Caleres Inc.

Company Overview

Business Model: Caleres, Inc. is a global footwear company that designs, develops, sources, manufactures, and distributes footwear for all ages, operating retail shoe stores and e-commerce websites. Its mission is to inspire people to feel great...feet first. The Company employs a "One Caleres" approach, integrating design, sourcing, speed, and marketing to accelerate growth. Revenue is generated through two primary segments: Famous Footwear, a family-branded footwear retailer, and Brand Portfolio, which encompasses wholesale operations and direct-to-consumer sales of owned and licensed brands.

Market Position: Caleres, Inc. operates in a highly fragmented and competitive footwear industry. Its Famous Footwear segment is positioned as one of America’s leading family-branded footwear retailers, targeting the millennial family with an assortment of trend-right, brand-name fashion, casual, and athletic footwear. The Brand Portfolio segment offers a cultivated portfolio of leading brands, showcasing them through retail stores, e-commerce, and wholesale distribution to approximately 1,900 retailers globally. The Company emphasizes its diversified business model, spanning consumer segments, categories, and distribution channels, as a source of competitive synergy.

Recent Strategic Developments:

• Stuart Weitzman Acquisition: In August 2025, Caleres, Inc. acquired the Stuart Weitzman business for $108.9 million, net of cash received. This acquisition strengthens the Company's position in the global footwear market and adds an iconic luxury women's footwear brand to the Brand Portfolio segment, expanding its presence in North America, Europe, and Asia.
• Expense Reduction Initiatives: During 2025, the Company incurred $9.6 million in costs related to expense reduction initiatives, primarily severance and associated costs.
• Corporate Headquarters Sale: In December 2025, Caleres, Inc. completed the sale of the largest parcel of its corporate headquarters campus in Clayton, Missouri, recognizing a gain of $2.6 million. The Company plans to vacate the remaining two parcels and relocate to a new leased headquarters in mid-2026.
• FLAIR Store Concept Expansion: The Famous Footwear segment continues to invest in enhancing the consumer experience by converting stores to the FLAIR (Famous Localized and Immersive Retail) concept, with 22 conversions and one new FLAIR store opened in 2025, totaling 57 FLAIR stores. These stores are noted to outperform traditionally designed retail stores.
• Brand Portfolio Expansion: The Company continues to expand its Sam Edelman presence in East and Southeast Asia, anticipating approximately 2 net new stores and 5 net new franchisee stores in 2026.

Geographic Footprint: Caleres, Inc. operates globally with both domestic and international operations.

• North America: Famous Footwear operates 821 stores across 49 states, Canada, and Guam. The Brand Portfolio segment operates 85 branded retail stores in North America (Allen Edmonds, Sam Edelman, Stuart Weitzman).
• East and Southeast Asia: The Brand Portfolio segment operates 103 branded retail stores, including 50 Stuart Weitzman stores, and has 148 international branded stores owned and operated by third parties through franchise agreements.
• Europe: The Brand Portfolio segment has wholesale operations and Stuart Weitzman retail locations.
• Other International: Wholesale operations extend to approximately 63 other countries.
• Revenue Distribution (2025): United States (93.6%), Canada (2.3%), East and Southeast Asia (2.0%), Other (2.0%).

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 43.0%
• Operating Margin: 0.2%
• Net Margin: -0.2% (Net Loss Attributable to Caleres, Inc. as % of Net Sales)

Investment in Growth (2025):

• R&D Expenditure: Not explicitly stated as a separate line item, but product development teams are maintained in various global locations.
• Capital Expenditures: $63.7 million (Purchases of property and equipment)
• Strategic Investments: $108.9 million (Acquisition of Stuart Weitzman, net of cash received)

Business Segment Analysis

Famous Footwear

Financial Performance (2025):

• Revenue: $1,500.1 million (-3.6% YoY)
• Operating Earnings: $47.2 million (-39.9 million YoY)
• Operating Margin: 3.2% (down from 5.6% in 2024)
• Key Growth Drivers: Focus on merchandising, marketing, and consumer experience; increasing vertical integration with Brand Portfolio brands (Dr. Scholl’s Shoes, LifeStride, Naturalizer, Blowfish Malibu); strong performance of the kids category; launch of the Jordan brand; and successful FLAIR store concept conversions.
• Comparable Sales % Change: -2.3% (improved each quarter throughout 2025)
• E-commerce Penetration: 16% of net sales (up from 14% in 2024)
• Sales to Loyalty Program Members: 77% of net sales (up from 75% in 2024)

