Caleres, Inc. Q4 FY2025 earnings call

• Brand portfolio sales driven by owned e-commerce and international performance, lead brands outperformed. • Famous Footwear's strategic initiatives working, flare remodels outperforming, strategy to elevate and edit brand and product assortment. • Sam Edelman had strong quarter with broad-based category performance, wholesale sales exceeding plan, owned e-commerce double-digit growth, licensing initiatives adding growth. • Stuart Weitzman successfully integrated, new organization structure, warehouse relocations, inventory liquidation. • Allen Edmonds had broad-based growth across channels. • Naturalizer had improving e-commerce and customer growth. • Bionic had strength in e-commerce and international. • Famous Footwear's Flair locations success and plans for 2026 expansion. • Centers of Expertise established to enhance performance and efficiency.

Brand portfolio sales on an organic basis increased 1.5% in the quarter and 20.3% when factoring in Stuart Weitzman. Lead brands in total were up 2% organically and represented nearly 60% of the brand portfolio sales. Owned e-commerce continued to see outsized growth and international business was strong. Sam Edelman had sales growth exceeding expectations, with broad-based category performance, wholesale sales exceeding plan, owned e-commerce double-digit growth, and positive results from stores. Stuart Weitzman had solid fourth quarter progress with integration, new organization structure, warehouse relocations, inventory liquidation, and sales driven by core and new styles. Allen Edmonds had broad-based growth across channels. Naturalizer had improving e-commerce sales momentum and new/retained customer growth. Bionic had strength in e-commerce and international channels. Famous Footwear total sales decreased 1.2% and comp sales increased 0.1%, e-commerce outperformed stores, Flair locations generated sales lift, and men's performed best, women's slightly unperformed, with fashion boots a standout category and top growth brands listed.

• 2026 is a build back year with modest organic sales growth but meaningful earnings recovery. • First quarter: consolidated sales increase mid to high single digits, famous sales down low single digits to flat, brand portfolio sales up mid-teens, consolidated gross margin improve 120 to 140 basis points, SG&A modestly leverage, tax rate 30% to 32%, gap EPS 21-26 cents, adjusted EPS 25-30 cents. • Full year 2026: consolidated sales up low to mid single digits, famous sales down low single digits to flat, brand portfolio sales up low double digits, gross margin up 140 to 180 basis points, SG&A rate relatively flat, interest expense ~$18 million, full year tax rate 28-30%, gap EPS $1.31-$1.61, adjusted EPS $1.35-$1.65, CapEx ~55-60 million.

• Evolving tariff environment with uncertainty on new tariffs. • Conflict in the Middle East introducing risk to outlook, modest business disruption with Middle East partners, region less than 1% of total business but important for long-term international growth. • Weather impact and Easter shift timing affecting performance.

Q: Hi, thanks, and good morning. So maybe just starting with the quarter, I know there was concern about potential risk to sales volatility in the bottom line, and that didn't really play out here. Could you just help us bridge if there was any volatility you recognized and what some of the offsets were? And then, more importantly, is there any go-forward risk with the ongoing SACS bank reps here? How should we think of that as more one-time in nature?

