“Our second quarter results demonstrate meaningful progress, with profits beating consensus by double digits and gross margins reaching 38.8% - our strongest Q2 margin performance in years”, said Mark Worden, President and Chief Executive Officer.

Second Quarter Results

In the second quarter of fiscal 2025, which ended on the 2^nd of August, the company’s net sales totalled 306.5 million US dollars. This reflects a 7.9% decrease, on a comparable basis to the 332.7 million US dollars recorded in the same period of the previous year. Comparable sales declined by 7.5%, including a high single-digit decline at Shoe Carnival and break-even results at Shoe Station.

However, while Shoe Station’s net sales grew by 1.6% in the second quarter, Shoe Carnival's declined by 10.1%, as compared to the same period of fiscal 2024. Meanwhile, Rogan's exceeded 20 million US dollars in net sales, in line with integration plans.

These results reinforce the successful implementation of the rebanner strategy, which led to an improvement in the gross margin of 270 basis points from 36.1% in the second quarter of the previous year to 38.8% in the second quarter of this year. The merchandise margin also increased by 390 basis points, driven by disciplined pricing, a shift in customer base towards higher-income Shoe Station customers, and strategic inventory management.

“Our rebanner strategy continues to deliver strong results. Through year-to-date August, the Shoe Station banner is outperforming the Shoe Carnival banner by a wide margin, with margins up sharply over last year”, emphasised Worden.

As of the 2^nd of August, Shoe Carnival operated 428 stores, more than doubling its footprint year-on-year. The company has completed 44 rebanners so far this year and plans to complete a further 58 in the second half of the year, with the aim of rebranding 145 Shoe Station stores (34% of the fleet) by the end of the year.

“This positions the Company to surpass 215 Shoe Station stores by Back-to-School 2026, achieving the critical 51 percent threshold where expected portfolio growth overtakes legacy declines”, reads the statement.

In the second quarter of the current fiscal year, Shoe Carnival reported a net income of 19.2 million US dollars, or 0.70 US dollars per diluted share, as compared to 22.6 million US dollars, or 0.25 US dollars per diluted share in the same quarter a year ago. Earnings per share include a negative impact of 0.21 US dollars from rebanner investments.

Back-to-School Update

In fiscal August, there was a turnaround with positive comparable sales ahead of plan. Shoe Station led the way with strong growth in children’s and adult athletics. Meanwhile, Shoe Carnival returned to growth in the children’s segment, achieving margin gains. Finally, Rogan’s delivered results in line with integration goals.

The company is debt-free. A successful Back-to-School season, fuelled by a strategic 5% increase in inventory, boosted cash reserves to approximately 148 million US dollars by the end of the August fiscal month. This improved cash position provided ample liquidity for ongoing rebanner investments, totalling 24.4 million US dollars in the year-to-date.

Fiscal 2025 Outlook

Overall, Shoe Carnival anticipates that the decline in its sales will slow down in the second half of the year, improving from a year-to-date drop of 7.7% to an expected decline of 3% for the full year. This improvement is driven by the successful rebanner strategy, as well as the performance in August. However, it has lowered its net sales forecast from between 1.15 and 1.23 billion US dollars to between 1.12 and 1.15 billion US dollars.

Earnings per share on a GAAP basis are expected to be between 1.70 and 2.10 US dollars, which reflects a 0.10 US dollar increase at the lower end of the range. This wide range reflects ongoing macroeconomic uncertainties.

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