Product Portfolio:

• Major product lines and services: Assortment of trend-right, brand-name fashion, casual, and athletic footwear for the entire family.
• Brands carried: Nike, Skechers, adidas, Crocs, Converse, Birkenstock, HeyDude, New Balance, Puma, Jordan, Vans, Bearpaw, Asics, Brooks, Under Armour, and Company-owned/licensed brands including Dr. Scholl’s Shoes, LifeStride, Naturalizer, and Blowfish Malibu.
• New product launches or major updates: Launched the Jordan brand in Q2 2025, which became a top 10 best-selling brand.

Market Dynamics:

• Competitive positioning within segment: One of America’s leading family-branded footwear retailers, employing an omni-channel approach.
• Key customer types and market trends: Targets the millennial family, providing trend-right, brand-name footwear at competitive prices. Leveraging e-commerce with services like Famously Fast Pickup and in-store fulfillment of online orders.

Brand Portfolio

Financial Performance (2025):

• Revenue: $1,316.0 million (+7.3% YoY)
• Operating Earnings: $32.3 million (-89.8 million YoY)
• Operating Margin: 2.4% (down from 10.0% in 2024)
• Key Growth Drivers: Acquisition of Stuart Weitzman contributed $102.2 million in net sales; strong growth in company-owned e-commerce and international business.
• Direct-to-consumer (% of net sales): 39% (up from 34% in 2024)
• Unfilled wholesale order position: $332.2 million at year-end 2025 (up from $260.2 million in 2024)

Product Portfolio:

• Major product lines and services: Diversified selection of footwear for women, men, and kids across various price points, sold through wholesale and direct-to-consumer channels.
• Owned Brands: Sam Edelman, Vionic, Naturalizer, Allen Edmonds, Dr. Scholl’s Shoes, Stuart Weitzman, LifeStride, Franco Sarto, Rykä, Blowfish Malibu.
• Licensed Brands: Vince, Veronica Beard.
• New product launches or major updates: Acquisition of Stuart Weitzman in August 2025.

Market Dynamics:

• Competitive positioning within segment: Consumer-focused segment aiming to strengthen brand preference through style, quality, differentiated brand promises, and innovative marketing.
• Key customer types and market trends: Wholesale to approximately 1,900 retailers (online retailers, national chains, department stores, independent retailers, mass merchandisers, franchise partners). Direct-to-consumer through 15 branded e-commerce websites and 188 owned retail stores globally.
• Sub-segment Breakdown:
  • Wholesale: Sold approximately 32 million pairs of shoes in 2025. Products under license agreements accounted for approximately 14% of segment sales.
  • Direct-to-Consumer: Includes 15 branded e-commerce websites and 188 owned retail stores (Allen Edmonds, Sam Edelman, Stuart Weitzman, Naturalizer).
    • Allen Edmonds: 58 stores in the United States.
    • Sam Edelman: 4 stores in the United States, 52 stores in East Asia.
    • Stuart Weitzman: 23 locations in North America, 50 locations in China (acquired in 2025).
    • Naturalizer: 1 store in Southeast Asia (domestic stores closed in 2024).
    • International franchise locations: 148 branded stores operated by third parties.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $5.0 million (300,000 shares) in 2025. As of January 31, 2026, 3,666,055 shares remain authorized for repurchase under the 2022 Program.
• Dividend Payments: $9.4 million ($0.28 per share) in 2025. A quarterly dividend of $0.07 per share was declared on March 12, 2026, payable April 10, 2026.
• Dividend Yield: Not explicitly stated, but based on $0.28 annual dividend and $13.25 average repurchase price in Q4 2025, it would be approximately 2.1%.
• Future Capital Return Commitments: The declaration and payment of future dividends are at the discretion of the Board of Directors.

