Shoe Carnival's 'Rebanner' strategy drives growth in Q2 2025

Shoe Carnival, a leading footwear retailer, announced its second-quarter fiscal 2025 results and updated its full-year outlook. The company reported a net income of 19.2 million dollars, or 70 cents per diluted share, beating the consensus by over 20 percent. This came despite a 7.9 percent decrease in net sales, which totalled 306.4 million dollars for the quarter. Comparable sales for the quarter declined by 7.5 percent.

President and CEO Mark Worden highlighted the company's "meaningful progress," particularly the expansion of its gross profit margin by 270 basis points to 38.8 percent—its strongest second-quarter margin performance in years. Worden stated that the company's strategic transformation is accelerating, as evidenced by positive comparable sales and margin expansion during the crucial August Back-to-School season. This return to growth happened ahead of the company’s projected timeline.

Shoe Station records sales increase, while Shoe Carnival declines

The divergence in second-quarter performance among the company’s banners reinforced its strategic focus. While Shoe Station's net sales grew by 1.6 percent, net sales for the Shoe Carnival brand declined by 10.1 percent. Meanwhile, Rogan's exceeded 20 million dollars in net sales, aligning with its integration plans.

A key driver of this success is the company's "Rebanner" strategy, which converts Shoe Carnival stores to the Shoe Station banner. Through August, the Shoe Station banner delivered 8 percent comparable sales growth, outperforming the Shoe Carnival banner by a wide margin. The company completed 20 rebanner conversions in the second quarter, bringing the year-to-date total to 44. An additional 58 stores are expected to be converted in the second half of the year, bringing the total to 145 Shoe Station stores by year-end. The company anticipates having over 215 Shoe Station stores by Back-to-School 2026, at which point the brand is expected to become the majority concept.

Shoe Carnival updates outlook

The company ended the second quarter debt-free, with 91.9 million dollars in cash, cash equivalents, and marketable securities. By the end of August, this increased to approximately 148 million dollars, largely due to a successful Back-to-School season that generated over 55 million dollars in cash.

Based on its performance, Shoe Carnival updated its fiscal 2025 outlook. The company now expects net sales to be between 1.12 billion dollars and 1.15 billion dollars and GAAP EPS to be between 1.70 dollars and 2.10 dollars, with the lower end of the range increasing by 10 cents. The company anticipates that sales declines will slow in the second half of the year as the Shoe Station brand's gains increasingly offset challenges faced by the Shoe Carnival banner.