What Happened?
Shares of footwear company Caleres (NYSE:CAL) fell 10.4% in the morning session after It reported disappointing third-quarter results and issued a full-year profit forecast that was significantly below expectations.
The company's adjusted earnings per share for the quarter came in at $0.38, falling well short of analyst estimates of $0.85. While revenue grew 6.6% year on year and beat expectations, this was overshadowed by a steep drop in profitability. Caleres's operating margin contracted significantly to 1.5% from 8% in the same period last year, indicating that expenses grew faster than revenue. Looking ahead, the company slashed its full-year adjusted earnings guidance to a midpoint of $0.58 per share, missing the Wall Street consensus by roughly 67%. The combination of the earnings miss and the bleak outlook pointed to a challenging road ahead for the company.
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What Is The Market Telling Us
Caleres’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. But moves this big are rare even for Caleres and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 6.3% on the news that investor optimism grew ahead of its third-quarter earnings report, scheduled for December 9th. Analysts expected the company to announce earnings of $0.75 per share and revenue of $768.59 million for the quarter. The positive sentiment was also supported by a broader market rally. A report showing an unexpected loss in jobs for November fueled hopes that the Federal Reserve would consider cutting interest rates, which generally helps lift stock prices. The stock had already been on an upward trend, having risen in seven of the previous ten trading days.
Caleres is down 45.2% since the beginning of the year, and at $12.33 per share, it is trading 54.3% below its 52-week high of $26.97 from December 2024. Investors who bought $1,000 worth of Caleres’s shares 5 years ago would now be looking at an investment worth $934.80.
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