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December 19, 2025 • 4 min read
For investors and footwear enthusiasts alike, digging into financial statements offers a peek under the hood of retail giants. Today, we are looking at Caleres Inc. (CAL). For those unfamiliar with the name, Caleres is the global footwear powerhouse behind Famous Footwear, as well as owner of wholesale brands like Sam Edelman, Naturalizer, and Dr. Scholl’s.
Let's unpack the numbers from their latest 10-Q filing for the quarter ended November 1, 2025. The story this quarter is one of transformation: a major luxury acquisition boosting the top line, while one-time costs and retail headwinds put significant pressure on profitability.
To understand how money flows through Caleres—from shoe sales down to the bottom line—take a look at this flow diagram for the third quarter.
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You might notice a negative number for revenue and costs labeled as "Unallocated" in the diagram above. Specifically, this includes an elimination of -$12.4 million in revenue and -$13.3 million in cost of goods sold. This represents "intersegment sales," where the Brand Portfolio segment (wholesale) sells shoes to the Famous Footwear segment (retail). To avoid double-counting revenue for the consolidated company, these internal transactions are removed (eliminated) from the final totals.
The headline event for Caleres this quarter was the completion of its acquisition of Stuart Weitzman on August 4, 2025. This iconic luxury brand is now part of the Caleres "Brand Portfolio" segment.
The impact was immediate and mixed. Total consolidated net sales rose 6.6% year-over-year to $790.1 million. The Brand Portfolio segment specifically jumped nearly 19%, largely fueled by the $45.8 million contribution from Stuart Weitzman.
However, acquiring a company isn't free, and the costs go beyond the purchase price. The acquisition weighed heavily on immediate profitability.
Much of this drop is due to "purchase accounting inventory adjustments." In plain English, when Company A buys Company B, they often have to revalue Company B's inventory to fair market value. When that inventory is sold, it flows through as a higher Cost of Goods Sold (COGS), temporarily hurting margins. This adjustment alone added $7.7 million to costs this quarter.
While the wholesale side was busy integrating luxury assets, the retail engine—Famous Footwear—faced a rougher road. Net sales for the segment dropped 2.2% to $418.8 million.
More importantly, comparable sales (sales from stores open at least 13 months) declined by 1.2%. Management cited a decline in consumer traffic as the primary driver. When fewer people walk into stores, retailers often have to resort to promotions to move product, which appears to be the case here. Gross profit margin for the segment dipped to 41.6%, reflecting the need to clear lower-margin products and increased promotional activity.
The filing also highlights broader risks. Caleres is navigating a volatile trade environment, noting executive orders on tariffs ranging from 19% to 50%. Because footwear is heavily reliant on international sourcing, tariff volatility creates uncertainty for future pricing and margins.
Furthermore, the company's balance sheet reflects the cost of its ambition. Borrowings on their revolving credit agreement swelled to $355.0 million (up from $238.5 million a year ago) primarily to fund the Stuart Weitzman deal.
Caleres is currently a company in transition. On one hand, they are diversifying into high-end luxury with Stuart Weitzman, a move that drives revenue growth. On the other, they are managing a maturing retail business in Famous Footwear that is fighting for foot traffic. While the profit numbers look thin this quarter due to acquisition noise, investors will be watching closely to see if the new luxury assets can deliver better margins once the dust settles.
Last updated: December 19, 2025