On his first quarterly call since returning to lead Shoe Carnival as Interim President and CEO, Cliff Sifford talked about the potential of the company’s introduction of the Air Jordan brand, but mostly delivered disappointing news, including that the chain is slowing down conversions of Shoe Carnival to the more upscale Shoe Station concept because some conversions had underperformed.

The retailer also forecast a decline in earnings in the current year due to the need to clear bloated inventories in the first half and tariff impacts.

Overall earnings and sales were down year-over-year in both the fourth quarter and the year due in part to pressures on Shoe Carnival’s lower-income customers, the impact of tariffs and store conversion expenditures.

Results were in line with a pre-announcement provided on February 25 and topped analysts’ guidance by 3 cents a share. At the time, the retailer said Mark Worden had departed from his position as the company’s president and CEO and had resigned from the Board of Directors, effective February 24. Sifford, vice chairman and president and CEO from 2012 to 2021, was appointed interim president and CEO.

Shares of Shoe Carnival on Thursday, March 26, fell $1.44, or 8.1 percent, to $16.43 in over-the-counter trading.

Jordan Launch
Regarding the Air Jordan launch, Sifford said the brand is available in over 60 percent of its Shoe Carnival and Shoe Station banners, with a full-fleet rollout expected by mid-April.

“Jordan resonates across both banners, but we believe it will be particularly effective in our legacy Shoe Carnival stores, which serve a more urban consumer whose lifestyle and brand preferences align closely with Jordan’s identity,” said Sifford.

Sifford said he believes Jordan has the potential to reach roughly 5 percent of its enterprise-level athletic sales. Said Sifford, “We do not expect all of that volume to be incremental, as some displacement of existing athletic assortment is anticipated. The brand addition is a meaningful, positive, and important signal of the strength of our vendor relationships.”

The Shoe Carnival launch comes as Jordan was launched last year at Famous Footwear and Academy Sports & Outdoors and reached Rack Room this past February.

Shoe Station Conversions
Regarding its former plan to aggressively convert Shoe Carnival locations to Shoe Station, Sifford said Shoe Carnival only plans to rebanner approximately 21 stores before back-to-school 2026, down from 71 stores previously communicated.

Sifford said Shoe Carnival completed 101 rebanners in 2025, following an initial 10-store test conducted the prior year. When evaluating the performance of those 101 stores, particularly in the second half, Shoe Carnival observed a “meaningful variability in in-store sales performance across the converted locations.”

Sifford elaborated, “Some stores are performing very well. Others have not yet achieved the results we expect from the model.”

In the Q&A session, Sifford noted that the first Shoe Carnival store conversions were in “great locations that served a customer with a higher income level, higher demographics,” and that the company “may have raised the assortment level a little too high for that consumer” in subsequent areas serving lower-income households.

He also said Shoe Carnival converted the stores “too quickly before we did the research on the individual stores.”

In his formal comments, Sifford said the variability in performance of the converted stores “tells us we have more work to do before continuing conversions at the pace we had planned.

Specifically, we are focused on better understanding which consumer demographics respond most favorably to the Shoe Station format in-store, which marketing approaches are most effective at driving sustained traffic to newly converted locations, and how we can further refine product assortments and rebanner stores to improve in-store conversion and productivity.”

On the positive side, Sifford noted the Shoe Station outperformed the family footwear industry for the third consecutive year, and Shoe Station’s e-commerce performance has been “particularly strong.” He said, “Online sales are demonstrating broad consumer resonance with the Shoe Station brand and assortments well beyond the physical store footprint of the converted locations. That is an important signal as we think about the opportunity ahead.”

Sifford further said the retailer’s board’s conviction in Shoe Station as the company’s long-term growth vehicle is “unchanged.” The proposed corporate name changes to Shoe Station Group, Inc. remains on the agenda for the firm’s upcoming shareholder meeting on June 10.

Sifford also said the retailer has no plans to convert any Shoe Station locations back into Shoe Carnival stores. He said, “We are going to adjust the product mix in those stores, especially where the demographics demand that, so that we can get the customer who was shopping in those stores to shop in the Shoe Station stores.”

