Item 2. Management’s Discussion and Analysis
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Business Overview
We are a global footwear company that operates retail stores and e-commerce websites, and designs, develops, sources, manufactures and distributes footwear for people of all ages. Our mission is to inspire people to feel great...feet first. We offer retailers and consumers a diversified portfolio of leading footwear brands. Outfitted in our brands, customers can step confidently into every aspect of their lives. As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points. We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels. A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands.
Acquisition of Stuart Weitzman
In February 2025, we signed a definitive agreement to acquire Stuart Weitzman from Tapestry, Inc. for $105 million, subject to customary adjustments. Stuart Weitzman has been an iconic global luxury women’s footwear brand for over 35 years. The acquisition of Stuart Weitzman advances our strategic agenda to grow our Brand Portfolio segment with more global and direct-to-consumer reach. The acquisition is expected to close in the summer of 2025. We expect to fund the acquisition with our revolving credit facility.
Known Trends Impacting Our Business
Based on the current macroeconomic environment and our recent operating results, we believe the following trends may continue to impact our business and operating results:
Macroeconomic Environment
Macroeconomic factors continued to impact consumer discretionary spending and our financial results during the first quarter of 2025. Recent tariff announcements by the United States presidential administration and the lack of clarity surrounding future trade policy developments have heightened uncertainty in the global economy. We continued to experience lighter consumer traffic in our retail stores during the first quarter, resulting in lower net sales. Following the executive order on tariffs, we acted quickly to pause production in China and made other sourcing changes, such as negotiating price concessions with our factories, to mitigate the impact of the tariffs. While we believe that the structural changes we have implemented in the last few years, as well as our diversified model and operational discipline, enable the Company to drive value in a variety of market conditions, changes in macro-level consumer spending trends and the impact of trade policy decisions may continue to adversely impact our financial results in the future. In the near-term, we are focused on the areas within our control, including optimizing our sourcing strategy. In addition, we expect to decrease selling and administrative expenses by approximately $15 million on an annualized basis through structural expense reductions. We believe our focus on cost control and our commitment to execute our clearly defined strategic initiatives have positioned us for sustainable, long-term growth.
Liquidity
Our liquidity position remains strong, with $33.1 million in cash and cash equivalents and excess availability on our revolving credit agreement of $233.4 million as of May 3, 2025. During the first quarter of 2025, borrowings on our revolving credit agreement increased by $39.0 million to $258.5 million. During 2025, we expect to refinance our revolving credit facility in advance of its maturity in October 2026. Refer to Note 5 to the condensed consolidated financial statements for further discussion of the acquisition.
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Financial Highlights
Highlights of our consolidated and segment results for the first quarter of 2025 and 2024 are as follows:
Thirteen Weeks Ended
($ millions, except per share amounts)
May 3, 2025
May 4, 2024
Change (1)
Consolidated net sales
$614.2
$659.2
($45.0)
(6.8)
%
Famous Footwear segment net sales
$327.7
$349.6
($21.9)
(6.3)
%
Famous Footwear comparable sales % change
(4.6)
%
(2.3)
%
n/m
n/m
Brand Portfolio segment net sales
$295.4
$317.2
($21.8)
(6.9)
%
Gross profit
$278.7
$309.1
($30.4)
(9.8)
%
Gross margin
45.4
%
46.9
%
n/m
(152 bps)
Operating earnings
$11.6
$42.8
($31.2)
(72.9)
%
Diluted earnings per share
$0.21
$0.88
($0.67)
(76.1)
%
(1) n/m – not meaningful
Metrics Used in the Evaluation of Our Business
The following are a few key metrics by which we evaluate our business, identify trends and make strategic decisions:
Comparable sales
The comparable sales metric is a metric commonly used in the retail industry to evaluate the revenue generated for stores that have been open for more than a year, though other retailers may calculate the metric differently. Management uses the comparable sales metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. Our comparable sales metric is a daily-weighted calculation for the period, which includes sales for stores that have been open for at least 13 months. In addition, in order to be included in the comparable sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year. Accordingly, closed stores are excluded from the comparable sales metric for each day of the closure. Relocated stores are treated as new stores and therefore excluded from the calculation. E-commerce sales for those websites that function as an extension of a retail chain are included in the comparable sales calculation. In fiscal years with 53 weeks (e.g. 2023), the 53 rd week of comparable sales is included in the calculation. In the following year (e.g. 2024), the prior fiscal year period is shifted by one week to compare similar calendar weeks. We believe the comparable sales metric is useful to shareholders and investors in assessing our retail sales performance of existing locations with comparable prior year sales, separate from the impact of store openings or store closures.
