Shoe Carnival(US:SCVL)2025-09-05 20:10Financial Performance - Net Income for Q2 2025 was $19.2 million, or $0.70 per diluted share, down from $22.6 million, or $0.82 per diluted share in Q2 2024[73]. - Net Sales declined by 7.9% in Q2 2025, primarily due to a 10.1% decline at the Shoe Carnival banner, while Shoe Station saw a 1.6% increase[76]. - Net Sales for Q2 2025 were $306.4 million, a decrease of $26.3 million, or 7.9%, compared to Q2 2024, primarily due to a 10.1% decline in the Shoe Carnival banner[86]. - Year-to-date 2025 Net Sales were $584.1 million, a decrease of $49.0 million, or 7.7%, compared to year-to-date 2024, with a 10.0% decline in the Shoe Carnival banner[90]. Gross Profit and Margins - Gross Profit margin increased to 38.8%, up 270 basis points from Q2 2024, driven by a 390 basis point increase in merchandise margin[75]. - Gross Profit for Q2 2025 was $118.8 million, a decrease of $1.1 million compared to Q2 2024, with a gross profit margin of 38.8%, up from 36.1% in Q2 2024[87]. - Year-to-date 2025 Gross Profit was $214.6 million, a decrease of $12.2 million compared to year-to-date 2024, with a gross profit margin of 36.7%, up from 35.8%[91]. Operating Income and Expenses - Selling, general and administrative expenses increased to 30.6% of Net Sales in Q2 2025, compared to 27.1% in Q2 2024[72]. - The rebanner strategy impacted Operating Income by approximately $7.5 million, or $0.21 per diluted share, with a year-to-date impact of $13.0 million, or $0.36 per diluted share[82]. - SG&A expenses increased by $3.7 million in Q2 2025 to $93.6 million, representing 30.6% of Net Sales, compared to 27.1% in Q2 2024[88]. Store Operations and Strategy - The company rebannered 44 stores to Shoe Station in Fiscal 2025, with plans to rebanner an additional 58 stores in the second half of Fiscal 2025[77]. - Approximately 145 stores, or one-third of the current store fleet, are expected to operate as Shoe Station stores by the end of Fiscal 2025[78]. - The company expects 51% of its fleet to operate as Shoe Station stores by August 2026 and over 80% by March 2027[80]. - The company currently operates 428 stores and plans to rebanner 58 additional stores into Shoe Station stores by the second half of Fiscal 2025, with over 50% of the store fleet expected to operate as Shoe Station stores by Back-to-School 2026[109]. - In Fiscal 2025, the company rebannered 24 Shoe Carnival stores in Q1 and 20 in Q2, resulting in a total of 313 Shoe Carnival stores and 87 Shoe Station stores by August 2, 2025[109]. Capital and Cash Management - Cash, Cash Equivalents, and Marketable Securities totaled $91.9 million at the end of Q2 2025, with $99.0 million available under the existing credit facility[84]. - Capital expenditures for Fiscal 2025 are expected to be between $45 million and $55 million, with $30 million to $35 million allocated for rebannered stores[108]. - The company had no borrowings outstanding during year-to-date 2025, and its Credit Agreement allows for dividends and share repurchases subject to certain covenants[116]. Shareholder Returns - The Board of Directors approved a quarterly cash dividend of $0.15 per share, up from $0.135 per share in Q2 2024, returning $8.5 million to shareholders year-to-date 2025[110]. - A share repurchase program for up to $50 million was authorized, effective January 1, 2025, with no repurchases made to date in Fiscal 2025[111][112]. Tax and Inventory - The effective income tax rate for year-to-date 2025 was 26.6%, compared to 25.9% for year-to-date 2024, primarily due to discrete adjustments related to share-settled equity awards[94]. - Merchandise Inventories at the end of Q2 2025 were $449.0 million, up approximately 5% compared to Q2 2024, to support the Back-to-School selling period[85]. Seasonal Impact - The company has three peak selling periods: Easter, back-to-school, and Christmas, which significantly impact operating results and require increased inventory[114].