What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-06-09 compared with 2025-12-11 · 134 added, 194 removed, 170 unchanged (66% of the section changed)

8 unchanged sentences

A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands.

Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our “One Caleres” capabilities to increase profitability, and delivering value for our shareholders.

Known Trends Impacting Our Business

1 unchanged sentence

Macroeconomic Environment

Macroeconomic factors continued to impact consumer discretionary spending and our financial results during the third quarter of 2025.

We continued to experience less consumer traffic in our Famous Footwear retail stores during the third quarter, resulting in lower net sales.

Macroeconomic conditions continued to weigh on consumer discretionary spending and our financial results during the first quarter of 2026.

Consumers remain impacted by elevated interest rates, persistent inflation, and expectations of future price increases, which have increased pressure on discretionary spending.

In addition, heightened geopolitical volatility has adversely affected the global economy.

More recently, conflict throughout the Middle East, particularly the war in Iran, has increased oil prices, resulting in higher product and transportation costs.

As a result, we continued to experience lower consumer traffic in our Famous Footwear retail stores during the quarter.

Tariff volatility and the lack of clarity surrounding future trade policy developments have heightened uncertainty in the global economy.

We source a majority of our products internationally.

Following the executive orders on tariffs in early 2025, we acted quickly to adjust our country sourcing mix and took other actions to mitigate the tariff impact, such as negotiating price concessions with our factories and selectively raising prices.

Despite these actions, we have been subject to tariffs ranging from 19% to 50% and price increases from our vendors.

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, the expense reduction initiatives that began in the second quarter of 2025 are expected to decrease selling and administrative expenses by approximately $15 million on an annualized basis.

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.

Our liquidity position remains strong, with $34.0 million in cash and cash equivalents and excess availability on our revolving credit agreement of $278.1 million as of November 1, 2025.

During the third quarter of 2025, borrowings on our revolving credit agreement increased to $355.0 million, primarily driven by borrowings to fund the acquisition of Stuart Weitzman.

We continue to monitor changes in policy impacting global trade, including tariffs, which have been volatile and subject to ongoing modification.

In February 2026, the U.S.

Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) and in March 2026, the U.S.

Court of International Trade ordered the U.S.

Customs and Border Protection Agency (“CBP”) to suspend collection of the invalidated tariffs and to establish a process to refund IEEPA tariffs previously collected.

While the timing remains uncertain, we currently estimate that we are eligible to receive approximately $57.9 million in refunds related to the invalidated tariffs.

Beginning in April 2026, we began filing refund claims with CBP related to eligible tariff payments made.

There can be no guarantee that a refund will equal the full amount of IEEPA tariffs paid, and any refund may be subject to further legal and regulatory developments that could delay, reduce, or eliminate any refund.

As a result of this uncertainty, as of May 2, 2026, we have not recorded a receivable related to the potential recovery of IEEPA tariffs paid.

Beginning on May 11, 2026, the Company has received cash of $16.8 million for a portion of its refunds claims, with applicable interest.

Additionally, following the Supreme Court’s ruling invalidating the IEEPA tariffs, the U.S.

imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 and initiated additional trade actions, including investigations under Section 301 of the Trade Act of 1974, that may result in further tariffs..

There remains substantial uncertainty regarding the potential changes or pauses to existing and newly announced tariffs, tariff levels, and whether additional tariffs or other reciprocal actions may be imposed, modified, or suspended.

We have continued to implement various mitigation strategies including adjusting the countries from which we source our products and negotiating price concessions with our factories and selectively raising prices.

Proposed or enacted tariffs and changes to U.S.

trade policies may be reinstituted, paused, removed, or changed at any time, and to the extent we are unable to successfully mitigate any negative resulting impacts, it could adversely affect our business, financial condition, and results of operation.

Our liquidity position remains strong, with $37.7 million in cash and cash equivalents and excess availability on our revolving credit agreement of $191.5 million as of May 2, 2026.

During the first quarter of 2026, borrowings on our revolving credit agreement increased to $347.5 million, primarily driven by borrowings to fund the acquisition of Stuart Weitzman in the third quarter of 2025.

Refer to Note 3 to the condensed consolidated financial statements for further discussion of the acquisition.

Financial Highlights

Highlights of our consolidated and segment results for the third quarter of 2025 and 2024 are as follows:

Highlights of our consolidated and segment results for the first quarter of 2026 and 2025 are as follows:

Thirteen Weeks Ended

($ millions, except per share amounts)

November 1, 2025

November 2, 2024

Consolidated net sales

31 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

Cost of goods sold

3 unchanged sentences

Interest expense, net

Other (expense) income, net

Other income, net

Earnings before income taxes

2 unchanged sentences

Net earnings attributable to Caleres, Inc.

Net sales increased $49.2 million, or 6.6%, to $790.1 million for the third quarter of 2025, compared to $740.9 million for the third quarter of 2024.

Net sales increased $52.4 million, or 8.5%, to $666.6 million for the first quarter of 2026, compared to $614.2 million for the first quarter of 2025.

Net sales of our Brand Portfolio segment increased $60.9 million, or 20.6%, reflecting the impact of our Stuart Weitzman acquisition on August 4, 2025, which contributed net sales of $43.9 million, and organic growth in our owned e-commerce and wholesale businesses.

