Caleres Q3 profit plunges on margin pressure

Caleres closed the $120.2m acquisition of Stuart Weitzman from Tapestry in August this year.

For the 13 weeks ended 1 November 2025, the footwear brand delivered net sales of $790.1m, an increase of 6.6% from $740.9m in the same period a year ago.

The growth was driven by 18.8% growth in the Brand Portfolio segment, which offset a 2.2% decline at Famous Footwear.

Direct-to-consumer sales accounted for roughly 71% of total net sales in the reported quarter.

Caleres president and CEO Jay Schmidt said: “Caleres delivered third quarter sales results that were ahead of our internal expectations, highlighted by organic sales growth in our Brand Portfolio segment, strong Lead Brands performance, sequential improvement in trends at Famous Footwear, and accelerated eCommerce momentum in both segments of our business.”

In the third quarter, the company’s gross profit increased to $329.9m, from $326.9m in the prior year quarter, but gross margin fell 230 basis points (bps) to 41.8%.

Gross margin for Famous Footwear and Brand Portfolio segments dropped 130bps and 350bps, respectively, over the quarter.

Selling and administrative (SG&A) expenses climbed to $311.3m, representing 39.4% of net sales, up 310bps from last year. Most of this was attributed to expenses tied to Stuart Weitzman, which added $32.2m in costs during the quarter.

SG&A expenses after the exclusion of Stuart Weitzman were still up $10m, reflecting an unfavourable comparison to the prior year, when incentive compensation was released.

The combined effect of lower margins and higher operating expenses drove a sharp decline in earnings.

Generally Accepted Accounting Principles (GAAP) net earnings fell to $2.4m, which translates to $0.07 per diluted share, compared with $41.4m, or $1.19 per diluted share, in the prior-year period.

Caleres’ inventory at quarter-end stood at $678.2m, an increase of $92m compared to last year. Stuart Weitzman accounted for $77m of that total.

Looking ahead to the remainder of fiscal 2025, the company expects ongoing tariff headwinds to weigh on gross margin and confirmed that Stuart Weitzman will remain a significant source of earnings dilution.

Caleres anticipates GAAP loss per diluted share between $0.13 and $0.18, and adjusted earnings per diluted share between $0.55 and $0.60, which incorporates an estimated $0.60 to $0.65 of dilution from Stuart Weitzman.

“For the balance of the year, we will be working to transition the Stuart Weitzman business to Caleres systems and clean up aged and excess inventory as we hone our strategies for long-term growth and profitability of the brand. In fiscal 2026, we will begin to unlock synergistic cost savings,” Schmidt added.