Why is Caleres stock down today?

Actions of Caleres (HORSE -18.71%)parent of Famous Footwear and other shoe brands, tumbled today after the company posted disappointing results in its second-quarter earnings report. As of 11:34 a.m. ET, shares were down 19.1% on the news.

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Caleres misses the mark

Caleres said revenue for the quarter fell 1.8 percent to $683.3 million, well below estimates of $723.8 million. Sales of celebrity footwear rose 1.5 percent, which included a later-than-expected back-to-school season, with most sales coming in the third quarter. Sales of the portfolio of brands fell 5.1% due to weak seasonal demand and challenges in implementing its new enterprise resource planning system.

Despite weaker-than-expected sales, gross margin rose 30 basis points to 45.5%, although selling, general and administrative expenses rose 2% to $268.3 million. All in all, the company finished with earnings per share of $0.85, down from $0.95 in the year-ago quarter and missing the consensus estimate of $1.22.

CEO Jay Schmidt acknowledged the disappointing results, saying, “Caleres reported second quarter results that were below expectations. While our brands and products continue to resonate with consumers and we remain confident in our long-term vision, our second quarter results in both segments fell short of our potential.”

Can Caleres bounce back?

Management also lowered its guidance for the full year. It now sees sales falling by single digits, compared to a previous forecast of a flat 2%, and is cutting its adjusted earnings per share (EPS) estimate to $4.00-4.15 from $4.30-4 .60 USD. For the third quarter, it called for flat sales to decline 2% and adjusted EPS of $1.30-$1.40, below the $1.50 consensus.

Caleres did not explicitly blame macro factors in the report, but the disappointing results follow similar numbers from fellow shoe stock parent DSW Designer brands yesterday, which also fell on its earnings report.

This could be favorable for Caleres as the stock looks cheap at a forward price-to-earnings ratio of less than 8 after today’s decline. If the business can return to positive growth, it should recoup today’s losses.