We saw strength in premium brands and declines in our more value-oriented brands.

Net sales in our Famous Footwear segment decreased $9.5 million, or 2.2%, and comparable sales declined 1.2%, reflecting less traffic.

Our direct-to-consumer sales represented approximately 71% of consolidated net sales for the third quarter of 2025, compared to 72% for the third quarter of 2024.

We saw strength in premium brands and growth in most of our more value-oriented brands.

Net sales in our Famous Footwear segment decreased $8.4 million, or 2.5%, and comparable sales declined 2.3%, reflecting less traffic in our retail stores.

Our direct-to-consumer sales represented approximately 67% of consolidated net sales for the first quarter of 2026, compared to 70% for the first quarter of 2025.

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.

Net sales decreased $20.7 million, or 1.0%, to $2,062.8 million for the nine months ended November 1, 2025, compared to $2,083.5 million for the nine months ended November 2, 2024.

Net sales for our Famous Footwear segment decreased $52.1 million, or 4.3% during the first nine months of 2025, compared to the first nine months of 2024 and comparable sales declined 3.0%.

Net sales for our Brand Portfolio segment increased $29.1 million, primarily reflecting the impact of our Stuart Weitzman acquisition, which contributed net sales of $45.8 million.

On a consolidated basis, our direct-to-consumer sales were 72% of total net sales for the nine months ended November 1, 2025, consistent with the nine months ended November 2, 2024.

Gross profit increased $2.9 million, or 0.9%, to $329.9 million for the third quarter of 2025, compared to $327.0 million for the third quarter of 2024.

As a percentage of net sales, gross profit decreased to 41.8% for the third quarter of 2025, compared to 44.1% for the third quarter of 2024, driven by lower merchandise margins associated with the impact of tariffs, higher inventory markdowns and higher sales of lower margin product.

In addition, the Brand Portfolio segment recognized $7.7 million in incremental cost of goods sold related to the fair value step-up adjustment on the acquired Stuart Weitzman inventory in the third quarter of 2025.

Gross profit decreased $52.5 million, or 5.5%, to $894.4 million for the nine months ended November 1, 2025, compared to $946.9 million for the nine months ended November 2, 2024.

As a percentage of net sales, gross profit decreased to 43.4% for the nine months ended November 1, 2025, compared to 45.5% for the nine months ended November 2, 2024, driven by lower merchandise margins associated with the impact of tariffs, higher inventory markdowns, incremental cost of goods sold of $7.7 million for the Stuart Weitzman fair value inventory step-up adjustment required for purchase accounting and incremental costs associated with canceling and moving inventory out of China after the tariff escalation in April.

Scholl’s, LifeStride, Naturalizer, Blowfish Malibu, and Ryka representing five of Famous Footwear’s top 20 best-selling footwear brands during the quarter.

Gross profit increased $36.8 million, or 13.2%, to $315.5 million for the first quarter of 2026, compared to $278.7 million for the first quarter of 2025.

As a percentage of net sales, gross profit increased to 47.3% for the first quarter of 2026, compared to 45.4% for the first quarter of 2025, primarily reflecting lower ongoing tariffs, the continuation of our tariff mitigation efforts, lower markdowns, and favorable product mix.

We classify certain warehousing, distribution, sourcing and other inventory procurement costs in selling and administrative expenses.

1 unchanged sentence

Selling and Administrative Expenses

Selling and administrative expenses increased $42.5 million, or 15.9%, to $311.2 million for the third quarter of 2025, compared to $268.7 million for the third quarter of 2024.

The increase was driven by expenses associated with the Stuart Weitzman brand acquired in the third quarter of 2025, as well as higher expenses associated with our cash and share-based incentive compensation programs.

As a percentage of net sales, selling and administrative expenses increased to 39.4% for the third quarter of 2025, from 36.2% for the third quarter of 2024.

Selling and administrative expenses increased $44.2 million, or 5.5%, to $847.5 million for the nine months ended November 1, 2025, compared to $803.3 million for the nine months ended November 2, 2024.

The increase was primarily due to expenses associated with our acquired Stuart Weitzman brand.

We also experienced higher expenses associated with growth in our international business, higher facility costs, reflecting higher depreciation associated with the investment in Famous Footwear store renovations and upgrades to the FLAIR concept and higher store rent expense as leases are renewed and a higher provision for expected credit losses.

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 41.1% for the nine months ended November 1, 2025, from 38.6% for the nine months ended November 2, 2024.

Selling and administrative expenses increased $27.2 million, or 10.2%, to $293.7 million for the first quarter of 2026, compared to $266.5 million for the first quarter of 2025.

The increase was driven by expenses associated with our acquired Stuart Weitzman brand, as well as higher expenses associated with our incentive compensation programs.

As a percentage of net sales, selling and administrative expenses increased to 44.1% for the first quarter of 2026, from 43.4% for the first quarter of 2025.

Restructuring and Other Special Charges, Net

Restructuring and other special charges of $6.7 million and $14.1 million for the third quarter and nine months ended November 1, 2025, respectively, were for legal, information technology and other related costs associated with the acquisition and integration of Stuart Weitzman, which closed on August 4, 2025, and severance and other related costs associated with our expense reduction initiatives.

