Caleres Inc.
06/09/2026 | Press release | Distributed by Public on 06/09/2026 14:04
Quarterly Report for Quarter Ending May 2, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Business Overview
We are a global footwear company that operates retail stores and e-commerce websites, and designs, develops, sources, manufactures and distributes footwear for people of all ages. Our mission is to inspire people to feel great...feet first. We offer retailers and consumers a diversified portfolio of leading footwear brands. Outfitted in our brands, customers can step confidently into every aspect of their lives. As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points. We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels. A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands. Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our "One Caleres" capabilities to increase profitability, and delivering value for our shareholders.
Known Trends Impacting Our Business
Based on the current macroeconomic environment and our recent operating results, we believe the following trends may continue to impact our business and operating results:
Macroeconomic Environment
Macroeconomic conditions continued to weigh on consumer discretionary spending and our financial results during the first quarter of 2026. Consumers remain impacted by elevated interest rates, persistent inflation, and expectations of future price increases, which have increased pressure on discretionary spending. In addition, heightened geopolitical volatility has adversely affected the global economy. More recently, conflict throughout the Middle East, particularly the war in Iran, has increased oil prices, resulting in higher product and transportation costs. As a result, we continued to experience lower consumer traffic in our Famous Footwear retail stores during the quarter.
Tariff volatility and the lack of clarity surrounding future trade policy developments have heightened uncertainty in the global economy. We source a majority of our products internationally. We continue to monitor changes in policy impacting global trade, including tariffs, which have been volatile and subject to ongoing modification. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency ("CBP") to suspend collection of the invalidated tariffs and to establish a process to refund IEEPA tariffs previously collected. While the timing remains uncertain, we currently estimate that we are eligible to receive approximately $57.9 million in refunds related to the invalidated tariffs. Beginning in April 2026, we began filing refund claims with CBP related to eligible tariff payments made. There can be no guarantee that a refund will equal the full amount of IEEPA tariffs paid, and any refund may be subject to further legal and regulatory developments that could delay, reduce, or eliminate any refund. As a result of this uncertainty, as of May 2, 2026, we have not recorded a receivable related to the potential recovery of IEEPA tariffs paid. Beginning on May 11, 2026, the Company has received cash of $16.8 million for a portion of its refunds claims, with applicable interest.
Additionally, following the Supreme Court's ruling invalidating the IEEPA tariffs, the U.S. imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 and initiated additional trade actions, including investigations under Section 301 of the Trade Act of 1974, that may result in further tariffs.. There remains substantial uncertainty regarding the potential changes or pauses to existing and newly announced tariffs, tariff levels, and whether additional tariffs or other reciprocal actions may be imposed, modified, or suspended. We have continued to implement various mitigation strategies including adjusting the countries from which we source our products and negotiating price concessions with our factories and selectively raising prices. Proposed or enacted tariffs and changes to U.S. trade policies may be reinstituted, paused, removed, or changed at any time, and to the extent we are unable to successfully mitigate any negative resulting impacts, it could adversely affect our business, financial condition, and results of operation.
Liquidity
Our liquidity position remains strong, with $37.7 million in cash and cash equivalents and excess availability on our revolving credit agreement of $191.5 million as of May 2, 2026. During the first quarter of 2026, borrowings on our revolving credit agreement increased to $347.5 million, primarily driven by borrowings to fund the acquisition of Stuart Weitzman in the third quarter of 2025. Refer to Note 3 to the condensed consolidated financial statements for further discussion of the acquisition.