A: Okay, Ashley, we're having a little bit of a hard time hearing, but your question is, we expected more sales volatility in the quarter and it didn't come through, so talk about some of the puts and takes. Is that right? Yes. Yes, please. Okay, so first of all, we... We did provide a estimate mid January and that did actually play out. We we didn't ship sacks for the balance of the month and we were fully reserved on the bad debt. So however, other areas of our business were strong enough to offset the six cents that we did play out. And I think that was a key reason for it. It just came in better or. gross margin impact on tariffs was 40 basis points in the brand portfolio on the quarter, which was also better than our expectation. Okay. Got it. And can you hear me clearly? Yeah. We'll try. We'll clarify if we can. Okay. Okay. So, just as a follow-up then, as we think about gross margin and the embedded recovery story here, can you Help us parse out what's already in the exit rate for the year versus what still needs to come through from either mix or a tariff mitigation standpoint in 2026. Thanks. Yeah, so on the margin, when we think about guidance in 2026, you'll see relatively flat margins on the famous business. And as it relates to the brand portfolio side, We'll see recovery around the tariff side of the business. Also with mix, we think about Stuart Weitzman is incremental margin accretion because of the margin levels that they play, as well as other mix in our lead brands driving that up. Got it. That's super helpful. Thank you. Thanks, Ashley. Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question. Hi. Good morning, everyone. I like the term build-back year for 2026. And as you think about the build-back year for 2026, on the brand portfolio side, how are you thinking about wholesale? With SACS, the six-cent impact, I think you may have expected are up to six cents for the year. How are you planning that this year what are you shipping them or not shipping them and with the market share gains that you saw in shoe chains at famous footwear in the fourth quarter key drivers of that new brands being added how do you think about the addition of new brands and categories that you're adding in them and then just lastly the shaping or cadence of the year anything on margin profile whether it's lapping of tariffs that we should expect to see And does the rising energy prices, how is that an impact? Thank you. Dana, I'll start and then we'll fill in along the way. So first of all, you know, we are seeing our, you know, key points of our business on the brand portfolio continue to point toward, you know, support our guidance. We said our order book is in line with that guidance right now. Our own e-commerce trend line right now looks very good for the brand portfolio, and we're seeing international up on it as well. So that's been quite good. We have – and we're seeing those key, you know, drivers coming through with our lead brand, so we continue to see that come through. But otherwise, we feel pretty good all the way around. With Stuart, as you've noticed, the – You know, we feel like all of the work that was done in the back half of 26 leads us to a place where they can start to build back their business, and that really goes straight across all of their channels and geography and everywhere. So while we're not guiding specifically by, you know, brand, we will see good, I think, momentum coming through there, which is great. And then finally, on the – on the facts piece right now, we don't have anything new to report on that, but our, um, we're, we're prepared to, um, you know, to go forward at this moment, um, with our, with a wholesale book that we have. And then actually that does support at least our guide for the quarter. So, um, we'll tell you more when we have more to say, um, but otherwise it looks, um, pretty good. And then you also mentioned about famous footwear, what drove that market share gain back. And that was, um, As you had suggested, the lead brands coming through in famous footwear was actually the big driver for that. And as we had said earlier, famous had a nice lift in holiday, really going after that more gift-giving piece. And we felt very good about it and saw the brands that I did mention. We had good momentum from Skechers, Birkenstock, Sorrel, Timberland, others. Um, and obviously the big Jordan piece proved very powerful during holiday. Um, so that was obviously a big win for us too. So, um, again, it just supports, um, I think our guidance going forward and the momentum we're seeing. And Dana, you had asked a little bit about the spread of margin during the quarter to reinforce the guidance we said consolidated in the first quarter was going to go up, um, 120 to 140. And then for the full year, $140, $180. And so you'll see results kind of throughout each of those quarters as we look at the year. And then just, Dana, one more thing on market share. You mentioned new brands. On the brand portfolio side, while Stuart Weisman did add to our market share, we gained market share in women's fashion, but we're on an organic basis as well. Thank you. Thank you. Thank you. Our next question comes from the line of Mitch Cummins with Seaport Research. Please proceed with your question. Yes, thanks for taking my questions. Jay, in your prepared remarks, you talked a little bit about quarter-to-date performance, BP, EECOM, and also at FAMIS. And I was wondering if there's any way to kind of parse out the impact that you might be seeing from kind of tax refunds versus more recently higher gas prices and maybe