Sales per square foot
The sales per square foot metric is commonly used in the retail industry to calculate the efficiency of sales based upon the square footage in a store. Management uses the sales per square foot metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. The sales per square foot metric is calculated by dividing total retail store sales, excluding e-commerce sales and the retail operations of our joint venture in China, by the total square footage of the retail store base in North America at the end of each month of the respective period.
Dire ct-to-consumer sales
Direct-to-consumer sales includes sales from our retail stores, our company-owned websites and sales through our customers’ websites that we fulfill on a drop-ship basis. While we take an omni-channel approach to reach consumers, we believe that our direct-to-consumer channels reinforce the image of our brands and strengthens our connection with the end consumer. In addition, direct-to-consumer sales generally result in a higher gross margin for the Company as compared to wholesale sales. As a result, management monitors trends in direct-to-consumer sales as a percentage of our Brand Portfolio segment and total consolidated net sales.
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RESULTS OF OPERATIONS
Following are the consolidated results and the results by segment:
CONSOLIDATED RESULTS
Thirteen Weeks Ended
May 3, 2025
May 4, 2024
% of
% of
($ millions)
Net Sales
Net Sales
Net sales
$
614.2
100.0
%
$
659.2
100.0
%
Cost of goods sold
335.5
54.6
%
350.1
53.1
%
Gross profit
278.7
45.4
%
309.1
46.9
%
Selling and administrative expenses
266.5
43.4
%
266.3
40.4
%
Restructuring and other special charges, net
0.6
0.1
%
—
—
%
Operating earnings
11.6
1.9
%
42.8
6.5
%
Interest expense, net
(3.8)
(0.6)
%
(3.8)
(0.6)
%
Other income, net
0.7
0.1
%
1.0
0.2
%
Earnings before income taxes
8.5
1.4
%
40.0
6.1
%
Income tax provision
(2.6)
(0.4)
%
(9.2)
(1.4)
%
Net earnings
5.9
1.0
%
30.8
4.7
%
Net loss attributable to noncontrolling interests
(1.0)
(0.1)
%
(0.1)
(0.0)
%
Net earnings attributable to Caleres, Inc.
$
6.9
1.1
%
$
30.9
4.7
%
Net Sales
Net sales decreased $45.0 million, or 6.8%, to $614.2 million for the first quarter of 2025, compared to $659.2 million for the first quarter of 2024, with declines in both our Famous Footwear and Brand Portfolio segments. Net sales in our Famous Footwear segment decreased $21.9 million, or 6.3%, and comparable sales declined 4.6%, reflecting slower traffic in both our retail stores and e-commerce business. Net sales in the Brand Portfolio segment decreased $21.8 million, or 6.9% during the first quarter of 2025. Our direct-to-consumer sales represented approximately 70% of consolidated net sales for the first quarter of 2025, compared to 69% in the first quarter of 2024. We remain focused on international growth, direct-to-consumer penetration, elevating the consumer experience at Famous Footwear and maximizing the vertical opportunity between the Famous Footwear and Brand Portfolio segments, with Dr. Scholl’s, LifeStride, Naturalizer and Blowfish Malibu representing four of Famous Footwear’s top 20 best-selling footwear brands during the quarter.