Balance Sheet Position (as of January 31, 2026):

• Cash and Cash Equivalents: $29.8 million
• Total Debt: $296.5 million (Borrowings under revolving credit agreement)
• Net Cash Position: ($266.7 million) (Calculated as Cash and Cash Equivalents - Total Debt)
• Credit Rating: Not disclosed in the provided text.
• Debt Maturity Profile: The revolving credit agreement matures on June 27, 2030.

Cash Flow Generation (2025):

• Operating Cash Flow: $103.2 million
• Free Cash Flow: Not explicitly stated or calculable from provided data.
• Cash Conversion Metrics: Not explicitly stated.

Operational Excellence

Production & Service Model:

• Caleres, Inc. designs, develops, sources, manufactures, and distributes footwear.
• Design and Product Development: Teams are located in Clayton, Missouri; Dongguan, China; Elda, Spain; Putian, China; New York, New York; Novato, California; Port Washington, Wisconsin; and other select fashion locations including Milan and Florence, Italy. These teams monitor trends, identify consumer preferences, and create new product styles.
• Manufacturing: Primarily relies on a global network of third-party independent footwear manufacturers (approximately 49 manufacturers operating 107 facilities). The Company also operates its own manufacturing facilities in Port Washington, Wisconsin, and Santiago, Dominican Republic, for the Allen Edmonds brand, emphasizing quality and craftsmanship.
• Recrafting Operations: The Port Washington facility supports recrafting services for Allen Edmonds footwear, extending product life and supporting sustainability.
• Service Delivery: Omni-channel approach for Famous Footwear, including e-commerce (famousfootwear.com, famousfootwear.ca) and 821 retail stores. Famous Footwear leverages brick-and-mortar store inventory to fulfill approximately two-thirds of e-commerce orders not picked up in-store, reducing delivery times.

Supply Chain Architecture: Key Suppliers & Partners:

• Third-Party Manufacturers: Approximately 49 manufacturers operating 107 facilities globally, sourcing approximately $451.0 million of shoes in 2025.
• Key Branded Footwear Suppliers (Famous Footwear): Nike, Skechers, and adidas represented approximately 24% of consolidated net sales in 2025.
• Sourcing Agents: Used in certain countries to facilitate and manage product development, production, and shipment.
• Supplier Finance Program: A voluntary program allowing suppliers to sell receivables to participating financial institutions, leveraging Caleres, Inc.'s credit rating. As of January 31, 2026, $25.3 million of accounts payable were subject to this program.

Facility Network:

• Manufacturing: Port Washington, Wisconsin (Allen Edmonds footwear and accessories, recrafting operations); Santiago, Dominican Republic (Allen Edmonds footwear and accessories).
• Research & Development: Clayton, Missouri; Dongguan, China; Elda, Spain; Putian, China; New York, New York; Novato, California; Port Washington, Wisconsin; Milan, Italy; Florence, Italy.
• Distribution: Leased distribution centers in Chino, California (Brand Portfolio); Lebanon, Tennessee (Famous Footwear and Brand Portfolio); Lebec, California (Famous Footwear); Perth, Ontario (Famous Footwear and Brand Portfolio, also an outlet center). Famous Footwear also uses regional third-party pooled distribution sites.
• Office Space: Clayton, Missouri (principal corporate headquarters, partially owned/leased); St. Louis, Missouri (leased); New York, New York (leased); Novato, California (leased); Elda, Spain (leased); Milan, Italy (leased); Dongguan, China (leased); Putian, China (leased); Shanghai, China (leased).

Operational Metrics:

