CALERES INC (CAL)

ITEM 2    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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OVERVIEW

Business Overview

We are a global footwear company that operates retail stores and e-commerce websites, and designs, develops, sources, manufactures and distributes footwear for people of all ages.  Our mission is to inspire people to feel great...feet first.  We offer retailers and consumers a diversified portfolio of leading footwear brands.  Outfitted in our brands, customers can step confidently into every aspect of their lives.  As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points.  We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels.  A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands. Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our “One Caleres” capabilities to increase profitability, and delivering value for our shareholders.

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Known Trends Impacting Our Business

Based on the current macroeconomic environment and our recent operating results, we believe the following trends may continue to impact our business and operating results:

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Macroeconomic Environment

Macroeconomic conditions continued to weigh on consumer discretionary spending and our financial results during the first quarter of 2026. Consumers remain impacted by elevated interest rates, persistent inflation, and expectations of future price increases, which have increased pressure on discretionary spending. In addition, heightened geopolitical volatility has adversely affected the global economy. More recently, conflict throughout the Middle East, particularly the war in Iran, has increased oil prices, resulting in higher product and transportation costs. As a result, we continued to experience lower consumer traffic in our Famous Footwear retail stores during the quarter.

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Tariff volatility and the lack of clarity surrounding future trade policy developments have heightened uncertainty in the global economy. We source a majority of our products internationally. We continue to monitor changes in policy impacting global trade, including tariffs, which have been volatile and subject to ongoing modification. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency (“CBP”) to suspend collection of the invalidated tariffs and to establish a process to refund IEEPA tariffs previously collected. While the timing remains uncertain, we currently estimate that we are eligible to receive approximately $57.9 million in refunds related to the invalidated tariffs. Beginning in April 2026, we began filing refund claims with CBP related to eligible tariff payments made. There can be no guarantee that a refund will equal the full amount of IEEPA tariffs paid, and any refund may be subject to further legal and regulatory developments that could delay, reduce, or eliminate any refund. As a result of this uncertainty, as of May 2, 2026, we have not recorded a receivable related to the potential recovery of IEEPA tariffs paid. Beginning on May 11, 2026, the Company has received cash of $16.8 million for a portion of its refunds claims, with applicable interest.

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Additionally, following the Supreme Court’s ruling invalidating the IEEPA tariffs, the U.S. imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 and initiated additional trade actions, including investigations under Section 301 of the Trade Act of 1974, that may result in further tariffs.. There remains substantial uncertainty regarding the potential changes or pauses to existing and newly announced tariffs, tariff levels, and whether additional tariffs or other reciprocal actions may be imposed, modified, or suspended. We have continued to implement various mitigation strategies including adjusting the countries from which we source our products and negotiating price concessions with our factories and selectively raising prices. Proposed or enacted tariffs and changes to U.S. trade policies may be reinstituted, paused, removed, or changed at any time, and to the extent we are unable to successfully mitigate any negative resulting impacts, it could adversely affect our business, financial condition, and results of operation.

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Liquidity

Our liquidity position remains strong, with $37.7 million in cash and cash equivalents and excess availability on our revolving credit agreement of $191.5 million as of May 2, 2026.  During the first quarter of 2026, borrowings on our revolving credit agreement increased to $347.5 million, primarily driven by borrowings to fund the acquisition of Stuart Weitzman in the third quarter of 2025. Refer to Note 3 to the condensed consolidated financial statements for further discussion of the acquisition.

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Financial Highlights

Highlights of our consolidated and segment results for the first quarter of 2026 and 2025 are as follows:

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Metrics Used in the Evaluation of Our Business

The following are a few key metrics by which we evaluate our business, identify trends and make strategic decisions:

Comparable sales

The comparable sales metric is a metric commonly used in the retail industry to evaluate the revenue generated for stores that have been open for more than a year, though other retailers may calculate the metric differently. Management uses the comparable sales metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. Our comparable sales metric is a daily-weighted calculation for the period, which includes sales for stores that have been open for at least 13 months.  In addition, in order to be included in the comparable sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year. Accordingly, closed stores are excluded from the comparable sales metric for each day of the closure.  Relocated stores are treated as new stores and therefore excluded from the calculation. E-commerce sales for those websites that function as an extension of a retail chain are included in the comparable sales calculation.  In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation.  In the following year, the prior fiscal year period is shifted by one week to compare similar calendar weeks.  We believe the comparable sales metric is useful to shareholders and investors in assessing our retail sales performance of existing locations with comparable prior year sales, separate from the impact of store openings or store closures.