Restructuring and other special charges, net resulted in income of $2.1 million for the first quarter of 2026, driven by a gain on the sale of one of the remaining parcels comprising the corporate headquarters and offset by Stuart Weitzman acquisition and integration costs.

Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges.

We incurred restructuring costs of $1.6 million for the third quarter and nine months ended November 2, 2024, primarily for severance.

We incurred restructuring costs of $0.6 million for the first quarter of 2025, primarily for legal and other related costs associated with the acquisition of Stuart Weitzman.

Operating Earnings

Operating earnings decreased $44.7 million to $12.0 million for the third quarter of 2025, compared to $56.7 million for the third quarter of 2024, reflecting the factors described above.

As a percentage of net sales, operating earnings were 1.5% for the third quarter of 2025, compared to 7.7% for the third quarter of 2024.

Operating earnings decreased $109.2 million to $32.8 million for the nine months ended November 1, 2025, compared to $142.0 million for the nine months ended November 2, 2024, primarily reflecting lower net sales and gross profit.

As a percentage of net sales, operating earnings were 1.6% for the nine months ended November 1, 2025, compared to 6.8% for the nine months ended November 2, 2024.

Operating earnings increased $12.3 million to $23.9 million for the first quarter of 2026, compared to $11.6 million for the first quarter of 2025, reflecting the factors described above.

As a percentage of net sales, operating earnings were 3.6% for the first quarter of 2026, compared to 1.9% for the first quarter of 2025.

Interest Expense, Net

Interest expense, net increased $2.6 million, or 88.5%, to $5.5 million for the third quarter of 2025, compared to $2.9 million for the third quarter of 2024, reflecting higher average borrowings on our revolving credit facility.

Interest expense, net increased $3.8 million, or 37.5%, to $13.8 million for the nine months ended November 1, 2025, compared to $10.0 million for the nine months ended November 2, 2024.

Interest expense, net increased $0.9 million, or 23.7%, to $4.7 million for the first quarter of 2026, compared to $3.8 million for the first quarter of 2025, reflecting higher average borrowings on our revolving credit facility.

As discussed above, we used the revolving credit facility to fund the acquisition of Stuart Weitzman that closed on August 4, 2025.

We anticipate that the higher borrowings will result in higher interest expense for the remainder of 2025 and into fiscal 2026.

Other (Expense) Income, Net

Other expense, net was $0.3 million for the third quarter of 2025, compared to an immaterial amount for the third quarter of 2024.

Other income decreased $0.8 million to $1.4 million for the nine months ended November 1, 2025, compared to $2.2 million for the nine months ended November 2, 2024, primarily reflecting lower income generated from our pension plan assets in the third quarter and nine months ended November 1, 2025.

Other Income, Net

Other income, net increased $0.5 million to $1.2 million for the first quarter of 2026, compared to $0.7 million for the first quarter of 2025, primarily reflecting higher income generated from our pension plan assets in the first quarter of 2026.

Refer to Note 14 of the condensed consolidated financial statements for further information.

1 unchanged sentence

Our effective tax rate can vary considerably from period to period, depending on a number of factors.

Our consolidated effective tax rates were 76.7% and 23.6% for the thirteen weeks ended November 1, 2025 and November 2, 2024, respectively.

For the thirty-nine weeks ended November 1, 2025 and November 2, 2024, our consolidated effective tax rates were 29.3% and 23.8%, respectively.

The higher effective tax rates for the thirteen and thirty-nine weeks ended November 1, 2025 were primarily driven by the year-to-date pre-tax book income mix, including the financial results of Stuart Weitzman following the acquisition on August 4, 2025.

The effective tax rate for the thirty-nine weeks ended November 1, 2025 was also impacted by discrete tax benefits of $2.5 million associated with the resolution of the remaining transition tax for the mandatory deemed repatriation of cumulative foreign earnings.

For the thirty-nine weeks ended November 2, 2024, we recorded discrete tax benefits of approximately $1.1 million related to share-based compensation.

Our consolidated effective tax rates were 32.4% and 29.8% for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively.

The higher effective tax rate was driven by discrete tax provisions related to share-based compensation of $1.2 million and $0.3 million for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively.

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.

In January 2026, the OECD announced that the U.S.

multinational regime would be considered a side-by-side regime that should prevent U.S.

companies from double taxation.

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.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted into law.

The OBBB Act includes a broad range of tax reform provisions, including allowing accelerated tax deductions for qualified property and immediate deduction of domestic research and development costs.

The OBBB Act also modifies some of the international tax rules.

We are in the process of evaluating the impact of the OBBB Act on our consolidated financial statements, but the provisions are not expected to have a material impact on the Company’s income tax provision.

Net Earnings Attributable to Caleres, Inc.

Net earnings attributable to Caleres, Inc.

was $2.4 million and $16.0 million for the third quarter and nine months ended November 1, 2025, respectively, compared to $41.4 million and $102.3 million for the third quarter and nine months ended November 2, 2024, as a result of the factors described above.

were $14.3 million for the first quarter of 2026 compared to $6.9 million for the first quarter of 2025, as a result of the factors described above.