Financial Highlights
Highlights of our consolidated and segment results for the first quarter of 2026 and 2025 are as follows:
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Thirteen Weeks Ended |
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($ millions, except per share amounts) |
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May 2, 2026 |
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May 3, 2025 |
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Change (1) |
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Consolidated net sales |
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$666.6 |
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$614.2 |
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$52.4 |
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8.5 |
% |
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Famous Footwear segment net sales |
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$319.3 |
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$327.7 |
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($8.4) |
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(2.5) |
% |
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Famous Footwear comparable sales % change |
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(2.3) |
% |
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(4.6) |
% |
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n/m |
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n/m |
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Brand Portfolio segment net sales |
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$356.3 |
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$295.4 |
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$60.9 |
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20.6 |
% |
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Gross profit |
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$315.5 |
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$278.7 |
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$36.8 |
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13.2 |
% |
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Gross margin |
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47.3 |
% |
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45.4 |
% |
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n/m |
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190 |
bps |
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Operating earnings |
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$23.9 |
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$11.6 |
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$12.3 |
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106.3 |
% |
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Diluted earnings per share |
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$0.42 |
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$0.21 |
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$0.21 |
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100.0 |
% |
| (1) | n/m - not meaningful |
Metrics Used in the Evaluation of Our Business
The following are a few key metrics by which we evaluate our business, identify trends and make strategic decisions:
Comparable sales
The comparable sales metric is a metric commonly used in the retail industry to evaluate the revenue generated for stores that have been open for more than a year, though other retailers may calculate the metric differently. Management uses the comparable sales metric as a measure of an individual store's success to determine whether it is performing in line with expectations. Our comparable sales metric is a daily-weighted calculation for the period, which includes sales for stores that have been open for at least 13 months. In addition, in order to be included in the comparable sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year. Accordingly, closed stores are excluded from the comparable sales metric for each day of the closure. Relocated stores are treated as new stores and therefore excluded from the calculation. E-commerce sales for those websites that function as an extension of a retail chain are included in the comparable sales calculation. In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation. In the following year, the prior fiscal year period is shifted by one week to compare similar calendar weeks. We believe the comparable sales metric is useful to shareholders and investors in assessing our retail sales performance of existing locations with comparable prior year sales, separate from the impact of store openings or store closures.
Sales per square foot
The sales per square foot metric is commonly used in the retail industry to calculate the efficiency of sales based upon the square footage in a store. Management uses the sales per square foot metric as a measure of an individual store's success to determine whether it is performing in line with expectations. The sales per square foot metric is calculated by dividing total retail store sales, excluding e-commerce sales and the retail operations of our joint venture in China, by the total square footage of the retail store base in North America at the end of each month of the respective period.
Direct-to-consumer sales
Direct-to-consumer sales includes sales from our retail stores, our company-owned websites and sales through our customers' websites that we fulfill on a drop-ship basis. While we take an omni-channel approach to reach consumers, we believe that our direct-to-consumer channels reinforce the image of our brands and strengthens our connection with the end consumer. In addition, direct-to-consumer sales generally result in a higher gross margin for the Company as compared to wholesale sales. As a result, management monitors trends in direct-to-consumer sales as a percentage of our Brand Portfolio segment and total consolidated net sales.
