Analysts Are Bullish As Caleres Braces for Tariff Impacts

Caleres Inc. has joined a growing group of companies that have seen the negative impact of tariffs on its bottom line.

With a 15% levy on Chinese consumer goods scheduled to hit American businesses in mid-December, the St. Louis-based firm is bracing for the second round of trade headwinds.

For the third quarter, Caleres posted adjusted earnings per share of 78 cents, falling short of Wall Street’s estimates of 83 cents. Caleres said those results included a $0.03 net impact related to the 15% duty that went into effect on Sept. 1. It also shared expectations of another $0.02 net impact during Q4, totaling $0.05 for the year. Overall, its revenues rose 2.1% to $792.4 million, compared with expectations of $820.4 million.

Caleres’ shares have declined 20% since the start of the year, and they took a roughly 8% dip Monday to close at $22.23 following the release of its earnings report.

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However, several analysts remained positive on the stock, citing improvements on the horizon: About 60% of Caleres products imported to the U.S. are manufactured in China, down from 85% five years ago. In a distribution note, Susquehanna Financial Group analyst Sam Poser wrote that the company is in a good position to mitigate the impact of impending tariffs.

“Caleres has a significant manufacturing presence in China and thus carries considerable negotiating leverage,” he said, adding that it is “likely receiving concessions from Chinese factories, while also continuing to diversify its manufacturing base out of China.”

In its conference call, SVP and CFO Kenneth Hannah explained that 70% of its product line that came out from China was impacted by the first round of the fourth tranche of tariffs that took effect in September, while the remaining 30% is included in the second round of the list. The firm has also indicated that it would raise prices for certain brands and products to offset increasing costs in its supply chain.

“Caleres posted mixed Q3 results driven by the brand portfolio and tariff impacts,” added Wedbush Securities analyst Christopher Svezia. But he noted that “importantly both the brand portfolio and Famous Footwear are accelerating against a de-risked and achievable revised full-year outlook.”

President, Chairman and CEO Diane Sullivan said that Caleres’ third-quarter results led to the decision to narrow the top end of its full-year adjusted EPS outlook range by $0.05 to $2.35 to $2.40.

“I’m confident that the teams are focusing on what we can control and operating with the necessary discipline to deliver our guidance,” she explained.

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