Stuart Weitzman integration and tariffs drag down Caleres Q3 earnings

Footwear company Caleres reported third quarter 2025 financial results that showed positive sales momentum, but profitability took a significant hit due to costs associated with the recent 108.9 million dollars acquisition of Stuart Weitzman and ongoing tariff pressure.

Consolidated sales for the quarter reached 790.1 million dollars, an increase of 6.6 percent year-over-year. However, adjusted earnings per diluted share plummeted to 38 cents, a sharp decline from 1.23 dollars in the prior year.

The company's performance was mixed across its segments. The Brand Portfolio segment was the primary driver of top-line growth, with sales surging 18.8 percent, which included a 45.8 million dollars contribution from Stuart Weitzman, which was acquired in August. Even on an organic basis, Brand Portfolio sales grew by 4.6 percent, highlighted by double-digit growth in its lead brands and market share gains in women's fashion footwear. By contrast, the Famous Footwear segment continued to face headwinds, with sales declining 2.2 percent and comparable sales down 1.2 percent. Across both segments, owned eCommerce sales were up double digits, with direct-to-consumer channels now accounting for approximately 71 percent of total net sales.

CEO Jay Schmidt affirmed that the sales results were "ahead of our internal expectations" and that the business fundamentals are improving. He noted that the Brand Portfolio, with the addition of Stuart Weitzman, now contributes nearly half the company's sales and more than half its operating earnings.

Despite this, the gross margin contracted by 230 basis points to 41.8 percent (42.7 percent on an adjusted basis), a decline primarily attributed to tariffs and near-term dilution from the integration of Stuart Weitzman.

Looking ahead, Caleres is focused on integrating the Stuart Weitzman business, which includes transitioning systems and cleaning up aged inventory, with cost synergies expected to begin in fiscal 2026. However, the company is maintaining a cautious outlook for the near-term, guiding for a GAAP loss per diluted share in the range of 13 cents to 18 cents for the full year and adjusted earnings per diluted share of 55 cents to 60 cents, which includes an estimated 60 cents to 65 cents of dilution from the acquisition. Caleres anticipates reporting a loss for the fourth quarter on both a GAAP and adjusted basis.