Caleres' Q2 2026 Earnings Call: Tariff Woes, Gross Margin Delays, and Divergent Views on Famous Footwear Sales

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $658.5M, down 3.6% YOY
• EPS: $0.35 per diluted share vs $0.85 prior year; includes $0.07 discrete tax benefit
• Gross Margin: 43.4%, down 210 bps YOY
• Operating Margin: 2.4%

Guidance:

• No annual guidance due to tariff uncertainty.
• Famous Footwear: August comp +1%; expect September/October comps down low single digits.
• Brand Portfolio (ex-Stuart Weitzman): August sales up low single digits; 3Q gross margin down similar to 2Q; improvement expected in 4Q as mitigation actions take hold.
• SG&A (ex-SW): modest increase in 3Q; more savings benefit in 4Q from restructuring; pursuing additional cost savings.
• Tariffs to pressure BP gross margin in 2H; mitigation via sourcing mix, factory concessions, select price increases, and reducing dutiable value.
• Famous to pass through some vendor price increases; monitoring demand impact.

Business Commentary:

• Sales Trends and Market Share Gains:
• Caleres Incorporated reported adjusted earnings per share of $0.35 and sales declined 3.6% year-over-year in Q2 2025.
• Sales trends improved sequentially in both segments of the business, and the brand portfolio gained market share in women's fashion footwear.

• The improvements were driven by international sales growth and market share gains in shoe chains and kids, despite challenges from market uncertainty and tariff pressures.

• Tariff Mitigation and Cost-Saving Initiatives:

• Tariffs negatively impacted Q2 sales by $10 million due to order cancellations and delayed receipts.
• The company worked on mitigating tariff impacts through negotiations with factory partners, mix

Sentiment Analysis:

• Sales down 3.6% and EPS $0.35 vs $0.85 last year; gross margin down 210 bps. Management not providing annual guidance due to tariffs. Positives: Famous August comp +1%, share gains in women’s fashion footwear and shoe chains, lead brands grew, strong back-to-school aided by Jordan, and expected 4Q margin improvement as tariff mitigation takes effect.

Q&A:

• Question from Ashley Owens (KeyBanc Capital Markets): What drove Famous Footwear’s August comp improvement (+1%) and any change in women’s softness?
  Response: Brick-and-mortar saw better traffic and conversion (AUR flat); web saw higher traffic and AUR; assortment shifts and the Jordan launch were key drivers.

• Question from Ashley Owens (KeyBanc Capital Markets): How should we think about gross margins for Famous and Brand Portfolio in 2H amid promos and tariffs?
  Response: Famous: promo cadence unchanged; clearance markdowns continue; some vendor price increases to be passed through. Brand Portfolio: fewer markdown pressures as inventory aligns, but tariffs pressure margins in 3Q with improvement expected in 4Q.

• Question from Mitch Kummetz (Seaport Research): What is Stuart Weitzman’s back-half impact on sales/EBIT/interest and accretion timing?
  Response: No specific sales/EBIT outlook yet due to purchase accounting; net purchase ~$108M, funded by ~$120M borrowing at ~5.7–5.8%; goal is profitability post-transition with potential 2026 structural savings, but not guiding to accretion.

• Question from Mitch Kummetz (Seaport Research): Quantify BP order cancellations/delays and 3Q tariff margin impact?
  Response: $10M 2Q BP sales impact split ~50/50 between cancellations and delays; ~$5M delayed expected in 3Q. BP 3Q gross margin expected down similar to 2Q (with 2Q down ~240 bps), improving in 4Q as mitigations take hold.

• Question from Dana Telsey (Telsey Advisory Group): What are you seeing in consumer health and brand performance at Famous and BP?
  Response: Consumers prioritize top national and elevated brands; back-to-school strong (Jordan a top-10); lead and premium contemporary brands outperform; fashion/dress and boots improving.

• Question from Dana Telsey (Telsey Advisory Group): Progress on tariff mitigation and cost savings?
  Response: Mitigation includes selective price increases, factory concessions, sourcing mix shifts, and efficiency initiatives; external partner engaged to unlock additional structural savings, largely benefiting 2026.

• Question from Dana Telsey (Telsey Advisory Group): How are wholesale order trends into holidays?
  Response: Demand is dynamic with faster reorders; sell-through exceeds sell-in; DTC up; retailers turning inventory quickly and showing cautious optimism.