FAMOUS FOOTWEAR

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

($ millions, except sales per square foot)

2 unchanged sentences

Restructuring and other special charges, net

Operating earnings

Operating (loss) earnings

Comparable sales % change

2 unchanged sentences

Impact of changes in Canadian exchange rate on sales

Sales per square foot, excluding e-commerce (thirteen and thirty-nine weeks ended)

Sales per square foot, excluding e-commerce (thirteen weeks ended)

Sales per square foot, excluding e-commerce (trailing twelve months)

3 unchanged sentences

Ending stores

Net sales of $418.8 million in the third quarter of 2025 decreased $9.5 million, or 2.2%, compared to the third quarter of 2024.

While comparable sales decreased 1.2% for the third quarter of 2025 driven by a decline in consumer traffic, Famous Footwear has experienced sequential sales improvement throughout the year.

We experienced strong growth in e-commerce sales and an increase in e-commerce penetration to 16% of net sales in the third quarter of 2025, from 14% in the third quarter of 2024.

We closed seven stores during the third quarter of 2025, resulting in 823 stores and total square footage of 5.4 million at the end of the quarter, compared to 851 stores and total square footage of 5.6 million at the end of the third 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 75% of our net sales made to program members in the third quarter of 2025, compared to 74% in the third quarter of 2024.

Net sales of $1,146.0 million in the nine months ended November 1, 2025 decreased $52.1 million, or 4.3%, compared to the nine months ended November 2, 2024.

Comparable sales declined 3.0% in the nine months ended November 1, 2025, driven by a decline in traffic.

Athletics continues to be our top-selling category.

We remain focused on 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 for the nine months ended November 1, 2025.

In mid-July, we launched the Jordan brand, both online and in our retail stores.

Jordan quickly rose to one of Famous Footwear’s top brands.

During the first nine months of 2025, we opened two stores and closed 25 stores, and operated 56 FLAIR stores as of November 1, 2025.

We have experienced sales growth in stores converted to the FLAIR concept, and we will continue to evaluate stores for FLAIR conversion to drive sales growth.

Gross profit decreased $9.5 million, or 5.2%, to $174.3 million for the third quarter of 2025, compared to $183.8 million for the third quarter of 2024.

As a percentage of net sales, our gross profit decreased to 41.6% for the third quarter of 2025, from 42.9% for the third quarter of 2024, reflecting higher sales volume of lower margin product, higher levels of promotional activity during the quarter and additional LIFO and other reserves.

Gross profit decreased $36.8 million, or 6.9%, to $497.5 million for the nine months ended November 1, 2025, compared to $534.2 million for the nine months ended November 2, 2024.

As a percentage of net sales, our gross profit decreased to 43.4% for the nine months ended November 1, 2025, compared to 44.6% for the nine months ended November 2, 2024, driven by higher levels of promotional activity and higher freight costs.

Net sales of $319.3 million in the first quarter of 2026 decreased $8.4 million, or 2.5%, compared to the first quarter of 2025.

Comparable sales decreased 2.3% for the first quarter of 2026 driven by a decline in consumer traffic in our retail stores.

We experienced strong growth in e-commerce sales and an increase in e-commerce penetration to 16% of net sales in the first quarter of 2026, from 14% in the first quarter of 2025.

Our kids category, which is a key differentiator for Famous Footwear, continued to outperform the total chain.

We opened one store and closed 10 stores during the first quarter of 2026, resulting in 812 stores and total square footage of 5.4 million at the end of the quarter, compared to 835 stores and total square footage of 5.5 million at the end of the first quarter of 2025.

Sales to members of our customer loyalty program, Famously You Rewards, continue to account for a majority of the segment’s sales with approximately 78% of our net sales made to program members in the first quarter of 2026, compared to 79% in the first quarter of 2025.

Gross profit decreased $8.4 million, or 5.7%, to $140.0 million for the first quarter of 2026, compared to $148.4 million for the first quarter of 2025.

As a percentage of net sales, our gross profit decreased to 43.8% for the first quarter of 2026, from 45.3% for the first quarter of 2025, reflecting higher levels of clearance-related promotional activity and inventory valuation adjustments.

Selling and Administrative Expenses

Selling and administrative expenses decreased $0.6 million, or 0.4%, to $153.4 million for the third quarter of 2025, compared to $154.0 million for the third quarter of 2024.

The decrease was primarily driven by lower warehouse and distribution costs due to lower volume as well as lower salaries expense, partially offset by higher retail facilities costs, including depreciation expense associated with the investments in the FLAIR store concept.

During the third quarter of 2025, we converted one store to the new FLAIR concept, ending the quarter with a total of 56 FLAIR stores.

Selling and administrative expenses decreased $3.0 million, or 2.1%, to $140.4 million for the first quarter of 2026, compared to $143.4 million for the first quarter of 2025.

The decrease was primarily driven by lower warehouse and distribution costs and timing of marketing spend.

During the first quarter of 2026, we converted two stores to the FLAIR concept, ending the quarter with a total of 59 FLAIR stores.

These stores continue to outperform our traditionally designed retail stores.

As a percentage of net sales, selling and administrative expenses increased to 36.6% for the third quarter of 2025, compared to 36.0% for the third quarter of 2024.

Selling and administrative expenses decreased $0.2 million, or 0.1%, to $453.0 million for the nine months ended November 1, 2025, compared to $453.2 million for the nine months ended November 2, 2024.

