CAL

Caleres ($CAL) Directors Buy the Dip After 65% Stock Plunge – Value Opportunity Amid Operational Challenges?

03/31/2025 20:47

Caleres Inc ($CAL) has experienced a dramatic stock price decline over the past year, drawing attention to the contrasting trading patterns among company insiders. Particularly noteworthy is the stark contrast between executive selling near price peaks and recent director buying at multi-year lows. The footwear company's stock climbed to $43.56 in late August 2024 before entering a prolonged downtrend, eventually falling to around $15 by March 2025—representing a staggering 65% decline from its 52-week high. Against this backdrop, insider transactions have shown intriguing patterns. In mid-2024, when the stock traded between $33 and $35, company officer Diane M. Sullivan executed substantial sales in rapid succession. She sold a total of 26,063 shares (worth approximately $878,000) on June 17-18, followed by an additional 17,068 shares (approximately $605,000) on July 22. During the same period, Director Carla C. Hendra also divested 5,349 shares (about $177,000) on July 15. Significantly, these sales occurred shortly before operational issues surfaced publicly. On September 13, 2024, Telsey Group reported that an SAP ERP system upgrade had caused disruptions in order fulfillment and delayed back-to-school sales, prompting them to lower their price target from $40 to $37. This issue contributed to the stock plummeting from $36.90 to $29.95 on September 12. The challenges continued as Caleres' stock dropped nearly 20% in a single day on December 5, 2024, falling from $32.97 to $26.38. The downward trend persisted, with the stock hitting the $16 level by early February 2025. However, as the stock reached multi-year lows in early 2025, company directors began stepping in as buyers. Director Kyle Gendreau purchased 5,000 shares (approximately $99,600) at $19.92 on January 17, and Director Lori Greeley acquired 9,000 shares (about $159,800) at $17.75 on March 27. These purchases occurred at roughly half the price at which executives had sold their shares. Between these buying activities, Caleres announced a significant strategic decision. In February 2025, the company agreed to acquire luxury brand Stuart Weitzman from Tapestry for $105 million. This news pushed the stock up 4% to $17.17. Despite Stuart Weitzman facing challenges due to weakened luxury spending in North America and China, the acquisition is expected to strengthen Caleres' portfolio. However, financial results announced on March 20, 2025, for the quarter ending January 31 fell short of expectations. Adjusted EPS declined to 33 cents from 86 cents in the prior-year period, and revenue decreased by 8.3% to $639.23 million, missing Wall Street's forecast of $653.86 million. Examining Caleres' current financial metrics, the company has a market capitalization of $581 million, which is relatively low compared to its annual revenue of $2.72 billion. Its P/E ratio stands at 5.7x, below industry averages, while maintaining a dividend yield of 1.6%. The debt-to-equity ratio of 36.2% suggests a reasonably healthy financial structure. How should investors interpret these contrasting insider trading patterns? The mid-2024 executive sales might have anticipated the operational issues and performance challenges that followed. Conversely, the recent director purchases could indicate a belief that the stock has become undervalued or confidence in long-term strategies like the Stuart Weitzman acquisition. Caleres' insider trading patterns suggest that while the company faces short-term challenges, some insiders maintain confidence in its long-term value. With shares now trading around $17, down from over $40, value investors might find the current situation intriguing. However, volatility is likely to persist until operational issues are resolved and performance improves.

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