Gross Profit
Gross profit decreased $30.4 million, or 9.8%, to $278.7 million for the first quarter of 2025, compared to $309.1 million for the first quarter of 2024. As a percentage of net sales, gross profit decreased to 45.4% for the first quarter of 2025, compared to 46.9% for the first quarter of 2024, reflecting lower merchandise margins, incremental costs associated with canceling and moving inventory out of China after the tariff escalation in April and higher inventory markdowns. In addition, we experienced higher freight costs, due in part to the higher mix of e-commerce sales.
We classify certain warehousing, distribution, sourcing and other inventory procurement costs in selling and administrative expenses. Accordingly, our gross profit and selling and administrative expense rates, as a percentage of net sales, may not be comparable to other companies.
Selling and Administrative Expenses
Selling and administrative expenses increased $0.2 million, or 0.1%, to $266.5 million for the first quarter of 2025, compared to $266.3 million for the first quarter of 2024. The increase was driven by higher costs associated with growth in our international business, higher facilities costs, reflecting higher depreciation associated with the investment in Famous Footwear store renovations and upgrades to the FLAIR (Famous Localized and Immersive Retail) concept and higher store rent expense as leases are renewed, and higher information technology expenses. These increases were partially offset by lower advertising and marketing expenses and lower expenses for our cash and share-based incentive compensation plans. As a percentage of net sales, selling and administrative expenses increased to 43.4% for the first quarter of 2025, from 40.4% for the first quarter of 2024, reflecting deleveraging of expenses on lower net sales.
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Restructuring and Other Special Charges, Net
Restructuring and other special charges of $0.6 million for the first quarter of 2025 were for legal and other related costs associated with the pending acquisition of Stuart Weitzman, which is expected to close in the summer of 2025. Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges. There were no restructuring and other special charges during the first quarter of 2024.
Operating Earnings
Operating earnings decreased $31.2 million to $11.6 million for the first quarter of 2025, compared to $42.8 million for the first quarter of 2024, reflecting the factors described above. As a percentage of net sales, operating earnings were 1.9% for the first quarter of 2025, compared to 6.5% for the first quarter of 2024.
Interest Expense, Net
Interest expense, net was $3.8 million for the first quarter of 2025, consistent with the first quarter of 2024, reflecting higher average borrowings on our revolving credit facility, offset by a lower weighted-average interest rate. As discussed above, we expect to fund the acquisition of Stuart Weitzman with our revolving credit facility. We anticipate that the higher borrowings will result in higher interest expense for the second half of 2025.
Other Income, Net
Other income, net decreased $0.3 million to $0.7 million for the first quarter of 2025, compared to $1.0 million for the first quarter of 2024, primarily reflecting lower income generated from our pension plan assets in the first quarter of 2025. Refer to Note 13 of the condensed consolidated financial statements for further information.
Income Tax Provision
Our effective tax rate can vary considerably from period to period, depending on a number of factors. Our consolidated effective tax rate was 29.8% for the first quarter of 2025, compared to 23.0% for the first quarter of 2024. The higher effective tax rate was driven in part by a discrete tax provision, related to share-based compensation, of approximately $0.3 million in the first quarter of 2025, compared to discrete tax benefits of approximately $0.8 million in the first quarter of 2024.
In 2021, the Organization for Economic Cooperation and Development (OECD) released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules, which became effective on January 1, 2024. The United States has not yet enacted legislation implementing Pillar Two. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our tax provision or effective tax rate.
Net Earnings Attributable to Caleres, Inc.
Net earnings attributable to Caleres, Inc. was $6.9 million for the first quarter of 2025 and $30.9 million for the first quarter of 2024, as a result of the factors described above.
