Caleres (NYSE:CAL) reported third-quarter revenue of $790.1 million, a 6.6% increase from the prior year and above the $768.59 million forecast by analysts. However, earnings fell short of expectations as the retailer absorbed integration expenses tied to its recent purchase of Stuart Weitzman. Shares dropped 17% in premarket trading on Tuesday following the release.
The company posted adjusted earnings of $0.38 per share, well below the consensus estimate of $0.85. Caleres said that without the impact from Stuart Weitzman, adjusted EPS would have been $0.67.
Within the Brand Portfolio segment, sales rose 18.8%, bolstered by $45.8 million in revenue from Stuart Weitzman, which Caleres acquired in August for roughly $108.9 million. Excluding the acquisition, organic Brand Portfolio revenue increased 4.6%, with Lead Brands delivering double-digit growth. The Famous Footwear division saw a 2.2% decline in sales, with comparable sales down 1.2%.
Jay Schmidt, president and chief executive officer, 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.”
Gross margin slipped to 41.8%, a contraction of 230 basis points year-over-year, due largely to tariff headwinds and expenses related to integrating Stuart Weitzman. Caleres noted that Brand Portfolio now accounts for nearly half of total revenue and more than half of operating income.
For the full year, the company expects a GAAP loss per share between $0.13 and $0.18, and adjusted EPS of $0.55 to $0.60. This guidance includes $0.60 to $0.65 of dilution from the Stuart Weitzman acquisition. Caleres also projected a loss in the fourth quarter as it continues migrating Stuart Weitzman onto its internal systems and clears older inventory.
Looking ahead, Schmidt added, “In fiscal 2026, we will begin to unlock synergistic cost savings. Through this integration process, we are sharpening our operating structure to better leverage our scale and strengthen our ability to build and grow powerful brands and consumer experiences.”