• Wholesale Pairs Sold (Brand Portfolio): Approximately 32 million pairs in 2025.
• Famous Footwear Store Count: 821 stores at year-end 2025 (net closure of 25 stores in 2025). Anticipates opening approximately 15 and closing approximately 25 retail store locations in 2026.
• Brand Portfolio Store Count: 188 Company-operated stores at year-end 2025 (85 in North America, 103 in East and Southeast Asia).
• Sourcing by Country (2025): Vietnam ($284.7 million), China ($88.4 million), Cambodia ($45.3 million), India ($11.0 million), Other ($21.6 million). Total sourced: $451.0 million.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Famous Footwear retail stores (821 locations), Brand Portfolio branded retail stores (188 Company-operated stores globally), and Company-owned e-commerce websites (famousfootwear.com, famousfootwear.ca, samedelman.com, vionicshoes.com, naturalizer.com, allenedmonds.com, shoebank.com, stuartweitzman.com, lifestride.com, francosarto.com, ryka.com, drschollsshoes.com).
• Channel Partners: Wholesale distribution to approximately 1,900 retailers, including online retailers (Amazon.com, Nordstrom.com, Zappos.com), national chains (Nordstrom Rack, DSW, TJX Corporation, Kohl’s, Ross Stores), department stores (Nordstrom, Macy’s, Dillard’s), mass merchandisers (Walmart), and independent retailers (QVC Group, Inc.).
• Franchise Partners: 148 international branded stores owned and operated by third parties through franchise agreements.
• Joint Venture: CLT Brand Solutions, a joint venture with Brand Investment Holding Limited, distributes Sam Edelman and Naturalizer brands through e-commerce sites and 53 retail stores in East Asia.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Significant wholesale customers include Amazon.com, Nordstrom.com, Zappos.com, Nordstrom Rack, DSW, TJX Corporation (TJ Maxx, Marshalls), Kohl’s, Ross Stores, Nordstrom, Macy’s, Dillard’s, Walmart, and QVC Group, Inc.
• Customer Concentration: Products purchased from three key third-party suppliers (Nike, Skechers, and adidas) represented approximately 24% of consolidated net sales in 2025. The Company notes that a decision by a significant customer to decrease purchases could have a material adverse effect.

Geographic Revenue Distribution (2025):

• United States: $2,582.1 million (93.6% of total net sales)
• Canada: $64.8 million (2.3% of total net sales)
• East and Southeast Asia: $54.6 million (2.0% of total net sales)
• Other: $56.3 million (2.0% of total net sales)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The footwear industry is highly fragmented with many companies operating traditional brick-and-mortar retail stores, departments, and e-commerce businesses. The market is subject to rapidly changing consumer shopping preferences and fashion trends. Key Trends Driving Industry Evolution:

• Consumer Shift to Online and Mobile Shopping: Increased price competition, demand for lower shipping costs, improved shipping speeds, and optimized mobile platforms. This trend has led to higher average distribution costs due to increased volume of smaller, single-pair shipments and higher return rates for e-commerce sales.
• Consolidation of Retailers: Growing bargaining strength of a reduced number of key retailers, potentially leading to more favorable terms for them, reduced store counts for products, and increased direct sourcing from factories.
• Fast Fashion, Value Fashion, and Off-Price Retailers: Shifted customer expectations of pricing for well-known brands, contributing to promotional and pricing pressures.
• Supplier Direct-to-Consumer Sales: Some suppliers sell directly through their own e-commerce sites and retail stores, increasing competition.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Local, regional, and national shoe store chains.
• Department stores.
• Discount stores.
• Mass merchandisers.
• Numerous independent retail operators of various sizes.
• E-commerce businesses.
• Competing footwear suppliers who own and license aggressively marketed brands.

Emerging Competitive Threats:

• New entrants and disruptive technologies, including artificial intelligence and machine learning, which may change supply chain, distribution channels, and point-of-sale capabilities.
• Retailers increasingly sourcing directly from factories or through agents.

Competitive Response Strategy:

• Increasing awareness of its brands.
• Improving the efficiency of its supply chain.
• Enhancing the style, comfort, fashion, and perceived value of its products.
• Investing in digital marketing and loyalty programs to drive direct-to-consumer growth.
• Leveraging consumer insights and data to inform marketing initiatives.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Consumer Demand Volatility: Worldwide economic uncertainty, inflation, elevated interest rates, recession concerns, and geopolitical tensions (e.g., China-Taiwan, Middle East, Eastern Europe) can decrease disposable income and consumer purchases of discretionary items like footwear. This may lead to reduced demand, increased inventories, lower revenues, higher discounts, and lower gross margins.
• Fashion Trends & Consumer Preferences: The footwear industry is subject to rapidly changing preferences. Failure to anticipate and respond to these changes, or if brands fall out of favor, can lead to decreased revenues, damaged brand image, and inability to execute growth plans.
• Technology Disruption: Rapid changes from AI and machine learning may alter supply chain, distribution, and point-of-sale capabilities, requiring quick adaptation.
• Customer Concentration: Dependence on a reduced number of key wholesale retailers due to industry consolidation, which may lead to demands for more favorable terms, reduced store counts for products, and increased direct sourcing by customers.
• Supplier Concentration: Famous Footwear segment relies on a substantial portion of products from three key third-party suppliers (Nike, Skechers, adidas). Loss of any major supplier could materially impact the segment.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• International Sourcing Dependency: Primary reliance on international third-party manufacturers (e.g., 20% from China in 2025) exposes the Company to risks including trade relations, work stoppages, transportation delays (ports, vessel/container shortages), increased costs (customs duties, tariffs), political instability, natural disasters, and military conflicts.
• Manufacturing Capacity Shifts: Potential for manufacturing capacity to shift from footwear to other products or labor shortages at manufacturers.
• Distribution Center Disruptions: Reliance on leased distribution centers for high-volume e-commerce and single-pair shipments. Disruptions due to natural disasters, inability to manage/renew leases, wage inflation, or labor shortages could impair timely inventory delivery.
• Inventory Management: Difficulty in accurately forecasting sales and managing inventory levels can lead to excess inventory, write-downs, higher carrying costs, or, conversely, inventory shortages and lost sales.
• Cybersecurity Breaches: Routine possession of sensitive consumer and associate information, increased mobile shopping, and remote work environments heighten cybersecurity risk. Breaches could lead to data loss, increased costs, business disruption, reputational damage, fines, or lawsuits.
• Acquisition Integration Challenges: Acquisitions like Stuart Weitzman involve risks such as exposure to new markets, loss of key personnel, integration difficulties, unexpected expenses, and potential write-offs of goodwill or intangible assets.

Financial & Regulatory Risks

Market & Financial Risks:

• Foreign Currency Fluctuations: Global operations expose the Company to foreign currency fluctuations, potentially leading to higher costs and decreased gross profits, especially as international operations expand.
• Interest Rate Volatility: Variable-rate debt under the Credit Agreement means increases in interest rates could require a greater portion of cash flow for interest payments, negatively impacting net income and cash flow.
• Pension Costs Volatility: Defined benefit pension plan costs are sensitive to returns on invested assets, discount rates, plan demographics, and regulatory changes, potentially reducing cash available for operations.
• Credit Risk to Wholesale Customers: Extension of credit to wholesale customers, some of whom have experienced financial difficulties, increases the risk of uncollectible accounts. Regulatory & Compliance Risks:
• Changes in Tax Laws: Future changes in tax laws (domestic and international, e.g., Pillar Two, OBBB Act) could materially impact the effective tax rate, profitability, and increase volatility.
• Responsible Business Initiative Scrutiny: Increased scrutiny from stakeholders and regulators regarding ESG goals (e.g., greenhouse gas emissions, labor standards, climate disclosure regulations like California Senate Bill 253, EU's CSRD). Failure to achieve goals or comply could result in liabilities, increased costs, reputational harm, and legal proceedings.
• Labor, Trade, and Other Legal Violations: Risks associated with suppliers failing to adhere to labor practices, workplace environment standards, product safety, or trade laws (e.g., customs duties, quotas, tariffs).
• Intellectual Property Protection: Dependence on licensing well-recognized brands and protecting owned intellectual property. Risks include inability to renew licenses, failure of licensees to meet goals, and ineffective protection of IP rights in certain jurisdictions.
• Litigation: Involvement in ordinary course legal proceedings and litigation, which could result in unexpected expenditures of time and resources, or material adverse effects.

