in connection with gross margin pressure in the fourth quarter before improvement in 2026. But that was before both the U.S. Supreme Court ruling against U.S. President Donald Trump’s reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) and the subsequent implementation of temporary Section 122 tariffs of the Trade Act of 1974.
Under the prior tariff structure, Telsey said Caleres has an unmitigated tariff impact in teh range os $65 million on an annualized basis, with $40 million mitigated through factory negotiations, price increases and other actions. With the new incremental global tariffs implemented through July 24, she said the shoe firm is considering SG&A (selling, general and administrative) opportunities to neutralize the impact to the operating margin.
“The company has reduced its exposure to China as well, with over 50 percent of the brand portfolio’s dollar volume sourced outside of China and room to diversify further to up to 70 percent of dollar volume by the end of 2025, led by the lead brands,” she wrote. “Famous Footwear’s exposure will be reduced as well, down from 15 percent of vendor receipts as of last quarter.”
And as for the CFO search, the company said in January that senior vice president and chief accounting officer Dan Karpel would serve in the position on an interim capacity to replace former chief financial executive Jack Calandra. She said the transition is at a “difficult time” for the company as it tries to integrate the Stuart Weitzman brand against a challenging macro environment that’s now been layered with the complexities from the Saks bankruptcy.
Caleres is trading in the $9.24-a-share range, and Telsey has a price target of $16.
“While Caleres has a solid portfolio of brands and a business model to support them, work remains to return its business to prior levels of profitably while integrating Stuart Weitzman against tariff and macro-related uncertainty,” she said. “The acquisition of Stuart Weitzman brings a quality brand name to the brand portfolio business that can add to the topline and future profitability potential, and we believe the brand can benefit from a true footwear pure-play owner.”