Sales per square foot

The sales per square foot metric is commonly used in the retail industry to calculate the efficiency of sales based upon the square footage in a store. Management uses the sales per square foot metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. The sales per square foot metric is calculated by dividing total retail store sales, excluding e-commerce sales and the retail operations of our joint venture in China, by the total square footage of the retail store base in North America at the end of each month of the respective period.

Direct-to-consumer sales

Direct-to-consumer sales includes sales from our retail stores, our company-owned websites and sales through our customers’ websites that we fulfill on a drop-ship basis. While we take an omni-channel approach to reach consumers, we believe that our direct-to-consumer channels reinforce the image of our brands and strengthens our connection with the end consumer. In addition, direct-to-consumer sales generally result in a higher gross margin for the Company as compared to wholesale sales. As a result, management monitors trends in direct-to-consumer sales as a percentage of our Brand Portfolio segment and total consolidated net sales.

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RESULTS OF OPERATIONS

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Following are the consolidated results and the results by segment:

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CONSOLIDATED RESULTS

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Net Sales

Net sales increased $52.4 million, or 8.5%, to $666.6 million for the first quarter of 2026, compared to $614.2 million for the first quarter of 2025.  Net sales of our Brand Portfolio segment increased $60.9 million, or 20.6%, reflect

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ITEM 7MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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OVERVIEW

Business Overview

We are a global footwear company that operates retail shoe stores and e-commerce websites, and designs, develops, sources, manufactures and distributes footwear for people of all ages.  Our mission is to inspire people to feel great...feet first.  We offer retailers and consumers a diversified portfolio of leading footwear brands.  Outfitted in our brands, customers can step confidently into every aspect of their lives.  As both a retailer and a wholesaler, we have a perspective on the marketplace that enables us to serve consumers from different vantage points.  We believe our diversified business model provides us with synergies by spanning consumer segments, categories and distribution channels.  A combination of thoughtful planning and rigorous execution is key to our success in optimizing our business and portfolio of brands.  Our business strategy is focused on accelerating growth in our Brand Portfolio segment, gaining market share and deepening connections with the millennial family in our Famous Footwear segment, leveraging our “One Caleres” capabilities to increase profitability, and delivering value for our shareholders.

Famous Footwear

Famous Footwear, which is one of America’s leading family–branded footwear retailers, was founded on a simple idea: that everyone deserves to feel the joy that comes from a new pair of shoes. Our Famous Footwear segment includes 821 Famous Footwear stores, famousfootwear.com and famousfootwear.ca in Canada.  This North American footprint of

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mostly off-mall store locations is convenient for Famous Footwear’s target consumer, the millennial family.  We seek to meet the needs of that millennial family and others by providing an assortment of trend-right, brand-name fashion, casual and athletic footwear at a great price.

During 2025, we continued to execute on our three-pronged strategy, which concentrates on merchandising, marketing and consumer experience.  We remained focused on increasing the opportunity between Famous Footwear and the brands within our Brand Portfolio segment, such as Dr. Scholl’s Shoes, LifeStride, Naturalizer and Blowfish Malibu, among others.  Vertical integration provides Famous Footwear with greater access to fashion products from brands that resonate with its consumer, as well as greater ability to be flexible with trends and offer better profit potential.  We also have focused on offering the consumer a balanced assortment of fashion and athletic styles from well-known brands.  We continued to tightly manage our inventory levels in 2025, optimizing SKU counts and amplifying key product trends and items to drive sales volume.  We believe our kids category is a key competitive differentiator.  With the millennial mom as our target consumer, we believe her primary purchase motivation is her kids and will prioritize these purchases, even with macroeconomic pressures.  As a result, we continue to make the kids business a critical component of how our associates connect with our consumers, including ensuring every child finds the perfect style and fit.