As a percentage of net sales, selling and administrative expenses increased to 39.5% for the nine months ended November 1, 2025, compared to 37.9% for the nine months ended November 2, 2024, reflecting deleveraging of expenses over lower net sales.

Restructuring and Other Special Charges, Net

Restructuring and other special charges of $0.2 million and $0.3 million for the three and nine months ended November 1, 2025, respectively, were associated with our expense reduction initiatives, primarily severance.

Restructuring costs of $0.2 million were incurred, primarily for severance, during the three and nine months ended November 2, 2024.

Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges.

Operating Earnings

Operating earnings decreased $8.8 million to $20.7 million for the third quarter of 2025, compared to $29.6 million for the third quarter of 2024, primarily reflecting the factors described above.

As a percentage of net sales, operating earnings declined to 5.0% for the third quarter of 2025, compared to 6.9% for the third quarter of 2024.

Operating earnings decreased $36.6 million to $44.2 million for the nine months ended November 1, 2025, compared to $80.8 million for the nine months ended November 2, 2024.

As a percentage of net sales, operating earnings were 3.9% for the nine months ended November 1, 2025, compared to 6.7% for the nine months ended November 2, 2024.

As a percentage of net sales, selling and administrative expenses increased to 44.0% for the first quarter of 2026, compared to 43.8% for the first quarter of 2025.

Operating (Loss) Earnings

Operating (loss) earnings decreased $5.4 million to operating loss of $0.4 million for the first quarter of 2026, compared to operating earnings of $5.0 million for the first quarter of 2025, primarily reflecting the factors described above.

As a percentage of net sales, operating (loss) earnings declined to (0.1)% for the first quarter of 2026, compared to 1.5% for the first quarter of 2025.

BRAND PORTFOLIO

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

Cost of goods sold

3 unchanged sentences

Direct-to-consumer (% of net sales) (1)

Change in wholesale net sales ($)

Change in retail net sales ($)

Change in wholesale net sales, excluding Stuart Weitzman ($)

Change in retail net sales, excluding Stuart Weitzman ($)

Sales change from acquired Stuart Weitzman business

5 unchanged sentences

Ending stores - North America (2)

East and Southeast Asia

Ending stores - East Asia (2)

2 unchanged sentences

(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.

(2) Includes the 25 North America and 53 East Asia retail stores acquired from Stuart Weitzman.

Net sales of $393.7 million in the third quarter of 2025 increased $60.8 million, or 18.8%, compared to the third quarter of 2024.

The increase primarily reflects the acquisition of Stuart Weitzman on August 4, 2025, which contributed net sales of $45.8 million in the third quarter of 2025.

We experienced strong growth in our company-owned e-commerce business, which increased approximately 14% during the third quarter of 2025, and organic growth in our wholesale business.

(2) Includes 23 North America and 48 East Asia retail stores acquired from Stuart Weitzman.

Net sales of $356.3 million in the first quarter of 2026 increased $60.9 million, or 20.6%, compared to the first quarter of 2025.

The increase primarily reflects the acquisition of Stuart Weitzman on August 4, 2025, which contributed net sales of $43.9 million in the first quarter of 2026.

We experienced strong growth in our company-owned e-commerce business, which increased approximately 21% during the first quarter of 2026, and growth in our wholesale business.

We saw strength in premium brands and declines in our more value-oriented brands.

Our direct-to-consumer sales represented approximately 37% of net sales for the third quarter of 2025, compared to 34% for the third quarter of 2024.

During the third quarter of 2025, we did not open or close any stores in North America.

We acquired 25 retail stores located in North America from Stuart Weitzman, resulting in a total of 88 stores at November 1, 2025, compared to 62 stores at November 2, 2024.

We remain focused on international growth and continued to expand our international presence during the third quarter of 2025.

There were 109 stores in East Asia at November 1, 2025, including 53 acquired from Stuart Weitzman, compared to 49 stores at November 2, 2024.

There were also 150 international branded stores owned and operated by third parties through franchise agreements at November 1, 2025, compared to 113 international branded stores at August 3, 2024.

Net sales increased $29.1 million, or 3.1%, to $954.7 million for the nine months ended November 1, 2025, compared to $925.6 million for the nine months ended November 2, 2024, reflecting softer demand associated with the challenging macroeconomic environment and competitive retail landscape, partially offset by the $45.8 million net sales contribution from our recently acquired Stuart Weitzman brand.

Our unfilled order position for our wholesale sales increased $53.8 million, or 21.8%, to $300.4 million at November 1, 2025, compared to $246.6 million at November 2, 2024, primarily reflecting the unfilled order position for the Stuart Weitzman brand.

Gross profit increased $13.1 million, or 9.3%, to $154.7 million for the third quarter of 2025, compared to $141.6 million for the third quarter of 2024, driven by net sales growth, partially offset by the incremental cost of goods sold related to the fair value step-up adjustment on the

acquired Stuart Weitzman inventory.

As a percentage of net sales, our gross profit decreased to 40.3% for the third quarter of 2025, compared to 43.8% for the third quarter of 2024.

The decrease was driven by the incremental cost of goods sold related to purchase accounting inventory adjustments, continued impact of tariffs and higher inventory markdowns, due in part to the addition of the Stuart Weitzman brand.

Gross profit decreased $16.2 million, or 3.9%, to $395.1 million for the nine months ended November 1, 2025, compared to $411.3 million for the nine months ended November 2, 2024.