RESULTS OF OPERATIONS
Following are the consolidated results and the results by segment:
CONSOLIDATED RESULTS
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Thirteen Weeks Ended |
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May 2, 2026 |
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May 3, 2025 |
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% of |
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% of |
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($ millions) |
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Net Sales |
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Net Sales |
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Net sales |
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$ |
666.6 |
100.0 |
% |
$ |
614.2 |
100.0 |
% |
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Cost of goods sold |
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351.1 |
52.7 |
% |
335.5 |
54.6 |
% |
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Gross profit |
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315.5 |
47.3 |
% |
278.7 |
45.4 |
% |
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Selling and administrative expenses |
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293.7 |
44.1 |
% |
266.5 |
43.4 |
% |
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Restructuring and other special charges, net |
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(2.1) |
(0.4) |
% |
0.6 |
0.1 |
% |
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Operating earnings |
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23.9 |
3.6 |
% |
11.6 |
1.9 |
% |
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Interest expense, net |
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(4.7) |
(0.7) |
% |
(3.8) |
(0.6) |
% |
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Other income, net |
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1.2 |
0.2 |
% |
0.7 |
0.1 |
% |
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Earnings before income taxes |
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20.4 |
3.1 |
% |
8.5 |
1.4 |
% |
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Income tax provision |
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(6.6) |
(1.0) |
% |
(2.6) |
(0.4) |
% |
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Net earnings |
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13.8 |
2.1 |
% |
5.9 |
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1.0 |
% |
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Net loss attributable to noncontrolling interests |
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(0.5) |
(0.1) |
% |
(1.0) |
(0.1) |
% |
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Net earnings attributable to Caleres, Inc. |
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$ |
14.3 |
2.2 |
% |
$ |
6.9 |
1.1 |
% |
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Net Sales
Net sales increased $52.4 million, or 8.5%, to $666.6 million for the first quarter of 2026, compared to $614.2 million for the first quarter of 2025. Net sales of our Brand Portfolio segment increased $60.9 million, or 20.6%, reflecting the impact of our Stuart Weitzman acquisition on August 4, 2025, which contributed net sales of $43.9 million, and organic growth in our owned e-commerce and wholesale businesses. We saw strength in premium brands and growth in most of our more value-oriented brands. Net sales in our Famous Footwear segment decreased $8.4 million, or 2.5%, and comparable sales declined 2.3%, reflecting less traffic in our retail stores. Our direct-to-consumer sales represented approximately 67% of consolidated net sales for the first quarter of 2026, compared to 70% for the first quarter of 2025. We remain focused on international growth, direct-to-consumer penetration, elevating the consumer experience at Famous Footwear and maximizing the vertical opportunity between the Famous Footwear and Brand Portfolio segments, with Dr. Scholl's, LifeStride, Naturalizer, Blowfish Malibu, and Ryka representing five of Famous Footwear's top 20 best-selling footwear brands during the quarter.
Gross Profit
Gross profit increased $36.8 million, or 13.2%, to $315.5 million for the first quarter of 2026, compared to $278.7 million for the first quarter of 2025. As a percentage of net sales, gross profit increased to 47.3% for the first quarter of 2026, compared to 45.4% for the first quarter of 2025, primarily reflecting lower ongoing tariffs, the continuation of our tariff mitigation efforts, lower markdowns, and favorable product mix.
We classify certain warehousing, distribution, sourcing and other inventory procurement costs in selling and administrative expenses. Accordingly, our gross profit and selling and administrative expense rates, as a percentage of net sales, may not be comparable to other companies.
Selling and Administrative Expenses
Selling and administrative expenses increased $27.2 million, or 10.2%, to $293.7 million for the first quarter of 2026, compared to $266.5 million for the first quarter of 2025. The increase was driven by expenses associated with our acquired Stuart Weitzman brand, as well as higher expenses associated with our incentive compensation programs. As a percentage of net sales, selling and administrative expenses increased to 44.1% for the first quarter of 2026, from 43.4% for the first quarter of 2025.
Restructuring and Other Special Charges, Net
Restructuring and other special charges, net resulted in income of $2.1 million for the first quarter of 2026, driven by a gain on the sale of one of the remaining parcels comprising the corporate headquarters and offset by Stuart Weitzman acquisition and integration costs. Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges. We incurred restructuring costs of $0.6 million for the first quarter of 2025, primarily for legal and other related costs associated with the acquisition of Stuart Weitzman.
Operating Earnings
Operating earnings increased $12.3 million to $23.9 million for the first quarter of 2026, compared to $11.6 million for the first quarter of 2025, reflecting the factors described above. As a percentage of net sales, operating earnings were 3.6% for the first quarter of 2026, compared to 1.9% for the first quarter of 2025.
Interest Expense, Net
Interest expense, net increased $0.9 million, or 23.7%, to $4.7 million for the first quarter of 2026, compared to $3.8 million for the first quarter of 2025, reflecting higher average borrowings on our revolving credit facility. As discussed above, we used the revolving credit facility to fund the acquisition of Stuart Weitzman that closed on August 4, 2025.
