After finalizing its acquisition of Stuart Weitzman from Tapestry in August, Caleres management is focused on turning around the business in 2026.

On the company’s third quarter conference call on Tuesday, Caleres president and chief executive officer Jay Schmidt walked analysts through what’s working and what’s not as Caleres moves toward bringing Stuart Weitzman to breakeven in 2026 and profitability thereafter.

“As many of you know, the brand under Tapestry ownership has been underperforming in recent years and, as such, is dilutive to earnings as it came over,” Schmidt said. “During our first three months of ownership, our focus has been on stabilization and transition.”

As for what’s working, the CEO noted that the design, product quality and price value are all “resonating with the consumer” on the fall line offerings.

“Sell-throughs on the fall product have improved year-over-year, especially at wholesale and U.S. owned retail with full price strength in dress as well as short and tall boots,” he said. “Marketing featuring global ambassadors has connected with consumers of all ages. Our system integration is on track for the beginning of 2026 and reporting structures are in place for key functional areas such as finance, specialty retail, international and sourcing.”

As for what’s not working, Schmidt pointed to Weitzman’s China business, which “needed some intense focus and action,” he noted.

The CEO cite the “China direct-to-consumer business, where the shift in ownership resulted in sales volatility especially in August.” He said the company has “added new leadership in China and, in working closely with the Stuart Weitzman team in New York and our Caleres international team, they have made significant progress on improving sales sequentially month by month.”

There is also an excess of inventory that needs to be cleared out before Weitzman fully transitions over to Caleres. Schmidt said that much of the inventory on hand is “aged” and is more difficult to clear out.

When asked about it further by an analyst on the call, the CEO admitted that the brand’s inventory is global, which requires different strategies in different places.

“You’ll see most of that action move through the fourth quarter on Stuart Weitzman, meaning we’ve sold a lot of it, but again, the shipping will take place in the balance of the year,” Schmidt said. “And we are trying to do a lot of that before it comes into our Caleres facility in terms of integration.”

The CEO added that the Caleres team has made “significant progress” on liquidating the aged inventory. And while costly, Caleres management feels this inventory issue is “momentary in nature” and taking action now is “essential” for the success of this transition, he said.

“While we continue to expect the Stuart Weitzman business to be dilutive for the balance of 2025, we have a plan in place to achieve breakeven in 2026 through significant synergistic savings in distribution, logistics, specialty retail, digital and marketing operations and office facilities, along with all other back-office functions,” Schmidt continued. “And while these expense reductions will not be able to be realized until system cutover in February, I look forward to speaking much more about Stuart Weitzman, including our plans to improve sales performance, on the fourth quarter call.”

On Tuesday, the St. Louis-based footwear company said net sales in the third quarter of fiscal 2025 totaled $790.1 million, up 6.6 percent from $740.9 million in the same year-ago quarter. Adjusted net earnings in Q3 2025 were $13.1 million, or 38 cents per diluted share, down from $42.6 million, or $1.23 per diluted share, in the third quarter of 2024.

By segment, Famous Footwear saw net sales decrease 2.2 percent, with comparable sales down 1.2 percent in the third quarter. Caleres’ brand portfolio division reported a net sales increase of 18.8 percent in the period. Excluding Stuart Weitzman, net sales in the brand portfolio increased 4.6 percent to last year.