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FAMOUS FOOTWEAR
Thirteen Weeks Ended
May 3, 2025
May 4, 2024
% of
% of
($ millions, except sales per square foot)
Net Sales
Net Sales
Net sales
$
327.7
100.0
%
$
349.6
100.0
%
Cost of goods sold
179.3
54.7
%
188.6
53.9
%
Gross profit
148.4
45.3
%
$
161.0
46.1
%
Selling and administrative expenses
143.4
43.8
%
144.1
41.3
%
Operating earnings
$
5.0
1.5
%
$
16.9
4.8
%
Key Metrics
Comparable sales % change
(4.6)
%
(2.3)
%
Comparable sales $ change
$
(15.6)
$
(8.0)
Sales change from new and closed stores, net
$
(6.0)
$
8.4
Impact of changes in Canadian exchange rate on sales
$
(0.3)
$
(0.0)
Sales per square foot, excluding e-commerce (thirteen weeks ended)
$
51
$
54
Sales per square foot, excluding e-commerce (trailing twelve months)
$
235
$
246
Square footage (thousand sq. ft.)
5,504
5,622
Stores opened
—
3
Stores closed
11
8
Ending stores
835
855
Net Sales
Net sales of $327.7 million in the first quarter of 2025 decreased $21.9 million, or 6.3%, compared to the first quarter of 2024. We experienced a slow start to the first quarter of 2025, but sales improved in March and April. Comparable sales decreased 4.6% driven by a decline in consumer traffic in both our retail stores and e-commerce business. Despite the decline in traffic, we experienced growth in e-commerce sales and higher penetration of this channel. Penetration of e-commerce sales increased to 14% of net sales in the first quarter of 2025, compared to 13% in the first quarter of 2024. Our kids category, which is a key differentiator for Famous Footwear, continued to outperform the total chain.
We closed 11 stores during the first quarter of 2025, resulting in 835 stores and total square footage of 5.5 million at the end of the quarter, compared to 855 stores and total square footage of 5.6 million at the end of the first quarter of 2024. Sales to members of our customer loyalty program, Famously You Rewards, continue to account for a majority of the segment’s sales, with approximately 79% of our net sales made to program members in the first quarter of 2025, compared to 78% in the first quarter of 2024.
Gross Profit
Gross profit decreased $12.6 million, or 7.8%, to $148.4 million for the first quarter of 2025, compared to $161.0 million for the first quarter of 2024. As a percentage of net sales, our gross profit decreased to 45.3% for the first quarter of 2025, from 46.1% for the first quarter of 2024, reflecting higher freight costs, due in part to the higher mix of e-commerce sales, and higher levels of promotional activity during the quarter.
Selling and Administrative Expenses
Selling and administrative expenses decreased $0.6 million, or 0.4%, to $143.5 million for the first quarter of 2025, compared to $144.1 million for the first quarter of 2024. The decrease was primarily driven by lower marketing costs, partially offset by higher facilities costs, including depreciation expense associated with the investments in the FLAIR store concept. During the first quarter of 2025, we converted 10 stores to the new FLAIR concept, ending the quarter with a total of 44 FLAIR stores. These stores continue to outperform our traditionally designed retail stores. As a percentage of net sales, selling and administrative expenses increased to 43.8% for the first quarter of 2025, compared to 41.3% for the first quarter of 2024, reflecting the deleveraging of expenses on lower net sales.
Operating Earnings
Operating earnings decreased $11.9 million to $5.0 million for the first quarter of 2025, compared to $16.9 million for the first quarter of 2024, primarily reflecting the factors described above. As a percentage of net sales, operating earnings declined to 1.5% for the first quarter of 2025, compared to 4.8% for the first quarter of 2024.
