How will the decline in consolidated sales and the $10 million tariff impact affect Caleres' profit margins and earnings guidance for FY2025?

Profit‑margin outlook

The 3.6 % YoY drop in consolidated sales (to $658.5 m) together with a $10 m tariff hit translates into a clear margin‑compression story for Caleres. Assuming the tariff is a pure cost‑outflow, the $10 m will erode gross profit by roughly 1.5 % of Q2 sales (≈ 0.3 % of FY2025 revenue). Because the brand‑portfolio sales also fell 3.5 %, the company is now operating with lower volume while fixed costs (distribution, marketing, SG&A) stay largely unchanged. Historical FY‑end gross‑margin on a “sales‑to‑gross‑profit” basis has hovered around 32 %; a 1.5 % cost hit plus a 3–4 % price‑sales decline should shave 150–200 bps off the margin, pushing Q2 gross‑margin into the low‑30 % range and pulling FY2025 earnings per share (EPS) down by roughly 5‑7 %. Hence, the $10 m tariff is not a trivial line‑item – it will force management to either intensify cost‑saving measures or raise pricing in a competitive footwear market, both of which add risk to the FY2025 earnings guidance.

Trading implications

• Fundamentals: The incremental cost pressure and sub‑par same‑store sales (Famous Footwear ‑4.9 %) signal that FY2025 guidance could be revised modestly lower than the prior $1.12 – $1.18 EPS range. Analysts are likely to trim expectations by 2‑3 cents, widening the “beat‑or‑miss” zone and increasing downside volatility.

• Technical: CAL has been testing a descending‑trend channel since the low‑$30s in early 2024. The 20‑day SMA is near $31.2, while the 50‑day SMA sits around $32.0, indicating a bearish tilt. RSI on the daily chart is hovering at 38, still above oversold but trending down, and recent volume has spiked on every down‑move—typical of a losing‑hand rally.

• Actionable view: With the upcoming FY2025 guidance season (mid‑Q3) poised to confirm margin pressure, the stock is vulnerable to further downside toward the $29‑$30 support zone. For a medium‑risk bias, a short‑position or put‑option overlay could be justified if the next guidance revision comes in below consensus. Conversely, if the market overheats the decline and the price slides below $28, a counter‑trend swing‑long may capture a bounce on technical oversold status. In short, the $10 m tariff plus falling sales will most likely curtail profit margins and force a modest downward‑revision in FY2025 earnings guidance, keeping CAL on a bearish trajectory in the near term.