Caleres (CAL) Stock Forecast & Price Target

Caleres Inc. reported a significant improvement in gross margin, expanding 348 basis points year-over-year to 43.9%, largely driven by a 660 basis point increase in the Brand Portfolio segment and a 54 basis point gain in Famous Footwear. The Brand Portfolio also achieved record operating profit and margin in the third quarter, underscoring the segment's successful positioning and the company's overall operational strength. Although Famous Footwear experienced a slight decline in sales, the overall revenue increased by 0.1% year-over-year, supported by a 4.5% increase in Brand Portfolio sales, highlighting the company's resilience and capacity for growth in the competitive footwear market.

Caleres Inc. has demonstrated a concerning trend with its operating margin falling short of expectations, achieving only 7.1% for FY23 versus the projected 7.3% to 7.5%. Additionally, the significant year-over-year decline in inventory, particularly a 13.6% drop in the Brand Portfolio segment, raises questions about the effectiveness of its growth investments and overall demand for its products. Although the company managed to pay down $40 million on its revolving credit facility, the reliance on a tax benefit to support an earnings per share beat suggests underlying financial challenges that may hinder sustainable growth moving forward.