On September 9, Caleres (NYSE:CAL) held its second-quarter earnings call, and the numbers told two very different stories under one roof. Net sales rose 5.6% to $695.5 million, and adjusted diluted earnings per share jumped to $0.47 from $0.35 a year earlier. The company also raised the low end of its full-year guidance. Yet Famous Footwear, the chain that made Caleres a household name, kept losing ground while the newer brand portfolio did the heavy lifting.
Brand Fueled By Weitzman Deal
The brand portfolio, which houses names like Sam Edelman, Allen Edmonds, Naturalizer, Vionic and Stuart Weitzman, brought in $340.6 million in sales, up 23.6% on the strength of the Weitzman integration and 8.2% organic growth. Margins expanded even faster than sales, with the segment’s adjusted gross margin climbing 880 basis points to 49.1% as markdowns eased and tariff mitigation work paid off. Sam Edelman sales grew in the mid-teens, with double-digit growth at key department store accounts and higher average unit retails, while the brand added a men’s line in August that CEO Jay Schmidt said drew “positive reactions from all key accounts.”
Allen Edmonds revenue grew in the low-teens, led by wholesale strength and a doubling of its premium reserve collection, and its 18 Port Washington studio stores posted 15% growth, outpacing the rest of the fleet by 800 basis points. Naturalizer sales rose in the high single digits, and Vionic’s walking category grew more than 50% year over year, now 13% of the brand’s total sales. International sales climbed 57% overall, with Schmidt pointing to a “rapid resurgence” for Stuart Weitzman in China as the company’s single biggest growth vector.
Famous Footwear Loses Ground
Famous Footwear told the opposite story. Sales fell 6.3% to $374.4 million as consumers pulled back from lifestyle athletic shoes, and gross margin slipped 100 basis points to 42.7% as the chain leaned on promotions and clearance to move inventory. Schmidt noted that back-to-school arrived later than usual this year “due to the shift in Labor Day timing and several shifts in tax-free events,” which weighed on the quarter. CFO Daniel Karpel warned of “continuing softness in certain categories of our Famous business and related promotional activity as we adjust our inventories through the balance of the year.”
Inventory across the company climbed to $754.2 million, up $61 million, with $69 million of that tied to the Weitzman acquisition. Karpel also flagged an “uncertain tariff environment,” with the company assuming new tariffs will replace the prior IEEPA refunds that added $57.4 million to the quarter. Caleres closed the quarter with $50.9 million in cash against $288 million in revolver borrowings, and plans to open 13 stores while closing 26 this year.
Skepticism Meets A Cheap Multiple
Hedge fund ownership held steady at 26 funds in the most recent quarter versus 26 the quarter before, showing no shift in institutional conviction either way. Short interest sits at 11.66% of the float, a level that signals a meaningful bear camp still betting against the stock. Yet shares trade at a forward P/E of just 7.42 as of September 11, a multiple that assumes very little of the brand portfolio’s momentum continues. That combination points to a market still unconvinced the growth engine can outrun Famous Footwear’s slide.
One Company Two Different Stories
Caleres enters the back half of the year with raised guidance and a brand portfolio proving it can grow margins and market share at once. But Famous Footwear’s promotional pressure and the looming tariff shift Karpel described are real drags that guidance alone does not erase. For the bull case to hold, the brand portfolio needs to keep outrunning Famous Footwear’s decline as Stuart Weitzman marches toward its 2026 breakeven target.
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