just the overall impact from the war in Iran. And I do have a couple of follow-ups. Yeah. So just to characterize right now, we did see on our brand portfolio strong own-de-com performance coming through, which supports our guide. The The good news is that they're from all the key brands. We've seen it now on all four of our lead brands, Sam Edelman, Allen Edmonds, Naturalizer, and Bionic. We're also starting to see a nice turnaround at Stuart Weitzman on their e-commerce business, where that was not something that we saw in the back half of this year. So it looks like a lot of the team's work there coming through is working. As it goes over to the famous side, it's kind of a little different story. We had a good February, I would say, and that was through some good performance on some of the big brands there that continued, Skechers being one of them where we did have a brand takeover there, and that worked very well. We also did sell through some clearance there, too, which did support the business there. So we walk into March. It's a little bit of a mixed story here right now, and we're monitoring it day by day, week by week. There's also, you know, in addition to the geopolitical situation, there is a – we did have some weather impact, and we do have an Easter shift timing. So right now, as I said, the – What we're looking at supports our current guide and, you know, we'll report more when we know it, but we are managing it week to week. And then between famous and brand portfolio, could you talk a little bit about what you're seeing from a category performance quarter to date? And I'm also specifically curious kind of what you're seeing in terms of sandals as we're you know, entering the spring, summer season and any kind of sandal drivers there as you kind of see that playing out over the balance of the season. And I have one last question. Yep. So on the famous side,我继续为你生成完整的内容：So on the famous side, I mean, we continue to see a very strong Birkenstock business, and you know it well. So, I mean, it's clogs and sandals. That's where we are, and we're seeing strength on both of them from that, and that continues every single week. We're also seeing some good selling on sandals from Crocs, which I think is very good and does, you know, I think we'll overall support that business trend as we look forward. On the BP, we are seeing some good sandal business, particularly in the thong category, coming through on kit and heels, and that's been a key winner. But we're seeing it a little bit more on the fashion side. And even in Vionic, we're seeing a very nice sandals strength as of very recently, now that all the inventory is here, with both casual thongs, and then we're also seeing casual footbeds work well in that business. So I think it certainly wasn't supported by weather, Mitch, so we really think it's driven by newness right now. But that does at least give us optimism as we look forward. And then my last question, just on Stuart Weitzman, you talked about being break even for the year. Can you talk a little bit about how you see that playing out by quarter, especially in the first quarter and what's kind of embedded in the guidance in terms of Stuart? I'll start and then Dan can cut in. So, you know, we have completed most of the of the cost savings work so getting it onto our systems was um was you know a big piece of that moving the headquarters getting off of the tsa um getting it into our distribution center as we think about the stuart weisman sgna piece of the puzzle we've got you know some big buckets i would say distribution and logistics being one facilities being one we did complete in january restructuring. So that was a big piece of it. And so, you know, those are the big pieces of the puzzle. And then, you know, moving on to the gross margin side of things, we moved through a significant amount of aged inventory. We talked about that last quarter. It was $25 million in inventory. I think you could see it on the balance sheet that that's where we are. So that positions us a lot, you know, stronger placed. But if you think about Stuart Weitzman's business, it is a seasonal business. And so, you know, there will be some movement there. But in total, we feel very confident that we've positioned the business to return to, you know, break even and longer term. As we've said, we don't think that there's anything we see with the business that wouldn't suggest it can operate at the profit margins. We're quite comfortable earning for the rest of our brand portfolio. I don't know, Dan, if you would have anything to add there. No, I think to your point, if you look at our Q3 and Q4, you know, we lay out in kind of the with and without the clarity there. And so you could see the impact of Stuart Weitzman on that business. And to Liz's point, a lot of these significant changes have been made. We're on our systems now and structurally we're there. You know, certainly not seeing, you know, those types of results that we saw in Q3 and Q4 as we walk back to kind of break even here in the full year 26. Thank you. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Schmidt for any final comments. Okay. Thank you for your continued interest in Calaris. Before we close, I'd like to recognize the dedication of our teams across the company and across the globe who've shown tremendous determination and resilience this year. We are encouraged by the early momentum building in our business through all of our strategic initiatives, and we look forward to an improved, more profitable 2026. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.