Shoe Carnival(SCVL) - 2026 Q2 - Quarterly Results

Second Quarter Fiscal 2025 and Back-to-School Highlights Shoe Carnival exceeded profit consensus in Q2 FY2025, achieving its strongest gross margin in years and positive comparable sales during the Back-to-School period - Delivered $0.70 EPS, exceeding consensus by over 20 percent[5] - Expanded gross profit margin by 270 basis points to 38.8 percent, representing the strongest Q2 margin performance in years[3][5][7] - Achieved positive comparable sales and margin expansion across all banners during the August Back-to-School period, ahead of projected timelines[3][5][10] - Shoe Station's rebanner strategy achieved 8 percent comparable sales growth through year-to-date August[5] - Grew cash by double digits through fiscal August with zero debt, positioning the company to fund growth[5] Shoe Station Growth Strategy The company is aggressively executing its Shoe Station rebanner strategy, aiming for it to be the majority concept by Back-to-School 2026, delivering strong financial returns and increased margins Store Count as of August 2, 2025 | Banner | Count | | :------------ | :---- | | Shoe Carnival | 313 | | Shoe Station | 87 | | Rogan's | 28 | | Total | 428 | - Completed 20 rebanner conversions in Q2 2025, totaling 44 year-to-date conversions[5] - Expected to reach 145 Shoe Station stores by year-end fiscal 2025 (34% of fleet) and exceed 215 stores by Back-to-School 2026 (over 51% threshold)[5][6] - First-year rebanner investments of approximately $25 million are expected to impact fiscal 2025 operating income, with a $0.36 EPS impact incurred year-to-date, and a payback period of two to three years[6] Second Quarter Operating Results Q2 FY2025 saw a 7.9% net sales decrease and 7.5% comparable sales decline, yet gross profit margin expanded by 270 basis points to 38.8% due to strategic initiatives Second Quarter Fiscal 2025 Operating Results | Metric | Q2 FY2025 | Q2 FY2024 | Change (%) | | :-------------------- | :------------ | :------------ | :------------ | | Net Sales | $306.4 million | $332.7 million | -7.9% | | Comparable Sales | -7.5% | N/A | N/A | | Gross Profit Margin | 38.8% | 36.1% | +270 bps | | Net Income | $19.2 million | $22.6 million | -15.0% | | Diluted EPS | $0.70 | $0.82 | -14.6% | - Merchandise margin improved by 390 basis points, driven by disciplined pricing, a favorable mix shift, and strategic inventory investments[7] - Q2 2025 EPS included a $0.21 negative impact from rebanner investments, contributing to an estimated 1% net sales decline from temporary closures and a 2% increase in SG&A as a percent of net sales[8][9] Back-to-School Performance Update Fiscal August, including Back-to-School, showed significant acceleration with positive comparable sales year-over-year, driven by Shoe Station and strong children's category performance - The company achieved positive comparable sales year-over-year in fiscal August, a significant improvement from Q2 trends and ahead of projected timelines[10] - Comparable sales increased by high-single digits and rebanner margins expanded by 270 basis points during fiscal August[11] Fiscal August Performance by Banner | Banner | Net Sales Growth | Comparable Sales Growth | Key Drivers | | :------------ | :--------------- | :---------------------- | :------------------------------------------------------------------------------------------------------ | | Shoe Station | +1.6% | High-single digits | High-single digit growth in children's, low-twenties growth in adult athletics, with margin expansion | | Shoe Carnival | -10.1% | Positive children's category sales with margin growth | Sub-$40,000 income consumer remained pressured | | Rogan's | Exceeded $20M | Comparable sales growth | In line with integration plans | Balance Sheet Strength Shoe Carnival maintains a strong, debt-free balance sheet, funding growth from operating cash flow, with substantial cash reserves at Q2 2025 and fiscal August end - Ended Q2 2025 debt-free and fully funded operations and growth investments from operating cash flow[13] Cash and Cash Equivalents | Period | Amount (in millions) | | :---------------------- | :------------------- | | End of Q2 2025 | $91.9 | | August fiscal month end | ~$148 | | Change YoY (August) | >10% increase | - Inventory increased by 5% year-over-year, a strategic investment that improved key item availability during Back-to-School, contributing to margin expansion and sales capture, with normalization expected in 2026[14] - Capital expenditures totaled $24.4 million year-to-date, primarily for 44 completed rebanner conversions[15] - The company