20 Underperforming Stocks Targeted By Short Sellers

12. Caleres, Inc. (NYSE:CAL)

Short interest: 15.71%

6 months’ performance: -49.56%

Caleres, Inc. is a developer, designer, manufacturer, sourcer, and seller of footwear. The company generates its revenue through the Brand Portfolio and Famous Footwear segments. It provides private-label, licensed, and branded athletic, dress, and casual footwear products.

The firm’s sales performance remained challenging, with Famous Footwear comparable sales down by 3% and Brand Portfolio sales down by 7%. Due to high fixed costs and lower sales, the company faces margin pressure. Caleres’ operating margins significantly declined to 2% in Q4 from 5%. For the full year, operating margins dropped by 5.8%.

The company’s capital allocation decisions highlight further risks. In 2024, the company prioritized shareholders’ returns instead of paying off debt. As a result, the amount of debt increased to $220 million from $190 million in the last year. The latest acquisition of Stuart Weitzman will further cost $105 million, increasing debt by 50%. Stuart Weitzman, which is an unprofitable brand, will require significant investment, which is likely to also pressure margins.