Shoe Carnival, Inc.’s earnings fell in the first quarter as sales slid 7.5 percent. However, the family shoe chain said its rebanner strategy is seeing strong success and Shoe Station is now expected to represent over 80 percent of its store fleet by March 2027, up from a previous target of 51 percent.

First Quarter Fiscal 2025 Highlights

  • Profits outperformed market expectations by over 10 percent with $0.34 EPS achieved.
  • Rebanner strategy delivered double-digit comparable net sales growth and accretive margins.
  • Shoe Station banner net sales grew 4.9 percent while family footwear industry declined.
  • Accelerated expansion plan: Shoe Station to represent over 80 percent of the store fleet by March 2027.
  • Balance sheet strengthened with no debt and over 30 percent additional cash on hand compared to first quarter 2024.

“Our first quarter results reflect the continued success of our strategic transformation, with profits outperforming expectations by approximately 10 percent despite the challenging macroeconomic and retail environment,” said Mark Worden, president and chief executive officer. “The Shoe Station growth strategy is working exceptionally well, delivering industry-leading sales growth and accretive margins across diverse market types. This consistent outperformance versus both Shoe Carnival and industry trends across all footwear categories has given us the confidence to accelerate our rebanner initiative.”

Worden continued, “Today, we’re announcing an ambitious expansion of our rebanner strategy, with Shoe Station now expected to represent over 80 percent of our store fleet by March 2027, up from our previous target of 51 percent. We’re making these investments from a position of financial strength, with growing cash reserves and no debt. This is a pivotal moment for our company as we transform from a traditional family footwear retailer to a premium brand-focused national leader in footwear.”

First Quarter Operating Results
In first quarter 2025, the company’s Shoe Station banner contributed a 4.9 percent increase in net sales compared to first quarter 2024. These industry-leading results were primarily driven by double-digit comparable stores net sales growth from the company’s rebanner strategy. The company’s Shoe Carnival banner contributed a net sales decline of 10.0 percent. First quarter 2025 net sales from Rogan’s, which was acquired on February 13, 2024, were in-line with integration and synergy plans and exceeded $19 million in both first quarter 2025 and first quarter 2024.

Total company net sales in first quarter 2025 declined 7.5 percent to $277.7 million as compared to $300.4 million in first quarter 2024. Comparable stores net sales declined 8.1 percent, of which the company estimates approximately 1 percent was due to lost sales as impacted by the rebanner strategy.

First quarter 2025 gross profit margin was 34.5 compared to 35.6 percent in first quarter 2024. Gross profit margin included a 50 basis point increase in merchandise margin while buying, distribution and occupancy costs decreased gross profit margin by 160 basis points primarily due to deleverage from lower net sales.

First quarter 2025 selling, general, and administrative costs (SG&A) decreased $0.5 million. SG&A increases associated with the rebanner strategy were more than offset by the timing of selling expenses from other stores. As a percent of net sales, SG&A were 30.2 percent in first quarter 2025 compared to 28.1 percent in first quarter 2024, with rebanner investment as the primarily driver of this increase.

First quarter 2025 net income was $9.3 million, or 34 cents per share, compared to first quarter 2024 net income of $17.3 million, or 63 cents, a year ago. The company estimates first quarter 2025 EPS was negatively impacted by approximately 15 cents per share of rebanner strategy investment, inclusive of store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store’s grand opening, customer acquisition costs and other costs.

Capital Management and Cash Flow
The 2024 fiscal year end marked the 20th consecutive year the company ended a year with no debt, fully funding its operations, acquisitions and investments from operating cash flow. In first quarter 2025, the company also funded its operations without incurring any debt and growing its cash, cash equivalents and marketable securities $23.5 million compared to balances at the end of first quarter 2024. At the end of first quarter 2025, the company had approximately $93.0 million available to fund growth objectives.

During first quarter 2025, the company invested $16.8 million in additional merchandise inventory compared to inventories at the end of first quarter 2024. Additional inventory purchases were made in first quarter 2025 in advance of the tariff increases announced on April 2nd. Rebanner-related expense and these accelerated inventory purchases were the primary drivers of negative cash flow from operating activities in first quarter 2025.

In first quarter 2025, capital expenditures totaled $13.3 million and primarily reflect the 24 stores rebannered and one new store opened.

As of May 3, 2025, the company had $50 million available for future repurchases under its share repurchase program. During first quarter 2025, the company did not repurchase any shares.

The company paid a $0.15 per share quarterly cash dividend on April 21, 2025. On an annualized basis, this dividend is a 238 percent increase compared to the rate paid to shareholders five years ago. The dividend paid in first quarter 2025 marked the 11th consecutive year the company increased its dividend, and the company has now paid a dividend for 52 consecutive quarters.

Store Count
As of May 3, 2025, the company had 429 stores, with 334 Shoe Carnival stores, 67 Shoe Station stores and 28 Rogan’s stores. The Shoe Station store count has more than doubled since the end of first quarter 2024.

Shoe Station Rebanner Strategy Acceleration
Shoe Carnival noted that Shoe Station has been the industry’s fastest-growing retailer over the last two years, according to industry data. Over this same period, the company’s Shoe Carnival banner and the family footwear industry have experienced declines. Earlier this year, the company announced plans to grow its Shoe Station banner from a market leader in the Southeast into a national footwear and accessories leader. As part of this plan, the company rebannered 10 stores during a test phase in Fiscal 2024 and rebannered 24 stores in first quarter 2025.

The company is accelerating its rebanner strategy and now expects that approximately 120 stores, or 28 percent of the store fleet, to operate as a Shoe Station store by the end of Fiscal 2025. An additional 51 stores are expected to rebanner in Fiscal 2025 (20 in second quarter 2025, 25 in third quarter 2025 and 6 in fourth quarter 2025), with stores expanding into new markets and in markets where the brand is already known.

By March 2027, the company now expects over 80 percent of the current fleet to operate as a Shoe Station store.

The company expects the following prospects and impacts from the rebanner strategy:

  • Significant market share growth in regions where the company has underperformed with its Shoe Carnival concept or can perform even better under its Shoe Station concept.
  • Significant financial leverage from a more productive store base.
  • Fiscal 2025 rebanner investment impacting operating income in a range of $20 to $25 million, resulting in an approximate 65 cents decline in Fiscal 2025 EPS, of which the company estimates 15 cents was incurred in first quarter 2025.
  • Recovery of this first-year investment over a two-to-three-year period following a store’s grand opening.
  • As Shoe Station stores surpass over half of the store fleet by back-to-school shopping in Fiscal 2026, achievement of overall comparable stores net sales growth in third quarter 2026.

As a future phase of the growth strategy, the company continues to expect to enter new markets where it does not compete today.

Fiscal 2025 Outlook
Based on first quarter EPS exceeding market expectations, rebanner strategy momentum, and some improvement in macroeconomic uncertainties, the company reaffirmed its entire Fiscal 2025 outlook and continues to expect the following:

  • Net Sales: $1.15 billion to $1.23 billion, representing a range of down 4 percent to up 2 percent versus Fiscal 2024.
  • GAAP EPS: $1.60 to $2.10, inclusive of the rebanner strategy’s initial year costs.
  • Gross Profit Margin: 35 percent to 36 percent.
  • SG&A: $350 million to $360 million.
  • Capital Expenditures: $45 to $60 million.

Image Shoe Carnival