Geopolitical & External Risks

Geopolitical Exposure:

• International Trade Policies: Changes in U.S. and international trade policies, including tariffs (e.g., on products from China), trade restrictions, and retaliatory actions, can adversely impact business, increase costs, and reduce margins. Uncertainty around tariffs (e.g., U.S. Supreme Court ruling on IEEPA tariffs) creates supply chain and pricing challenges.
• Geographic Dependencies: Significant portion of supply from China (20% in 2025) makes the Company vulnerable to negative developments in U.S.-China relations.
• Global Conflicts: Impact of wars (Iran, Israel, Eastern Europe) and heightened tensions (China-Taiwan) can increase oil prices, transportation costs, and create economic instability.
• Sanctions & Export Controls: Compliance requirements and business limitations due to trade restrictions and sanctions.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Product Design and Development: Teams in multiple global locations (Clayton, Missouri; Dongguan, China; Elda, Spain; Putian, China; New York, New York; Novato, California; Port Washington, Wisconsin; Milan, Italy; Florence, Italy) monitor fashion trends and consumer preferences to create new footwear styles.
• Supply Chain Digitization: Steps taken to digitize end-to-end supply chain processes to enhance workload efficiency, visibility, and agility.
• E-commerce and Mobile Platforms: Continuous investment in enhancing e-commerce channels (e.g., Famous Footwear mobile application features) to deliver a superior customer experience.
• FLAIR Store Concept: Investment in store renovations to the FLAIR (Famous Localized and Immersive Retail) concept, which highlights leading brands and elevates the shopping experience.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly detailed, but the Company relies on its trademarks and trade names for competitive positioning.
• Licensing Programs: Licenses its owned brands (e.g., Famous Footwear trade name and logo to a financial institution for credit cards) to third parties for branded products and non-footwear categories, generating royalty revenue. Also acts as a licensee for certain brands.
• IP Litigation: Not explicitly detailed, but the Company notes the risk of ineffective protection of intellectual property rights in certain jurisdictions and potential litigation expenses.

Technology Partnerships:

• Not explicitly detailed, but the Company leverages information sharing relationships with the Federal Bureau of Investigation, Cybersecurity and Infrastructure Agency, and local law enforcement for cybersecurity.

Leadership & Governance

Executive Leadership Team (as of April 2, 2026)

Leadership Continuity: The Company's success depends on its ability to attract, develop, motivate, and retain qualified management and key personnel. Management transitions may create uncertainty and disrupt daily operations.

Board Composition: The Audit Committee of the Board of Directors is responsible for oversight of the cybersecurity program. The Technology and Digital Commerce Committee assists the Board with oversight regarding technology, data, digital commerce, and consumer connection.

Human Capital Strategy

Workforce Composition (as of January 31, 2026):

• Total Employees: Approximately 10,000 employees.
• Full-time Employees: 5,000
• Part-time Employees: 5,000
• Geographic Distribution: United States (no union contracts); Canada (approximately 22 warehouse employees under a union contract expiring October 2028).
• Skill Mix: The Company emphasizes attracting, developing, motivating, and retaining qualified management, administrative, product design and development, and sales and marketing personnel.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focus on attracting qualified personnel.
• Retention Metrics: Not explicitly stated, but the Company's values (Passion, Accountability, Curiosity, Creativity, and Caring) inform its work culture.
• Employee Value Proposition: Comprehensive benefits package including competitive salaries and wages, health insurance, retirement plans, education assistance, paid time off, parental bonding leave, adoption benefits, and charitable giving opportunities through the Caleres Cares Charitable Trust.

Diversity & Development:

• Diversity Metrics: Not explicitly stated.
• Development Programs: Newly hired associates receive health and safety training as part of onboarding and ongoing relevant training. Corporate offices support well-being with on-site amenities like a fitness center and registered dietician.
• Culture & Engagement: Values-driven culture (Passion, Accountability, Curiosity, Creativity, and Caring) to foster how employees work and interact.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly stated, but the Company monitors and complies with evolving environmental, product stewardship, and climate-related regulatory requirements, including California Senate Bill 253 and similar global regulations.
• Carbon Neutrality: Not explicitly stated.
• Renewable Energy: Not explicitly stated.

Supply Chain Sustainability:

• Supplier Engagement: Focus on doing business with suppliers committed to responsible business practices and the principles set forth in the Production Code of Conduct (PCOC), which includes standards for working conditions, labor practices, and product safety.
• Responsible Sourcing: Striving to use environmentally preferred materials in products and packaging.