Other Income, Net
Other income, net increased $0.5 million to $1.2 million for the first quarter of 2026, compared to $0.7 million for the first quarter of 2025, primarily reflecting higher income generated from our pension plan assets in the first quarter of 2026. Refer to Note 14 of the condensed consolidated financial statements for further information.
Income Tax Provision
Our effective tax rate can vary considerably from period to period, depending on a number of factors. Our consolidated effective tax rates were 32.4% and 29.8% for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively. The higher effective tax rate was driven by discrete tax provisions related to share-based compensation of $1.2 million and $0.3 million for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively.
In 2021, the Organization for Economic Cooperation and Development (OECD) released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules, which became effective on January 1, 2024. In January 2026, the OECD announced that the U.S. multinational regime would be considered a side-by-side regime that should prevent U.S. companies from double taxation. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our tax provision or effective tax rate.
Net Earnings Attributable to Caleres, Inc.
Net earnings attributable to Caleres, Inc. were $14.3 million for the first quarter of 2026 compared to $6.9 million for the first quarter of 2025, as a result of the factors described above.
FAMOUS FOOTWEAR
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Thirteen Weeks Ended |
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May 2, 2026 |
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May 3, 2025 |
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% of |
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% of |
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($ millions, except sales per square foot) |
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Net Sales |
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Net Sales |
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Net sales |
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$ |
319.3 |
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100.0 |
% |
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$ |
327.7 |
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100.0 |
% |
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Cost of goods sold |
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179.3 |
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56.2 |
% |
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179.3 |
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54.7 |
% |
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Gross profit |
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140.0 |
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43.8 |
% |
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$ |
148.4 |
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45.3 |
% |
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Selling and administrative expenses |
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140.4 |
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44.0 |
% |
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|
143.4 |
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43.8 |
% |
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Restructuring and other special charges, net |
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- |
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- |
% |
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- |
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- |
% |
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Operating (loss) earnings |
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$ |
(0.4) |
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(0.1) |
% |
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$ |
5.0 |
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1.5 |
% |
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Key Metrics |
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Comparable sales % change |
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(2.3) |
% |
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(4.6) |
% |
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Comparable sales $ change |
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$ |
(7.2) |
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$ |
(15.6) |
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Sales change from new and closed stores, net |
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$ |
(1.4) |
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$ |
(6.0) |
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Impact of changes in Canadian exchange rate on sales |
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$ |
0.2 |
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$ |
(0.3) |
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Sales per square foot, excluding e-commerce (thirteen weeks ended) |
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$ |
50 |
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$ |
51 |
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Sales per square foot, excluding e-commerce (trailing twelve months) |
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$ |
228 |
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$ |
235 |
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Square footage (thousand sq. ft.) |
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5,356 |
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5,504 |
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Stores opened |
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1 |
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- |
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Stores closed |
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10 |
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11 |
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Ending stores |
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812 |
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835 |
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Net Sales
Net sales of $319.3 million in the first quarter of 2026 decreased $8.4 million, or 2.5%, compared to the first quarter of 2025. Comparable sales decreased 2.3% for the first quarter of 2026 driven by a decline in consumer traffic in our retail stores. We experienced strong growth in e-commerce sales and an increase in e-commerce penetration to 16% of net sales in the first quarter of 2026, from 14% in the first quarter of 2025. Our kids category, which is a key differentiator for Famous Footwear, continued to outperform the total chain.
We opened one store and closed 10 stores during the first quarter of 2026, resulting in 812 stores and total square footage of 5.4 million at the end of the quarter, compared to 835 stores and total square footage of 5.5 million at the end of the first quarter of 2025. Sales to members of our customer loyalty program, Famously You Rewards, continue to account for a majority of the segment's sales with approximately 78% of our net sales made to program members in the first quarter of 2026, compared to 79% in the first quarter of 2025.