has $50 million remaining under its share repurchase authorization[15] Fiscal 2025 Outlook Shoe Carnival updated its Fiscal 2025 outlook, anticipating slower sales decline, increased gross profit margin, and higher capital expenditures due to strong Q2 and rebanner momentum Updated Fiscal 2025 Outlook | Metric | New Range | Previous Range | Notes | | :-------------------- | :---------------------------- | :---------------------------- | :------------------------------------------- | | Net Sales | $1.12 billion to $1.15 billion | $1.15 billion to $1.23 billion | Lowered | | GAAP EPS | $1.70 to $2.10 | Lower end increased by $0.10 | Increased lower end | | Gross Profit Margin | 36.5% to 37.5% | N/A | 150-basis point increase | | SG&A | $355 million to $360 million | N/A | Inclusive of increased rebanner investment | | Capital Expenditures | $45 to $55 million | N/A | Inclusive of $30 to $35 million for rebanners| - The outlook anticipates sales declines will slow in the second half, with the midpoint implying a 3% decline versus the 7.7% year-to-date decline, reflecting rebanner momentum and strong event performance[17] - As Shoe Station grows, its gains are expected to increasingly offset Shoe Carnival's challenges[17] Company Information & Conference Call Shoe Carnival, Inc. is a major family footwear retailer with 428 stores across 35 states and Puerto Rico, and hosted a Q2 results conference call on September 4, 2025 - Shoe Carnival, Inc. is one of the nation's largest family footwear retailers, offering a broad assortment of dress, casual, and athletic footwear from national name brands[21] - As of September 4, 2025, the company operated 428 stores in 35 states and Puerto Rico under its Shoe Carnival, Shoe Station, and Rogan's banners, with online shopping available[21] - A conference call was hosted on September 4, 2025, at 9:00 a.m. Eastern Time to discuss Q2 results, with a live webcast and archived replay available[18][20] Cautionary Statement Regarding Forward-Looking Information This cautionary statement highlights that forward-looking information in the press release is subject to risks and uncertainties, including rebanner strategy success, competition, and economic conditions, with no obligation to update - The press release contains forward-looking statements involving risks and uncertainties, where actual results, performance, or achievements could materially differ[23][24] - Key factors influencing actual results include the success of rebannering and Shoe Station growth, competitive pressures, economic downturns, supply chain constraints, and shifts in consumer buying trends[24][25] - The company cautions investors against undue reliance on these forward-looking statements and disclaims any obligation to update them[25] Financial Tables This section presents unaudited condensed consolidated financial statements for Shoe Carnival, Inc., including Statements of Income, Balance Sheets, and Cash Flows, providing detailed financial performance and position data Condensed Consolidated Statements of Income (Thirteen Weeks Ended) | Metric (in thousands) | August 2, 2025 | August 3, 2024 | | :---------------------------------------- | :------------- | :------------- | | Net sales | $306,388 | $332,696 | | Cost of sales | $187,580 | $212,753 | | Gross profit | $118,808 | $119,943 | | Selling, general and administrative expenses | $93,580 | $89,864 | | Operating income | $25,228 | $30,079 | | Net income | $19,225 | $22,573 | | Diluted EPS | $0.70 | $0.82 | | Cash dividends declared per share | $0.150 | $0.135 | Condensed Consolidated Balance Sheets (as of) | Metric (in thousands) | August 2, 2025 | August 3, 2024 | | :------------------------------ | :------------- | :------------- | | Cash and cash equivalents | $78,719 | $71,633 | | Merchandise inventories | $449,005 | $425,462 | | Total Current Assets | $574,068 | $537,096 | | Total Assets | $1,165,253 | $1,115,027 | | Total Current Liabilities | $156,463 | $159,990 | | Total Liabilities | $494,563 | $496,532 | | Total Shareholders' Equity | $670,690 | $618,495 | Condensed Consolidated Statements of Cash Flows (Twenty-six Weeks Ended) | Metric (in thousands) | August 2, 2025 | August 3, 2024 | | :---------------------------------------- | :------------- | :------------- | | Net cash provided by operating activities | $3,622 | $40,742 | | Net cash used in investing activities | $(22,936) | $(60,141) | | Net cash used in financing activities | $(10,647) | $(7,968) | | Net decrease in cash and cash equivalents | $(29,961) | $(27,367) | | Cash and cash equivalents at end of period | $78,719 | $71,633 |