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BRAND PORTFOLIO
Thirteen Weeks Ended
May 3, 2025
May 4, 2024
% of
% of
($ millions)
Net Sales
Net Sales
Net sales
$
295.4
100.0
%
$
317.2
100.0
%
Cost of goods sold
166.1
56.2
%
169.4
53.4
%
Gross profit
129.3
43.8
%
147.8
46.6
%
Selling and administrative expenses
111.9
37.9
%
106.4
33.5
%
Operating earnings
$
17.4
5.9
%
$
41.4
13.1
%
Key Metrics
Direct-to-consumer (% of net sales) (1)
35
%
33
%
Change in wholesale net sales ($)
$
(17.6)
$
(13.1)
Change in retail net sales ($)
$
(4.2)
$
4.8
Unfilled order position at end of period
$
263.6
$
257.0
Company-Operated Stores:
North America
Stores opened
3
—
Stores closed
2
1
Ending stores - North America
61
61
East Asia
Ending stores - East Asia
54
38
Total Company-Operated Stores
115
99
International franchise locations
116
103
Total
231
202
(1) Direct-to-consumer includes sales of our retail stores and e-commerce sites and sales through our customers’ websites that we fulfill on a drop-ship basis.
Net Sales
Net sales of $295.4 million in the first quarter of 2025 decreased $21.8 million, or 6.9%, compared to the first quarter of 2024. During the first quarter of 2025, we experienced solid consumer demand in key categories, including fashion, flats, sandals and sneakers, while dress styles were more challenged. Our direct-to-consumer sales represented approximately 35% of net sales for the first quarter of 2025, compared to 33% in the first quarter of 2024. During the first quarter of 2025, we opened three stores and closed two stores in the United States, resulting in a total of 61 stores, consistent with the first quarter of 2024. We have expanded our international presence. There were 54 stores in East Asia at May 3, 2025, compared to 38 stores at May 4, 2024. There were also 116 international branded stores owned and operated by third parties through franchise agreements at May 3, 2025, compared to 103 international branded stores at May 4, 2024.
Our unfilled order position for our wholesale sales increased $6.6 million, or 2.6%, to $263.6 million at May 3, 2025, compared to $257.0 million at May 4, 2024.
Gross Profit
Gross profit decreased $18.5 million, or 12.5%, to $129.3 million for the first quarter of 2025, compared to $147.8 million for the first quarter of 2024, driven by lower net sales. As a percentage of net sales, our gross profit decreased to 43.8% for the first quarter of 2025, compared to 46.6% for the first quarter of 2024. The decrease was driven by lower merchandise margins, incremental costs associated with canceling and moving inventory out of China after the tariff escalation in April and higher inventory markdowns.
Selling and Administrative Expenses
Selling and administrative expenses increased $5.5 million, or 5.2%, to $111.9 million for the first quarter of 2025, compared to $106.4 million for the first quarter of 2024. The increase reflects higher costs associated with growth in our international business, a higher provision for expected credit losses and higher salary and benefits expense, partially offset by lower marketing expenses. As a percentage of net sales, selling and administrative expenses increased to 37.9% for the first quarter of 2025, compared to 33.5% for the first quarter of 2024.
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Operating Earnings
Operating earnings decreased to $17.4 million for the first quarter of 2025, from $41.4 million for the first quarter of 2024, as a result of the factors described above. As a percentage of net sales, operating earnings were 5.9% for the first quarter of 2025, compared to 13.1% for the first quarter of 2024.
ELIMINATIONS AND OTHER
Thirteen Weeks Ended
May 3, 2025
May 4, 2024
% of
% of
($ millions)
Net Sales
Net Sales
Net sales
$
(8.9)
100.0
%
$
(7.6)
100.0
%
Cost of goods sold
(9.9)
110.9
%
(7.9)
103.7
%
Gross profit
1.0
(10.9)
%
0.3
(3.7)
%
Selling and administrative expenses
11.1
(125.9)
%
15.8
(208.9)
%
Restructuring and other special charges, net
0.6
(7.1)
%
—
—
%
Operating loss
$
(10.7)
122.1
%
$
(15.5)
205.2
%
The Eliminations and Other category includes the elimination of intersegment sales and profit, unallocated corporate administrative expenses, and other costs and recoveries.
The net sales elimination of $8.9 million for the first quarter of 2025 is $1.3 million, or 17.0%, higher than the first quarter of 2024, reflecting an increase in product sold from our Brand Portfolio segment to Famous Footwear.
Selling and administrative expenses decreased $4.7 million, to $11.1 million in the first quarter of 2025, compared to $15.8 million for the first quarter of 2024. The decrease primarily reflects lower expenses for our cash and share-based incentive compensation.
Restructuring and other special charges of $0.6 million for the first quarter of 2025 were for legal and other related costs associated with the pending acquisition of Stuart Weitzman that is expected to close in the summer of 2025. There were no restructuring and other special charges during the first quarter of 2024. Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.
LIQUIDITY AND CAPITAL RESOURCES
Borrowings
As further discussed in Note 10 to the condensed consolidated financial statements, the Company maintains a revolving credit facility for working capital needs that matures on October 5, 2026. The aggregate amount available under the revolving credit facility is up to $500.0 million, subject to borrowing base restrictions, and may be increased by up to $250.0 million. Interest on the borrowings is at variable rates based on the SOFR, or the prime rate (as defined in the Credit Agreement), plus a spread. During 2025, we expect to refinance our revolving credit facility in advance of its maturity in October 2026.
Total debt obligations of $258.5 million at May 3, 2025 increased $67.5 million, from $191.0 million at May 4, 2024, and $39.0 million, from $219.5 million at February 1, 2025. During the first quarter of 2025, we used our revolving credit facility to repurchase $5.0 million of shares of our common stock under our share repurchase program. Net interest expense for the first quarter of 2025 was $3.8 million, consistent with the first quarter of 2024, reflecting higher average borrowings on our revolving credit facility, offset by a lower weighted-average interest rate.
At May 3, 2025, we had $258.5 million in borrowings and $8.1 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was $233.4 million at May 3, 2025. We were in compliance with all covenants and restrictions under the Credit Agreement as of May 3, 2025.
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Working Capital and Cash Flow
Thirteen Weeks Ended
($ millions)
May 3, 2025
May 4, 2024
Change
Net cash (used for) provided by operating activities
$
(5.7)
$
36.1
$
(41.8)
Net cash used for investing activities
(21.1)
(10.3)
(10.8)
Net cash provided by (used for) financing activities
30.3
(16.4)
46.7
Effect of exchange rate changes on cash and cash equivalents
0.0
(0.0)
0.0
Increase in cash and cash equivalents
$
3.5
$
9.4
$
(5.9)
Reasons for the major variances in cash provided in the table above are as follows:
Cash provided by operating activities was $41.8 million lower in the thirteen weeks ended May 3, 2025 as compared to the thirteen weeks ended May 4, 2024, primarily reflecting the following factors:
● A decrease in trade accounts payable during the thirteen weeks ended May 3, 2025, compared to the thirteen weeks ended May 4, 2024,
● Lower net earnings in the thirteen weeks ended May 3, 2025, compared to the thirteen weeks ended May 4, 2024,
● An increase in inventory during the thirteen weeks ended May 3, 2025, compared to a decrease in the thirteen weeks ended May 4, 2024, partially offset by
● A smaller increase in accounts receivable during the thirteen weeks ended May 3, 2025 compared to the thirteen weeks ended May 4, 2024, and
● A smaller decrease in accrued expenses and other liabilities during the thirteen weeks ended May 3, 2025, compared to the thirteen weeks ended May 4, 2024.
Cash used for investing activities was $10.8 million higher for the thirteen weeks ended May 3, 2025 as compared to the thirteen weeks ended May 4, 2024, reflecting higher capital expenditures, due in part to the Famous Footwear store remodels to the new FLAIR concept. We had 44 FLAIR stores as of May 3, 2025 and expect to add nine more FLAIR stores during the second quarter of 2025.