As a percentage of net sales, our gross profit decreased to 41.4% for the nine months ended November 1, 2025, compared to 44.4% for the nine months ended November 2, 2024.

The decrease was driven by the same factors described above, as well as incremental costs associated with canceling factory orders and moving inventory out of China.

Our direct-to-consumer sales represented approximately 36% of net sales for the first quarter of 2026, compared to 35% for the first quarter of 2026.

During the first quarter of 2026, we did not open or close any stores in North America, resulting in a total of 85 stores, compared to 61 stores in the first quarter of 2025.

We remain focused on international growth and continue to evaluate expansion of our international presence during the first quarter of 2026.

There were 99 stores in East Asia at May 2, 2026, compared to 54 stores at May 3, 2025.

There were also 152 international branded stores owned and operated by third parties through franchise agreements at May 2, 2026, compared to 116 international branded stores at May 3, 2025.

Our unfilled order position for our wholesale sales increased $82.9 million, or 31.4%, to $346.5 million at May 2, 2026, compared to $263.6 million at May 3, 2025 .

Gross profit increased $45.2 million, or 35.0%, to $174.5 million for the first quarter of 2026, compared to $129.3 million for the first quarter of 2025, driven by net sales growth.

As a percentage of net sales, our gross profit increased to 49.0% for the first quarter of 2026, compared to 43.8% for the first quarter of 2025.

The increase was driven by lower ongoing tariffs, the continuation of our tariff mitigation efforts, lower markdowns, and favorable product mix.

Selling and Administrative Expenses

Selling and administrative expenses increased $36.0 million, or 33.8%, to $142.4 million for the third quarter of 2025, compared to $106.4 million for the third quarter of 2024 driven by expenses related to our acquired Stuart Weitzman brand and growth in our international business.

As a percentage of net sales, selling and administrative expenses increased to 37.1% for the third quarter of 2025, compared to 33.0% for the third quarter of 2024.

Selling and administrative expenses increased $45.8 million, or 14.7%, to $356.0 million for the nine months ended November 1, 2025, compared to $311.1 million for the nine months ended November 2, 2024.

The increase primarily reflects our acquired Stuart Weitzman brand in the third quarter of 2025, growth in our international business, a higher provision for expected credit losses and higher salary and benefits expense.

As a percentage of net sales, selling and administrative expenses increased to 37.4% for the nine months ended November 1, 2025, compared to 33.6% for the nine months ended November 2, 2024.

Selling and administrative expenses increased $23.1 million, or 20.6%, to $135.0 million for the first quarter of 2026, compared to $111.9 million for the first quarter of 2025 driven by expenses related to our acquired Stuart Weitzman brand and growth in our international

As a percentage of net sales, selling and administrative expenses was consistent with the prior comparable period, 37.9% for the first quarter of 2026, compared to 37.9% for the first quarter of 2025.

Restructuring and Other Special Charges, Net

Restructuring and other special charges of $1.2 million and $3.0 million for the three and nine months ended November 1, 2025 were primarily associated severance for our expense reduction initiatives.

Restructuring and other special charges of $0.4 million for the thirteen weeks ended May 2, 2026 were primarily associated Stuart Weitzman acquisition and integration costs.

Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges.

Restructuring costs of $1.1 million were incurred primarily for severance during the three and nine months ended November 2, 2024.

There were no Restructuring and other special charges during the thirteen weeks ended May 3, 2025.

Operating Earnings

Operating earnings decreased to $11.1 million for the third quarter of 2025, from $34.1 million for the third quarter of 2024, as a result of the factors described above.

As a percentage of net sales, operating earnings were 2.9% for the third quarter of 2025, compared to 10.5% for the third quarter of 2024.

Operating earnings decreased to $35.2 million for the nine months ended November 1, 2025, compared to $99.1 million for the nine months ended November 2, 2024, as a result of the factors described above.

As a percentage of net sales, operating earnings were 3.7% for the nine months ended November 1, 2025, compared to 10.7% in the nine months ended November 2, 2024.

Operating earnings increased to $39.1 million for the first quarter of 2026, from $17.4 million for the first quarter of 2025, as a result of the factors described above.

As a percentage of net sales, operating earnings were 11.0% for the first quarter of 2026, compared to 5.9% for the first quarter of 2025.

ELIMINATIONS AND OTHER

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

Cost of goods sold

3 unchanged sentences

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 $12.4 million for the third quarter of 2025 is $2.1 million, or 25.8%, higher than the third quarter of 2024, reflecting an increase in product sold from our Brand Portfolio segment to Famous Footwear.

The net sales elimination of $38.0 million for the nine months ended November 1, 2025 is $2.3 million, or 5.8%, lower than the nine months ended November 2, 2024, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.

Selling and administrative expenses increased $7.3 million, to $15.4 million in the third quarter of 2025, compared to $8.1 million for the third quarter of 2024, primarily reflecting higher expenses related to our cash-based incentive compensation and higher medical costs, partially offset by lower share-based incentive compensation expenses.

Selling and administrative expenses decreased $1.4 million, to $37.7 million for the nine months ended November 1, 2025, compared to $39.1 million for the nine months ended November 2, 2024 reflecting lower expenses for cash and share-based incentive compensation.