Gross Profit
Gross profit decreased $8.4 million, or 5.7%, to $140.0 million for the first quarter of 2026, compared to $148.4 million for the first quarter of 2025. As a percentage of net sales, our gross profit decreased to 43.8% for the first quarter of 2026, from 45.3% for the first quarter of 2025, reflecting higher levels of clearance-related promotional activity and inventory valuation adjustments.
Selling and Administrative Expenses
Selling and administrative expenses decreased $3.0 million, or 2.1%, to $140.4 million for the first quarter of 2026, compared to $143.4 million for the first quarter of 2025. The decrease was primarily driven by lower warehouse and distribution costs and timing of marketing spend. During the first quarter of 2026, we converted two stores to the FLAIR concept, ending the quarter with a total of 59 FLAIR stores. These stores continue to outperform our traditionally designed retail stores. As a percentage of net sales, selling and administrative expenses increased to 44.0% for the first quarter of 2026, compared to 43.8% for the first quarter of 2025.
Operating (Loss) Earnings
Operating (loss) earnings decreased $5.4 million to operating loss of $0.4 million for the first quarter of 2026, compared to operating earnings of $5.0 million for the first quarter of 2025, primarily reflecting the factors described above. As a percentage of net sales, operating (loss) earnings declined to (0.1)% for the first quarter of 2026, compared to 1.5% for the first quarter of 2025.
BRAND PORTFOLIO
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Thirteen Weeks Ended |
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May 2, 2026 |
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May 3, 2025 |
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% of |
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% of |
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($ millions) |
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Net Sales |
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Net Sales |
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Net sales |
$ |
356.3 |
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100.0 |
% |
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$ |
295.4 |
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100.0 |
% |
|
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Cost of goods sold |
|
181.8 |
|
51.0 |
% |
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|
166.1 |
|
56.2 |
% |
|
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Gross profit |
|
174.5 |
|
49.0 |
% |
|
|
129.3 |
|
43.8 |
% |
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|
Selling and administrative expenses |
|
135.0 |
|
37.9 |
% |
|
|
111.9 |
|
37.9 |
% |
|
|
Restructuring and other special charges, net |
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0.4 |
|
0.1 |
% |
|
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- |
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- |
% |
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Operating earnings |
$ |
39.1 |
|
11.0 |
% |
|
$ |
17.4 |
|
5.9 |
% |
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Key Metrics |
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Direct-to-consumer (% of net sales) (1) |
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36 |
% |
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|
35 |
% |
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Change in wholesale net sales, excluding Stuart Weitzman ($) |
$ |
10.5 |
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$ |
(17.6) |
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Change in retail net sales, excluding Stuart Weitzman ($) |
$ |
6.5 |
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$ |
(4.2) |
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Sales change from acquired Stuart Weitzman business |
$ |
43.9 |
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$ |
- |
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Unfilled order position at end of period |
$ |
346.5 |
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$ |
263.6 |
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Company-Operated Stores: |
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North America |
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Stores opened |
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- |
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3 |
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Stores closed |
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- |
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2 |
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Ending stores - North America(2) |
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85 |
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61 |
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East and Southeast Asia |
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Ending stores - East Asia (2) |
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99 |
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54 |
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Total Company-Operated Stores |
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184 |
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|
115 |
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International franchise locations |
|
152 |
|
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|
|
116 |
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|
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Total |
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336 |
|
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|
|
231 |
|
|
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| (1) | Direct-to-consumer includes sales of our retail stores and e-commerce sites and sales through our customers' websites that we fulfill on a drop-ship basis. |
| (2) | Includes 23 North America and 48 East Asia retail stores acquired from Stuart Weitzman. |
Net Sales
Net sales of $356.3 million in the first quarter of 2026 increased $60.9 million, or 20.6%, compared to the first quarter of 2025. The increase primarily reflects the acquisition of Stuart Weitzman on August 4, 2025, which contributed net sales of $43.9 million in the first quarter of 2026. We experienced strong growth in our company-owned e-commerce business, which increased approximately 21% during the first quarter of 2026, and growth in our wholesale business. We saw strength in premium brands and declines in our more value-oriented brands. Our direct-to-consumer sales represented approximately 36% of net sales for the first quarter of 2026, compared to 35% for the first quarter of 2026. During the first quarter of 2026, we did not open or close any stores in North America, resulting in a total of 85 stores, compared to 61 stores in the first quarter of 2025. We remain focused on international growth and continue to evaluate expansion of our international presence during the first quarter of 2026. There were 99 stores in East Asia at May 2, 2026, compared to 54 stores at May 3, 2025. There were also 152 international branded stores owned and operated by third parties through franchise agreements at May 2, 2026, compared to 116 international branded stores at May 3, 2025.
