Caleres Q1 2025: Navigating Contradictions in Tariffs, Pricing Strategies, and ERP Challenges

Tariff impacts on gross margins, pricing strategy and gross margin impact, impact of SAP upgrade on Brand Portfolio, and ERP implementation status are the key contradictions discussed in Caleres' latest 2025Q1 earnings call.



Sales and Earnings Performance:
- Caleres, Inc. reported first-quarter sales declined 6.8% year-over-year, with adjusted earnings per share at $0.22.
- The decline was primarily due to lower gross margins, increased reserves, and costs related to tariff escalation and sourcing disruption.

Impact of Tariffs and Sourcing Challenges:
- Tariffs and sourcing disruptions reduced gross margin profit by nearly $1.9 million in the quarter, impacting profitability.
- The company paused production in China following an executive order, leading to costs associated with canceling and relocating manufacturing.

Inventory and Credit Issues:
- The company experienced higher-than-planned inventories and customer credit concerns, with markdown reserves impacting the quarter by about $2.3 million.
- Expanding customer credit concerns resulted in added bad debt write-downs, affecting profit by almost $3.1 million compared to last year.

Brand Portfolio Performance:
- Brand portfolio sales declined 6.9%, with the lead brands (Sam Edelman, Allen Edmonds, Naturalizer, and Vionic) representing about 60% of sales and 80% of operating earnings.
- Sam Edelman delivered domestic sales growth and expanded internationally, while Allen Edmonds faced soft demand in dress shoes despite strong newness response.