[Management View]
Caleres management emphasized the strategic integration of Stuart Weitzman and the focus on mitigating tariff-related costs. The company aims to leverage its lead brands, which now represent over 50% of sales and operating earnings, to drive growth. Structural cost savings initiatives are expected to generate $15 million in annualized savings.

[Outlook]
Caleres refrained from providing annual guidance due to tariff uncertainties. The company plans to continue expanding its Flair format locations and enhancing e-commerce growth. Future plans include further cost savings and operational synergies from the Stuart Weitzman acquisition.

[Financial Performance]
Sales for fiscal Q2 2025 were $658.5 million, down 3.6% YoY. Adjusted EPS was $0.35, compared to $0.85 last year. Gross margin decreased by 210 basis points, impacted by tariffs and promotional activities. Inventory increased by 4.9% YoY.

[Q&A Highlights]
Question 1: Ashley Owens inquired about Famous Footwear's August performance and the impact of product assortment shifts.
Answer: Jack Calandra noted improved traffic and conversion in brick-and-mortar stores, with flat AURs. Online traffic also improved, with higher AURs. Jay Schmidt highlighted the success of new and expanded assortments, particularly the Jordan brand, which quickly became a top 10 brand.

Question 2: Ashley Owens asked about gross margin expectations for Famous Footwear and Brand Portfolio.
Answer: Jack Calandra stated that Famous Footwear has moved past the promotional cycle, with markdowns on clearance expected in Q4. Brand Portfolio is anticipated to see less inventory markdown pressure, with tariff mitigation effects normalizing in Q4.

Question 3: Mitch Kummetz requested details on the Stuart Weitzman acquisition's impact on sales and EBIT.
Answer: Liz Dunn explained that purchase accounting is still being finalized, affecting P&L implications. The acquisition was funded by $120 million in borrowings, with a net price of $108 million. Interest expense is estimated at a 5.7%-5.8% borrowing rate.

Question 4: Dana Telsey asked about consumer health and brand performance at Famous Footwear.
Answer: Jay Schmidt observed strong demand for national brands, with elevated products growing faster. The consumer remains informed and seeks value across the landscape. Premium contemporary brands are performing well.

Question 5: Dana Telsey inquired about tariff mitigation tactics and potential cost savings.
Answer: Jay Schmidt outlined selective price increases, negotiations with factory partners, and structural cost savings. Jack Calandra added that a consulting partner is exploring additional savings opportunities, expected to materialize in 2026.

[Sentiment Analysis]
Analysts expressed concern over tariff impacts and sought clarity on strategic initiatives. Management maintained a confident tone, emphasizing strategic brand integration and cost-saving measures.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|-------------------------|---------|---------|
| Sales | $658.5M | $683.5M |
| Adjusted EPS | $0.35 | $0.85 |
| Gross Margin | 43.4% | 45.5% |
| Inventory | $693M | $661M |

[Risks and Concerns]
Tariff uncertainties continue to pose risks, affecting sales and gross margins. The integration of Stuart Weitzman presents challenges in realizing operational synergies and cost savings.

[Final Takeaway]
Caleres faces significant challenges from tariff disruptions, impacting sales and margins. However, the strategic integration of Stuart Weitzman and focus on lead brands offer potential growth opportunities. Management's emphasis on cost savings and operational efficiency is crucial for navigating current market conditions and driving long-term shareholder value.