Restructuring and other special charges of $5.4 million and $10.8 million for the three and nine months ended November 1, 2025, respectively, were for legal, information technology and other related costs associated with the acquisition of Stuart Weitzman that closed on August 4, 2025 as well as severance and other costs associated with our expense reduction initiatives.

The net sales elimination of $9.0 million for the first quarter of 2026 is $0.1 million, or 1.1%, higher than the first quarter of 2025, reflecting a slight increase in product sold from our Brand Portfolio segment to Famous Footwear compared to the prior comparable period.

Selling and administrative expenses increased $7.2 million, to $18.3 million in the first quarter of 2026, compared to $11.1 million for the first quarter of 2025, primarily reflecting higher expenses related to our incentive compensation programs and employee benefits costs.

Restructuring and other special income of $2.6 million for the first quarter of 2026 was driven by a gain of $3.9 million for the sale of one of the remaining parcels comprising our corporate headquarters in Clayton, Missouri, partially offset by $1.3 million of technology, office relocation and other related costs associated with the acquisition of Stuart Weitzman.

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 acquisition of Stuart Weitzman.

Refer to Note 6 to the condensed consolidated financial statements for additional information related to these charges.

Restructuring and other special charges of $0.3 million for the three and nine months ended November 2, 2024 were incurred primarily for severance at our corporate headquarters.

LIQUIDITY AND CAPITAL RESOURCES

As further discussed in Note 11 to the condensed consolidated financial statements, the Company maintains a revolving credit facility for working capital needs and strategic initiatives that matures on June 27, 2030.

As further discussed in Note 11 to the condensed consolidated financial statements, we maintain a revolving credit facility for working capital needs and strategic initiatives that matures on June 27, 2030.

The aggregate amount available under the revolving credit facility is up to $700.0 million, subject to borrowing base restrictions, and may be further 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.

Total debt obligations of $355.0 million at November 1, 2025 increased $116.5 million, from $238.5 million at November 2, 2024, and $135.5 million, from $219.5 million at February 1, 2025.

On August 4, 2025, we completed the acquisition of Stuart Weitzman, as further discussed in Note 3 to the condensed consolidated financial statements.

The increase in borrowings at November 1, 2025 reflects borrowings to fund the acquisition.

Net interest expense for the third quarter of 2025 increased $2.6 million to $5.5 million, compared to $2.9 million for the third quarter of 2024, reflecting higher average borrowings on our revolving credit facility.

At November 1, 2025, we had $355.0 million in borrowings and $8.5 million in letters of credit outstanding under the Credit Agreement.

Total borrowing availability was $278.1 million at November 1, 2025.

We were in compliance with all covenants and restrictions under the Credit Agreement as of November 1, 2025.

Total debt obligations of $347.5 million at May 2, 2026 increased $89.0 million, from $258.5 million at May 3, 2025, and $51.0 million, from $296.5 million at January 31, 2026.

On August 4, 2025, we completed the acquisition of Stuart Weitzman, as further discussed in Note

3 to the condensed consolidated financial statements.

The increase in borrowings at May 2, 2026 primarily reflects borrowings to fund the acquisition, to fund business operations and inventory purchases.

Net interest expense for the first quarter of 2026 increased $0.9 million to $4.7 million, compared to $3.8 million for the first quarter of 2025, reflecting higher average borrowings on our revolving credit facility.

At May 2, 2026, we had $347.5 million in borrowings and $8.5 million in letters of credit outstanding under the Credit Agreement.

Total borrowing availability was $191.5 million at May 2, 2026.

We were in compliance with all covenants and restrictions under the Credit Agreement as of May 2, 2026.

Working Capital and Cash Flow

Thirty-Nine Weeks Ended

November 1, 2025

November 2, 2024

Net cash provided by operating activities

Thirteen Weeks Ended

Net cash used for operating activities

Net cash used for investing activities

Net cash provided by (used for) financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

1 unchanged sentence

Reasons for the major variances in cash provided in the table above are as follows:

Cash provided by operating activities was $35.3 million lower in the thirty-nine weeks ended November 1, 2025 as compared to the thirty-nine weeks ended November 2, 2024, primarily reflecting the following factors:

● Lower net earnings in the thirty-nine weeks ended November 1, 2025, compared to the thirty-nine weeks ended November 2, 2024,

● A decrease in trade accounts payable during the thirty-nine weeks ended November 1, 2025, compared to an increase in the thirty-nine weeks ended November 2, 2024, partially offset by

● An increase in accrued expenses and other liabilities during the thirty-nine weeks ended November 1, 2025, compared to a decrease in the thirty-nine weeks ended November 2, 2024, and

● A smaller increase in receivables during the thirty-nine weeks ended November 1, 2025, compared to the thirty-nine weeks ended November 2, 2024.

Cash used for investing activities was $115.4 million higher for the thirty-nine weeks ended November 1, 2025 as compared to the thirty-nine weeks ended November 2, 2024, reflecting the acquisition of Stuart Weitzman at the beginning of the third quarter of 2025 and higher capital expenditures, due in part to the Famous Footwear store remodels to the new FLAIR concept.

We had 56 FLAIR stores as of November 1, 2025 and expect to add one more FLAIR store in 2025.