Our unfilled order position for our wholesale sales increased $82.9 million, or 31.4%, to $346.5 million at May 2, 2026, compared to $263.6 million at May 3, 2025.
Gross Profit
Gross profit increased $45.2 million, or 35.0%, to $174.5 million for the first quarter of 2026, compared to $129.3 million for the first quarter of 2025, driven by net sales growth. As a percentage of net sales, our gross profit increased to 49.0% for the first quarter of 2026, compared to 43.8% for the first quarter of 2025. The increase was driven by lower ongoing tariffs, the continuation of our tariff mitigation efforts, lower markdowns, and favorable product mix.
Selling and Administrative Expenses
Selling and administrative expenses increased $23.1 million, or 20.6%, to $135.0 million for the first quarter of 2026, compared to $111.9 million for the first quarter of 2025 driven by expenses related to our acquired Stuart Weitzman brand and growth in our international
business. As a percentage of net sales, selling and administrative expenses was consistent with the prior comparable period, 37.9% for the first quarter of 2026, compared to 37.9% for the first quarter of 2025.
Restructuring and Other Special Charges, Net
Restructuring and other special charges of $0.4 million for the thirteen weeks ended May 2, 2026 were primarily associated Stuart Weitzman acquisition and integration costs. Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges. There were no Restructuring and other special charges during the thirteen weeks ended May 3, 2025.
Operating Earnings
Operating earnings increased to $39.1 million for the first quarter of 2026, from $17.4 million for the first quarter of 2025, as a result of the factors described above. As a percentage of net sales, operating earnings were 11.0% for the first quarter of 2026, compared to 5.9% for the first quarter of 2025.
ELIMINATIONS AND OTHER
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Thirteen Weeks Ended |
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May 2, 2026 |
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May 3, 2025 |
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% of |
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% of |
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($ millions) |
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Net Sales |
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Net Sales |
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||
|
Net sales |
$ |
(9.0) |
|
100.0 |
% |
|
$ |
(8.9) |
|
100.0 |
% |
|
|
Cost of goods sold |
|
(10.0) |
|
110.6 |
% |
|
|
(9.9) |
|
110.9 |
% |
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|
Gross profit |
|
1.0 |
|
(10.6) |
% |
|
|
1.0 |
|
(10.9) |
% |
|
|
Selling and administrative expenses |
|
18.3 |
|
(203.3) |
% |
|
|
11.1 |
|
(125.9) |
% |
|
|
Restructuring and other special charges, net |
|
(2.6) |
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28.9 |
% |
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|
0.6 |
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(7.1) |
% |
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Operating loss |
$ |
(14.7) |
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163.8 |
% |
|
$ |
(10.7) |
|
122.1 |
% |
|
The Eliminations and Other category includes the elimination of intersegment sales and profit, unallocated corporate administrative expenses, and other costs and recoveries.
The net sales elimination of $9.0 million for the first quarter of 2026 is $0.1 million, or 1.1%, higher than the first quarter of 2025, reflecting a slight increase in product sold from our Brand Portfolio segment to Famous Footwear compared to the prior comparable period.