At the same time, he said Shoe Carnival no longer expects to replace all its banners with Shoe Station and is moving forward for now as a two-banner company. Sifford said, “We think that the diversity of our customers, especially as we enter the Midwest and North Midwest and South, we should operate those stores as Shoe Carnival stores. Shoe Station will then be operated in the appropriate areas where the demographics call for the kind of product mix that we want Shoe Station to carry.”

At the end of the year, Shoe Station represented 144 stores, or 34 percent of the company’s 426-store fleet, up from 10 percent at the start of 2025.

Fourth-Quarter Results
Net sales in the fourth quarter declined 3.3 percent to $254.1 million, near the midpoint of the company’s guidance range. Comparable store sales declined 3.5 percent.

Shoe Station net sales were approximately flat, with a low-single-digit comparable-store sales decline. Shoe Carnival banner sales declined 4.5 percent, with mid-single-digit comparable-store sales decline, reflecting continued pressure on lower-income consumers and reduced promotional activity.

Gross margins in the quarter were 34.9 percent, approximately flat year over year. Merchandise margin expanded 30 basis points but was offset by deleverage in buying, distribution, and occupancy costs.

Sifford said, “Holiday was intensely competitive, and we chose not to chase unprofitable sales volume. That discipline preserved margins and protected the balance sheet as we moved into fiscal 2026.”

Net income declined 38.2 percent to was $9.1 million, or 33 cents per share, but exceeded analysts’ consensus expectations by 3 cents. Rebanner investments are estimated to have reduced fourth-quarter EPS by approximately 8 cents per share, primarily affecting SG&A expenses.

Fiscal Year 2025 Operating Results
Sales for the full year were $1.135 billion, a 5.6 percent year-over-year decrease. Comparable-store sales declined 5.6 percent, primarily due to a 7.7 percent decline in Shoe Carnival’s net sales.

Shoe Station net sales were $236.7 million, representing 21 percent of total sales, and grew organically by 2.7 percent, inclusive of a low-single-digit comparable store sales increase. Shoe Station’s growth outperformed the family footwear industry and exceeded Shoe Carnival’s performance by 10.4 percentage points.

Gross margins in the year improved by 100 basis points to 36.6 percent, marking the fifth consecutive year the company has exceeded 35 percent. The gains reflect disciplined pricing, favorable mix shift toward Shoe Station’s higher-income consumer, and deliberate inventory management decisions made in anticipation of tariff cost increases.

Net income in the year totaled $52.3 million, or $1.90 per diluted share, down 29.1 percent year over year from $73.8 million, or $2.68, a year ago. Rebanner investments is estimated to have impacted earnings by 66 cents a share. Earnings came in at the lower end of guidance in the range of $1.80 to $2.10.

Fiscal 2026 Guidance
Shoe Carnival’s guidance reflects its revised rebanner plan, anticipated tariff cost increases, and the company’s aggressive push at the start of the year to reduce inventory.

Sifford said the retailer ended the year with inventory up 14 percent year over year, primarily reflecting opportunistic pre-tariff buys that supported healthy margins. Sifford added, “In fiscal 2026, we will work that inventory down through disciplined selling and targeted promotional activity. That process will create near-term gross margin pressure, but it is necessary, and it is the right thing to do.”

Shoe Carnival’s outlook calls for:

  • Net sales of approximately down 1 percent to up 1 percent compared, reflecting comparable store sales declines in the first half offset by improvement in the second half as 21 planned rebanners are completed and Shoe Station’s growth continues.
  • Gross profit margin of approximately 34 percent, a decline of approximately 260 basis points compared to Fiscal 2025. This reflects tariff-related cost increases as pre-tariff inventory is sold and replaced with higher-cost goods, the non-recurrence of the temporary price increase benefit realized last year when prices were raised in advance of cost increases, and increased promotional activity required to improve inventory turns and reduce elevated inventory levels. Shoe Carnival noted that 2025 gross margins were elevated relative to the prior multi-year trend, driven by the timing of the temporary price increase benefit.
  • Adjusted SG&A expenses are expected to decrease approximately $12 to $14 million versus Fiscal 2025, reflecting lower rebanner-related costs associated with the reduced rebanner conversion program and continued operational cost discipline.
  • Adjusted EPS is expected in a range of $1.40 to $1.60, down from $1.90.

Shoe Carnival expects the first half to be more challenging, with comparable-store sales growth and the benefit of completed rebanners expected to contribute to better results in the second half of the year.

Image courtesy Shoe Carnival