Cash provided by financing activities was $119.5 million for the thirty-nine weeks ended November 1, 2025 as compared to cash used for financing activities of $23.2 million for the thirty-nine weeks ended November 2, 2024, primarily due to net borrowings on our revolving credit agreement of $135.5 million in the thirty-nine weeks ended November 1, 2025, compared to net repayments of $56.5 million in the comparable period in 2024.

The increase in borrowings during the thirty-nine weeks ended November 1, 2025 reflects the use of the revolving credit agreement to fund the Stuart Weitzman acquisition on August 4, 2025.

Cash used for operating activities was $22.1 million higher in the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, primarily reflecting the following factors, which includes cash used for Stuart Weitzman operating activities:

● A larger increase in accounts receivable during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025,

● A larger decrease in accrued expenses and other liabilities during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, and

● A larger increase in prepaid expenses and other current assets during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, partially offset by

● Higher net earnings in the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025,

● A smaller decrease in trade accounts payable during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025, and

● A smaller decrease in inventories during the thirteen weeks ended May 2, 2026, compared to the thirteen weeks ended May 3, 2025

Cash used for investing activities was $12.5 million lower for the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, reflecting lower capital expenditures, due in part to less Famous Footwear remodel spending.

We had 59 FLAIR stores as of May 2, 2026 and expect to add two more FLAIR stores during the second quarter of 2026.

The capital expenditures are offset by a $4.0 million of cash received for the sale of one of the remaining parcels comprising the Company’s corporate headquarters.

Cash provided by financing activities was $14.0 million higher for the thirteen weeks ended May 2, 2026 as compared to the thirteen weeks ended May 3, 2025, primarily due to net borrowings on our revolving credit agreement of $51.0 million in the thirteen weeks ended May 2, 2026, compared to net borrowings of $39.0 million in the comparable period in 2025.

The increase in borrowings during the thirteen weeks ended May 2, 2026 reflects the use of the revolving credit agreement to fund the Stuart Weitzman acquisition in Q3 2025 as well as to fund normal business operations, including inventory purchases.

The increase in borrowings is partially offset by lower purchases of $3.1 million of shares of our common stock under our share repurchase program in the thirteen weeks ended May 2, 2026, compared to $5.0 million of purchases in the comparable period in 2025.

A summary of key financial data and ratios at the dates indicated is as follows:

November 1, 2025

November 2, 2024

February 1, 2025

January 31, 2026

Working capital ($ millions) (1)

5 unchanged sentences

Total capitalization is defined as total debt and total equity .

Working capital at November 1, 2025 was $56.7 million, which was a decrease of $7.2 million from November 2, 2024 and a $21.9 million decrease from February 1, 2025.

The decrease in working capital from November 2, 2024 primarily reflects higher borrowings under our revolving credit agreement, partially offset by higher inventory, higher receivables and lower trade accounts payable.

Working capital at May 2, 2026 was $29.4 million, which was a decrease of $46.7 million from May 3, 2025 and a $12.2 million increase from January 31, 2026.

The decrease in working capital from May 3, 2025 primarily reflects higher borrowings under our revolving credit agreement and higher accrued expenses, partially offset by higher inventory, higher receivables and lower trade accounts payable.

The revolver was used to fund the acquisition of Stuart Weitzman, as further described in Note 3 to the condensed consolidated financial statements.

The decrease in working capital from February 1, 2025 primarily reflects higher borrowings under our revolving credit agreement and accrued expenses, partially offset by higher inventory and lower trade accounts payable.

Our current ratio was 1.06:1 as of November 1, 2025, compared to 1.08:1 at November 2, 2024 and 1.10:1 at February 1, 2025.

Our debt-to-capital ratio was 36.2% as of November 1, 2025, compared to 28.2% as of November 2, 2024 and 26.6% at February 1, 2025.

The higher debt-to-capital ratio as of November 1, 2025 reflects the increase in borrowings under our revolving credit agreement as a result of the Stuart Weitzman acquisition.

We declared and paid dividends of $0.07 per share in the third quarter of both 2025 and 2024.

The increase in working capital from January 31, 2026 primarily reflects higher receivables and prepaid and other current assets, partially offset by higher borrowings under our revolving credit agreement.

Our current ratio was 1.03:1 as of May 2, 2026, compared to 1.10:1 at May 3, 2025 and 1.02:1 at January 31, 2026.

Our debt-to-capital ratio was 35.9% as of May 2, 2026, compared to 29.7% as of May 3, 2025 and 32.7% at January 31, 2026.

The higher debt-to-capital ratio as of May 2, 2026 reflects the increase in borrowings under our revolving credit agreement as a result of the Stuart Weitzman acquisition.

We declared and paid dividends of $0.07 per share in the first quarter of both 2026 and 2025.

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.

5 unchanged sentences

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.

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 January 31, 2026.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

11 unchanged sentences

(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;

(ix) transitional challenges with acquisitions and divestitures;

(x) cybersecurity threats or other major disruption to the company’s information technology;

(xi) the ability to accurately forecast sales and manage inventory levels;

2 unchanged sentences

(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.

(xv) changes to tax laws, policies and treaties;

(xvi) our commitments and shareholder expectations related to responsible business initiatives;

(xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues;

and (xviii) 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 January 31, 2026, 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.

1 unchanged sentence

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.

For further information, see Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended January 31, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis