Caleres — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported second quarter net sales of $695.5 million, up 5.6% year-over-year.
• GAAP consolidated gross margin expanded 1,140 basis points to 54.8%, driven by $55.6 million in tariff refunds; excluding tariff refunds, adjusted gross margin was 46.8%, up 340 basis points.
• GAAP net earnings were $58.6 million ($1.71 per diluted share) compared to $6.7 million ($0.20 per diluted share) in the prior year.
• Adjusted net earnings were $16.1 million ($0.47 per diluted share) compared to $11.7 million ($0.35 per diluted share) in the prior year.
• Selling and administrative expenses were $303.4 million (43.6% of net sales), deleveraged 270 basis points year-over-year.
• Inventory was $754.2 million at quarter-end, up $61.0 million year-over-year; excluding Stuart Weitzman inventory, inventory was down 1.2%.
• Borrowings under the asset-based revolving credit facility were $288.0 million at quarter-end, with $357.3 million in availability.
• Net cash provided by operating activities for the 26 weeks ended August 1, 2026, was $73.2 million (based on $55.8 million for 13 weeks and $17.4 million implied for the prior 13 weeks, though only 13-week cash flow of $55.8 million is explicitly stated in the text; the 26-week figure is not explicitly stated in the text summary but the 13-week figure is $55.8 million). Correction: The text states net cash provided by operating activities was $55,777 thousand for the 13 weeks ended August 1, 2026.
• Cash and cash equivalents were $50.9 million at quarter-end, down from $191.5 million in the prior year period.

Guidance and Future Outlook

• Expects third quarter 2026 consolidated net sales to increase low-single digits.
• Expects third quarter GAAP earnings per diluted share of $0.62 to $0.70.
• Expects third quarter gross margin to improve 150 to 200 basis points, reflecting tariff mitigation efforts and lower current tariff rates.
• Expects full-year 2026 consolidated net sales to increase low-to-mid-single digits.
• Expects full-year GAAP earnings per diluted share of $2.80 to $2.95.
• Expects full-year adjusted earnings per diluted share of $1.50 to $1.65, an upgrade from prior guidance of $1.40 to $1.65.
• Expects full-year gross margin to improve 180 to 220 basis points.
• Expects full-year interest expense of approximately $16 to $17 million.
• Expects full-year capital expenditures of $50 to $55 million.
• Expects a full-year tax rate of 24% to 26% (third quarter tax rate expected at 23% to 25%).

Business Segments and Product Lines

• Brand Portfolio sales grew 23.6% organically (8.2% excluding Stuart Weitzman).
• International sales grew 57.0% (18.2% organically).
• Stuart Weitzman sales were tracking in line with expectations.
• Famous Footwear sales declined 6.3%, with comparable sales down 5.9%.
• Direct-to-consumer sales represented approximately 71% of total net sales.
• Brand Portfolio adjusted gross margin was 49.1%, up 880 basis points year-over-year.
• Famous Footwear gross margin was 42.7%, down 100 basis points year-over-year.
• Company-operated stores ended the period at 988 (814 Famous Footwear, 174 Brand Portfolio).

Market and Competitive Landscape

• Gained market share in Total Footwear.
• Brand Portfolio gained market share in Women's Fashion Footwear according to Circana.
• Fashion footwear is seeing breakout momentum with brands resonating with consumers.
• Lifestyle athletic products are underperforming compared to fashion products within Famous Footwear.

Risks and Challenges

• Famous Footwear results were below expectations due to a later Back-to-School season and softness in lifestyle athletic.
• Selling and administrative expenses were deleveraged, primarily reflecting expenses related to Stuart Weitzman.
• Inventory levels increased year-over-year, though down 1.2% when excluding Stuart Weitzman.
• The press release lists general risks including trade policies, tariffs, consumer demand shifts, inflation, supply chain disruptions, and competition.

Management Commentary and Tone

• Jay Schmidt, President and CEO, stated the company is pleased with second quarter performance, citing broad-based gains across brands, channels, and geographies in the Brand Portfolio.
• Management noted that while Famous Footwear results were below expectations, they are pivoting to align assortment with changing consumer demand by emphasizing fashion.
• Management expressed confidence in capitalizing on Brand Portfolio strength and rebuilding earnings power.
• The tone indicates a focus on profit improvement and earnings growth despite segment-specific headwinds.

Other Key Points

• The company reported a $55.6 million tariff refund recovery included in cost of goods sold.
• A gain on the sale of the corporate headquarters was recognized ($3.95 million proceeds).
• The company paid $4.767 million in dividends during the 13 weeks ended August 1, 2026.
• The company acquired treasury stock for $3.123 million during the 13 weeks ended August 1, 2026.
• The company operates approximately 1,000 retail stores globally.
• The conference call for Q2 2026 results was held on September 9, 2026.