Social Impact Initiatives:

• Community Investment: Charitable giving opportunities through the Caleres Cares Charitable Trust, including volunteer opportunities and a matching gift program.
• Product Impact: Intentional elimination of waste in strategic manufacturing facilities and extending product lifespan through donation, recrafting (Allen Edmonds), and reuse programs, supporting broader efforts toward circularity.
• Responsible Business Governance: A cross-functional steering committee manages the development of programs, goals, and metrics for responsible business initiatives. Periodic assessment of ESG topics relevant to the business and stakeholders.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The business is seasonal, with higher sales during the back-to-school and holiday seasons. Historically, the third fiscal quarter accounted for a substantial portion of annual earnings, though distribution among quarters has become more equal in recent years.
• Economic Sensitivity: Consumer confidence and spending are strongly influenced by general economic conditions, including inflation, interest rates, and geopolitical events, which can impact discretionary purchases.
• Industry Cycles: Not explicitly detailed beyond general economic sensitivity.

Planning & Forecasting:

• The Company places advance orders with manufacturers based on sales forecasts to minimize purchasing costs and maintains inventory for anticipated demand. It notes that adverse economic conditions and rapidly changing consumer preferences can make accurate forecasting difficult.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental Laws: Responsibility under various environmental laws for remediation of conditions at current and former facilities (e.g., Redfield site in Colorado).
• Trade Laws: Compliance with United States and international trade laws and regulations (e.g., customs duties, quotas, tariffs, anti-dumping duties, safeguard measures, cargo restrictions, export controls).
• Data Privacy: Compliance with increasingly complex regulations designed to protect business and personal data.
• Responsible Business Regulations: Monitoring and complying with evolving environmental, product stewardship, and climate-related regulatory requirements, including California Senate Bill 253 and EU’s Corporate Sustainability Directive (CSRD).
• Tax Laws: Compliance with domestic and international tax laws, including potential impacts from Pillar Two Global Anti-Base Erosion model rules and the One Big Beautiful Bill Act.

Trade & Export Controls:

• Export Restrictions: Exposure to country-specific limitations and licensing requirements.
• Sanctions Compliance: Restrictions related to sanctioned entities and compliance monitoring.
• Tariffs: Actively monitors and responds to tariffs imposed by the U.S. administration and potential retaliatory tariffs, which have negatively impacted net sales and gross margins. The U.S. Supreme Court ruling on IEEPA tariffs in February 2026 created uncertainty regarding refunds and potential new tariffs.

Legal Proceedings:

• The Company is involved in legal proceedings and litigation arising in the ordinary course of business. Management believes the outcome of currently pending ordinary course proceedings will not have a material adverse effect on results of operations or financial position.
• Environmental Remediation: Involved in environmental remediation and ongoing compliance activities at several sites, including the Redfield site in Colorado, with a reserve of $8.8 million for anticipated future activities as of January 31, 2026.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate (2025): 19.2% (compared to 21.5% in 2024).
• Effective Tax Rate Drivers (2025): Discrete tax items including $5.0 million expense from valuation allowances, offset by $3.0 million tax benefits from Macau foreign tax rate differential and $2.5 million related to remaining transition tax on mandatory deemed repatriation of cumulative foreign earnings.
• Geographic Tax Planning: International tax structure and transfer pricing are not explicitly detailed, but the Company evaluates international investment opportunities and plans to determine the level of international earnings considered indefinitely reinvested. No deferred taxes have been provided on accumulated unremitted earnings of international subsidiaries not subject to U.S. income tax.
• Tax Reform Impact:
  • Pillar Two Global Anti-Base Erosion Model Rules: The Company does not expect a material impact on its tax provision or effective tax rate from these rules, which became effective January 1, 2024, and aim to ensure large corporations are taxed at a minimum rate of 15%.
  • One Big Beautiful Bill Act (OBBB Act): Enacted July 4, 2025, includes provisions for accelerated tax deductions for qualified property and immediate deduction of domestic R&D costs, and modifies international tax rules. The Company is evaluating its impact but does not expect a material impact on its income tax provision.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The Company is self-insured and/or retains high deductibles for a significant portion of its workers’ compensation, health, disability, cyber risk, general liability, automobile, and property programs.
• Risk Transfer Mechanisms: Not explicitly detailed beyond self-insurance and high deductibles. The Company may engage in foreign currency hedging transactions from time to time to address market risks.