Selling and administrative expenses increased $7.2 million, to $18.3 million in the first quarter of 2026, compared to $11.1 million for the first quarter of 2025, primarily reflecting higher expenses related to our incentive compensation programs and employee benefits costs.
Restructuring and other special income of $2.6 million for the first quarter of 2026 was driven by a gain of $3.9 million for the sale of one of the remaining parcels comprising our corporate headquarters in Clayton, Missouri, partially offset by $1.3 million of technology, office relocation and other related costs associated with the acquisition of Stuart Weitzman. Restructuring and other special charges of $0.6 million for the first quarter of 2025 were for legal and other related costs associated with the acquisition of Stuart Weitzman. Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges.
LIQUIDITY AND CAPITAL RESOURCES
Borrowings
As further discussed in Note 11 to the condensed consolidated financial statements, we maintain a revolving credit facility for working capital needs and strategic initiatives that matures on June 27, 2030. The aggregate amount available under the revolving credit facility is up to $700.0 million, subject to borrowing base restrictions, and may be further increased by up to $250.0 million. Interest on the borrowings is at variable rates based on the SOFR, or the prime rate (as defined in the Credit Agreement), plus a spread.
Total debt obligations of $347.5 million at May 2, 2026 increased $89.0 million, from $258.5 million at May 3, 2025, and $51.0 million, from $296.5 million at January 31, 2026. On August 4, 2025, we completed the acquisition of Stuart Weitzman, as further discussed in Note
3 to the condensed consolidated financial statements. The increase in borrowings at May 2, 2026 primarily reflects borrowings to fund the acquisition, to fund business operations and inventory purchases. Net interest expense for the first quarter of 2026 increased $0.9 million to $4.7 million, compared to $3.8 million for the first quarter of 2025, reflecting higher average borrowings on our revolving credit facility.
At May 2, 2026, we had $347.5 million in borrowings and $8.5 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was $191.5 million at May 2, 2026. We were in compliance with all covenants and restrictions under the Credit Agreement as of May 2, 2026.
Working Capital and Cash Flow
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Thirteen Weeks Ended |
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($ millions) |
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May 2, 2026 |
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May 3, 2025 |
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Change |
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Net cash used for operating activities |
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$ |
(27.8) |
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$ |
(5.7) |
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$ |
(22.1) |
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Net cash used for investing activities |
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(8.6) |
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(21.1) |
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|
12.5 |
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Net cash provided by financing activities |
|
|
44.3 |
|
|
30.3 |
|
|
14.0 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
0.0 |
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|
0.0 |
|
|
0.0 |
|
|
Increase in cash and cash equivalents |
|
$ |
7.9 |
|
$ |
3.5 |
|
$ |
4.4 |
|
Reasons for the major variances in cash provided in the table above are as follows:
Cash used for operating activities was $22.1 million higher in the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, primarily reflecting the following factors, which includes cash used for Stuart Weitzman operating activities:
| ● | A larger increase in accounts receivable during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, |
| ● | A larger decrease in accrued expenses and other liabilities during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, and |
| ● | A larger increase in prepaid expenses and other current assets during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, partially offset by |
| ● | Higher net earnings in the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, |
| ● | A smaller decrease in trade accounts payable during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, and |
| ● | A smaller decrease in inventories during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025 |
Cash used for investing activities was $12.5 million lower for the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, reflecting lower capital expenditures, due in part to less Famous Footwear remodel spending. We had 59 FLAIR stores as of May 2, 2026 and expect to add two more FLAIR stores during the second quarter of 2026. The capital expenditures are offset by a $4.0 million of cash received for the sale of one of the remaining parcels comprising the Company's corporate headquarters.
Cash provided by financing activities was $14.0 million higher for the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, primarily due to net borrowings on our revolving credit agreement of $51.0 million in the thirteen weeks ended May 2, 2026, compared to net borrowings of $39.0 million in the comparable period in 2025. The increase in borrowings during the thirteen weeks ended May 2, 2026 reflects the use of the revolving credit agreement to fund the Stuart Weitzman acquisition in Q3 2025 as well as to fund normal business operations, including inventory purchases. The increase in borrowings is partially offset by lower purchases of $3.1 million of shares of our common stock under our share repurchase program in the thirteen weeks ended May 2, 2026, compared to $5.0 million of purchases in the comparable period in 2025.
