Shoe Carnival(SCVL) - 2026 Q3 - Quarterly Report

Financial Performance - Net Income for Q3 2025 was $14.6 million, or $0.53 per diluted share, down from $19.2 million, or $0.70 per diluted share in Q3 2024[77]. - Net Sales declined 3.2% in Q3 2025, primarily due to a 5.2% decline at the Shoe Carnival banner, while Shoe Station achieved a 5.3% increase in Net Sales[78]. - Comparable stores Net Sales decreased by 2.7%, with Shoe Station growing mid-single digits and Shoe Carnival declining mid-single digits[79]. - Net Sales for third quarter 2025 were $297.2 million, a decrease of $9.7 million, or 3.2%, compared to third quarter 2024, primarily due to a 5.2% decline in Shoe Carnival sales[89]. - Year-to-date 2025 Net Sales were $881.3 million, a decrease of $58.7 million, or 6.2%, compared to year-to-date 2024, with an 8.5% decline in Shoe Carnival sales[94]. Profitability and Margins - Gross Profit margin improved to 37.6%, up 160 basis points from Q3 2024, with Gross Profit increasing to $111.8 million compared to $110.4 million in Q3 2024[80]. - Gross Profit for third quarter 2025 was $111.8 million, with a gross profit margin of 37.6%, an increase of 160 basis points compared to the same quarter in 2024[90]. - Selling, General and Administrative Expenses (SG&A) increased to $93.2 million in third quarter 2025, representing 31.3% of Net Sales, up from 28.0% in the same quarter of 2024[92]. - Operating Income was reduced by approximately $25 million in Fiscal 2025 due to rebannering costs, with an estimated impact of $8.1 million in third quarter 2025 alone[85]. Cash Flow and Capital Expenditures - Cash, Cash Equivalents, and Marketable Securities increased by $16.6 million, or 18.2%, to $107.7 million by the end of Q3 2025[81]. - Cash generated from operating activities was $37.3 million in year-to-date 2025, down from $58.1 million in year-to-date 2024, primarily due to increased inventory purchases[101]. - Capital expenditures for the rebanner initiative totaled approximately $31 million in year-to-date 2025, with expectations of $25 million to $35 million for further expansion by Back-to-School 2026[85][86]. - Capital expenditures for Fiscal 2025 are expected to be between $45 million and $55 million, including approximately $31 million for rebanner capital expenditures[114]. Store Operations and Strategy - The acquisition of Rogan's added 28 physical stores, enhancing market presence in Wisconsin and Minnesota[67]. - Shoe Station stores now account for approximately 34% of the current store fleet, up from 10% at the beginning of Fiscal 2025, with a total of 144 stores as of the end of third quarter 2025[84]. - The company expects to have 215 Shoe Station stores by Back-to-School 2026, representing approximately 51% of the current store base[86]. - The company currently operates 428 stores, with plans to increase to 215 Shoe Station stores by Back-to-School 2026, representing approximately 51% of the current store base[115][116]. - In Fiscal 2025, the company rebannered a total of 72 Shoe Carnival stores and closed 3, resulting in a net decrease to 285 Shoe Carnival stores[115]. - The company expects limited store openings and closures in the near term as it executes its One Banner Strategy and increases scale through acquisitions[115]. Shareholder Returns and Market Risks - The quarterly cash dividend was increased to $0.15 per share in Q3 2025, up from $0.135 per share in Q3 2024, returning $12.6 million to shareholders year-to-date 2025[117]. - A share repurchase program for up to $50 million was authorized, effective January 1, 2025, with no repurchases made to date in Fiscal 2025[118][119]. - The company is exposed to market risk due to variable interest rates under its Credit Agreement, with no borrowings outstanding during year-to-date 2025[123]. - The Credit Agreement permits the payment of dividends and share repurchases, subject to certain covenants and restrictions[120]. Taxation - The effective income tax rate for year-to-date 2025 was 26.2%, compared to 25.5% for year-to-date 2024, influenced by adjustments related to share-settled equity awards[98]. Seasonal Trends - The company has three distinct peak selling periods: Easter, back-to-school, and Christmas, which significantly impact operating results[121].