We are leaning into our best brands from an inventory, marketing and store presence perspective.  In addition, we continue to invest in enhancing our in-store shopping experience to deliver a more engaging and inspiring experience across the omnichannel.  Our FLAIR (Famous Localized and Immersive Retail) store concept has been successful at driving sales growth and we plan to continue to transform stores to this enhanced consumer shopping experience in 2026.  The FLAIR store concept highlights our leading assortment of trending brands and elevates those brands in an energetic and exciting manner.

Brand Portfolio

Our Brand Portfolio segment is consumer-focused and we believe our success is dependent upon our ability to strengthen consumers’ preference for our brands by offering compelling style, quality, differentiated brand promises and innovative marketing campaigns.  The segment is comprised of the Sam Edelman, Vionic, Naturalizer, Allen Edmonds, Dr. Scholl’s Shoes, Stuart Weitzman, LifeStride, Franco Sarto, Rykä,  Blowfish Malibu, Vince, and Veronica Beard brands.  Through these brands, we offer our customers a diversified selection of footwear, each designed and targeted to a specific consumer segment within the marketplace.  We are able to showcase many of our brands in our retail stores and online, leveraging our wholesale and retail platforms, sharing consumer insights across our businesses and testing new and innovative products.  Our Brand Portfolio segment operates 85 retail stores in North America for our Allen Edmonds, Sam Edelman and Stuart Weitzman brands.  This segment also includes our e-commerce businesses that sell our branded footwear direct to consumers.  We also operate a joint venture, which expands our international presence by distributing our Sam Edelman and Naturalizer brands through e-commerce sites, 53 retail stores in East Asia with further distribution through 148 branded stores owned and operated by third parties through franchise agreements. The Brand Portfolio segment also includes 50 Stuart Weitzman retail store locations in East Asia.

Known Trends Impacting Our Business

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Macroeconomic Environment

Macroeconomic factors continued to impact consumer discretionary spending and our financial results during 2025. Throughout the year, we experienced less consumer traffic in our Famous Footwear retail stores, resulting in lower net sales; however, this decline was offset by higher net sales in our Brand Portfolio segment driven by our acquisition of Stuart Weitzman in August 2025. Tariff volatility and the lack of clarity surrounding future trade policy developments also heightened uncertainty in the global economy. We source a majority of our products internationally. Following the executive orders on tariffs in early 2025, we acted quickly to adjust our country sourcing mix and took other actions to mitigate the tariff impact, such as negotiating price concessions with our factories and selectively raising prices. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). The availability of refunds related to such tariffs, as well as the potential impact of additional tariff actions, remain uncertain. Despite these actions, we continued to be subject to tariffs ranging from 19% to 50% and price increases from our vendors. While we believe that the structural changes we have implemented in the last few years, as well as our diversified model and operational discipline, enable the Company to drive value in a variety of market conditions, changes in macro-level spending trends, geopolitical conflicts and

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uncertainties and the impact of trade policy decisions may continue to adversely impact our financial results in the future. In the near-term, we are focused on the areas within our control, including optimizing our sourcing strategy. We believe our focus on cost control and our commitment to execute our clearly defined strategic initiatives have positioned us for sustainable, long-term growth.

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Liquidity

Our liquidity position remains strong, with $29.8 million in cash and cash equivalents and excess availability on our revolving credit agreement of $207.7 million as of January 31, 2026. During 2025, borrowings on our revolving credit agreement increased by $77.0 million to $296.5 million, primarily driven by the acquisition of Stuart Weitzman on August 4, 2025.  During 2026, we will continue to evaluate our capital allocation priorities in light of business performance and market conditions.

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Financial Highlights

The following is a summary of the financial highlights for 2025 and 2024:

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The following items should be considered in evaluating the comparability of our 2025 and 2024 results:

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