Caleres 2026 Q1 Earnings Misses Targets as Net Income Plummets 80.7%

Caleres (CAL) reported its fiscal 2026 Q1 earnings on May 29th, 2025. The revenue fell short of expectations, missing Wall Street's estimates by 1.3%. The company has suspended guidance due to ongoing market uncertainties, including tariff issues. Despite weak February sales, there was a modest improvement in March and April. However, operating earnings were pressured by lower gross margins and increased costs. Caleres plans to cut SG&A expenses by $15 million annually to address these challenges and is optimistic about its strategic plan and future growth.

Revenue
Caleres's revenue declined by 6.8% to $614.22 million in Q1 2026, compared to $659.20 million in the previous year. Famous Footwear contributed $327.68 million, while the Brand Portfolio segment added $295.39 million. The Eliminations and Other category accounted for a negative $8.85 million, resulting in total consolidated revenues of $614.22 million.

Earnings/Net Income
Caleres's EPS fell sharply by 76.1% to $0.21 in Q1 2026, compared to $0.88 in Q1 2025. The net income plummeted by 80.7%, down to $5.95 million from $30.80 million. These numbers reflect disappointing earnings performance.

Price Action
The stock price of Caleres has tumbled 9.29% during the latest trading day, has plummeted 17.51% during the most recent full trading week, and has tumbled 14.34% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Caleres (CAL) shares post-revenue drop on the financial report release date and holding them for 30 days has resulted in significant underperformance. The return on this strategy was -31.95%, drastically lagging behind the benchmark return of 39.33%. The excess return was -71.29%, and the CAGR stood at -12.16%, highlighting substantial losses over the three-year period. Additionally, the strategy experienced a high maximum drawdown of -61.41% and a Sharpe ratio of -0.26, indicating considerable risk with negative returns. Overall, the approach demonstrated poor results and suggested a lack of resilience in the face of fluctuating market conditions.

CEO Commentary
Jay Schmidt, President and CEO, noted that while Caleres' brands resonate with consumers and both business segments gained market share, first-quarter results fell short of expectations due to weak sales in February and pressured operating earnings. He emphasized the need to control factors within their control, such as optimizing sourcing strategies and reducing SG&A expenses by $15 million annually. Schmidt expressed optimism about improvements in retail momentum and growth in the international business, stating, "We are confident in our ability to get back on track, execute our strategic plan, invest to fuel our growth initiatives, and drive sustained value for our shareholders."

Guidance
Caleres has suspended guidance due to ongoing uncertainties related to tariffs and market conditions. However, quarterly performance to date indicates that comparable sales for Famous are slightly better than Q1's 4.6% decline, while direct-to-consumer sales in the brand portfolio have shown modest increases. The company expects to realize $7.5 million in SG&A savings in the second half of 2025 from structural expense reductions, contributing to overall financial improvement.

Additional News
Recently, Caleres announced plans to acquire luxury brand Stuart Weitzman later this year, as part of its growth strategy. Additionally, the company repurchased 300,000 shares at an average price of $16.81 to counteract dilution from stock-based compensation. In another strategic move, Caleres aims to reduce its reliance on Chinese sourcing, targeting a 10% or less dependency by the latter half of 2025. These initiatives reflect Caleres's commitment to navigating current challenges while positioning itself for sustainable growth.