Cash provided by financing activities was $30.3 million for the thirteen weeks ended May 3, 2025 as compared to cash used for financing activities of $16.4 million for the thirteen weeks ended May 4, 2024, primarily due to net borrowings on our revolving credit agreement of $39.0 million in the thirteen weeks ended May 3, 2025, compared to net borrowings of $9.0 million in the comparable period in 2024. These increases were partially offset by $5.0 million of repurchases of our common stock during the thirteen weeks ended May 3, 2025, compared to $15.1 million in repurchases during the thirteen weeks ended May 4, 2024.
A summary of key financial data and ratios at the dates indicated is as follows:
May 3, 2025
May 4, 2024
February 1, 2025
Working capital ($ millions) (1)
$
76.1
$
41.0
$
78.6
Current ratio (2)
1.10:1
1.05:1
1.10:1
Debt-to-capital ratio (3)
29.7
%
24.9
%
26.6
%
(1) Working capital has been computed as total current assets less total current liabilities.
(2) The current ratio has been computed by dividing total current assets by total current liabilities.
(3) The debt-to-capital ratio has been computed by dividing the borrowings under our revolving credit agreement by total capitalization. Total capitalization is defined as total debt and total equity .
Working capital at May 3, 2025 was $76.1 million, which was an increase of $35.1 million from May 4, 2024 and a $2.5 million decrease from February 1, 2025. The increase in working capital from May 4, 2024 primarily reflects lower trade accounts payable and higher inventory, partially offset by higher borrowings under our revolving credit agreement. The decrease in working capital from February 1, 2025 primarily reflects higher borrowings under our revolving credit agreement and accrued expenses, partially offset by lower trade accounts payable. Our current ratio was 1.10:1 as of May 3, 2025, compared to 1.05:1 at May 4, 2024 and 1.10:1 at February 1, 2025. Our debt-to-capital ratio was 29.7% as of May 3, 2025, compared to 24.9% as of May 4, 2024 and 26.6% at February 1, 2025.
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We declared and paid dividends of $0.07 per share in the first quarter of both 2025 and 2024. The declaration and payment of any future dividend is at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors. However, we presently expect that dividends will continue to be paid.
We have various contractual or other obligations, including borrowings under our revolving credit facility, operating lease commitments, one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings and obligations for our supplemental executive retirement plan and other postretirement benefits. We also have purchase obligations to purchase inventory, assets and other goods and services. We believe our operating cash flows are sufficient to meet our material cash requirements for at least the next 12 months.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
No material changes have occurred related to critical accounting policies and estimates since the end of the most recent fiscal year. For further information on the Company’s critical accounting policies and estimates, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended February 1, 2025.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Recently issued accounting pronouncements, if any, and their impact on the Company are described in Note 2 to the condensed consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements and expectations regarding the Company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) changes in United States and international trade policies, including tariffs and trade restrictions; (ii) changing consumer demands, which may be influenced by general economic conditions and other factors; (iii) inflationary pressures and supply chain disruptions; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) supplier concentration, customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ix) cybersecurity threats or other major disruption to the company’s information technology systems including those related to our ERP upgrade; (x) transitional challenges with acquisitions and divestitures; (xi) the ability to accurately forecast sales and manage inventory levels; (xii) a disruption in the company’s distribution centers; (xiii) the ability to recruit and retain senior management and other key associates; (xiv) the ability to secure/exit leases on favorable terms; (xv) the ability to maintain relationships with current suppliers; (xvi) changes to tax laws, policies and treaties; (xvii) our commitments and shareholder expectations related to responsible business initiatives; (xviii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xix) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. The Company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended February 1, 2025, which information is incorporated by reference herein and updated by the Company’s Quarterly Reports on Form 10-Q. The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material changes have taken place in the quantitative and qualitative information about market risk since the end of the most recent fiscal year. For further information, see Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended February 1, 2025.
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