A summary of key financial data and ratios at the dates indicated is as follows:
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May 2, 2026 |
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May 3, 2025 |
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January 31, 2026 |
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Working capital ($ millions) (1) |
$ |
29.4 |
|
$ |
76.1 |
|
|
$ |
17.2 |
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Current ratio (2) |
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1.03:1 |
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1.10:1 |
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1.02:1 |
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Debt-to-capital ratio (3) |
|
35.9 |
% |
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29.7 |
% |
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|
32.7 |
% |
| (1) | Working capital has been computed as total current assets less total current liabilities. |
| (2) | The current ratio has been computed by dividing total current assets by total current liabilities. |
| (3) | The debt-to-capital ratio has been computed by dividing the borrowings under our revolving credit agreement by total capitalization. Total capitalization is defined as total debt and total equity. |
Working capital at May 2, 2026 was $29.4 million, which was a decrease of $46.7 million from May 3, 2025 and a $12.2 million increase from January 31, 2026. The decrease in working capital from May 3, 2025 primarily reflects higher borrowings under our revolving credit agreement and higher accrued expenses, partially offset by higher inventory, higher receivables and lower trade accounts payable. The revolver was used to fund the acquisition of Stuart Weitzman, as further described in Note 3 to the condensed consolidated financial statements. The increase in working capital from January 31, 2026 primarily reflects higher receivables and prepaid and other current assets, partially offset by higher borrowings under our revolving credit agreement. Our current ratio was 1.03:1 as of May 2, 2026, compared to 1.10:1 at May 3, 2025 and 1.02:1 at January 31, 2026. Our debt-to-capital ratio was 35.9% as of May 2, 2026, compared to 29.7% as of May 3, 2025 and 32.7% at January 31, 2026. The higher debt-to-capital ratio as of May 2, 2026 reflects the increase in borrowings under our revolving credit agreement as a result of the Stuart Weitzman acquisition.
We declared and paid dividends of $0.07 per share in the first quarter of both 2026 and 2025. The declaration and payment of any future dividend is at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors. However, we presently expect that dividends will continue to be paid.
We have various contractual or other obligations, including borrowings under our revolving credit facility, operating lease commitments and obligations for our supplemental executive retirement plan and other postretirement benefits. We also have purchase obligations to purchase inventory, assets and other goods and services. We believe our operating cash flows are sufficient to meet our material cash requirements for at least the next 12 months.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
No material changes have occurred related to critical accounting policies and estimates since the end of the most recent fiscal year. For further information on the Company's critical accounting policies and estimates, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended January 31, 2026.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Recently issued accounting pronouncements, if any, and their impact on the Company are described in Note 2 to the condensed consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements and expectations regarding the Company's future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changes in United States and international trade policies, including tariffs and trade restrictions; (ii) changing consumer demands, which may be influenced by general economic conditions and other factors; (iii) inflationary pressures and supply chain disruptions; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) supplier concentration, customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ix) transitional challenges with acquisitions and divestitures; (x) cybersecurity threats or other major disruption to the company's information technology; (xi) the ability to accurately forecast sales and manage inventory levels; (xii) a disruption in the company's distribution centers;
(xiii) the ability to recruit and retain senior management and other key associates; (xiv) the ability to secure/exit leases on favorable terms; (xv) changes to tax laws, policies and treaties; (xvi) our commitments and shareholder expectations related to responsible business initiatives; (xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xviii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. The Company's reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended January 31, 2026, which information is incorporated by reference herein and updated by the Company's Quarterly Reports on Form 10-Q. The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.
Caleres Inc. published this content on June 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on June 09, 2026 at 20:04 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]