US' Shoe Carnival reports $297.2 mn in Q3 sales as margins strengthen

In contrast, Shoe Carnival banner sales fell 5.2 per cent, with comparable store sales declining mid-single digits as lower-income consumers remained under pressure. Rogan’s contributed more than $21 million in net sales, aligned with integration plans. Comparable store sales across the company declined 2.7 per cent.

The gross profit rose to $111.8 million. The net income for Q3 FY25 was $14.6 million, or $0.53 per diluted share. The company estimated that rebannering investments reduced Q3 EPS by around $0.22. The gross profit margin expanded 160 basis points to 37.6 per cent.

Merchandise margin strengthened by 190 basis points (bps) due to disciplined pricing, favourable mix towards higher-income Shoe Station customers, and strategic inventory actions. These improvements more than offset around 30 bps of deleverage in buying, distribution and occupancy costs, Shoe Carnival said in a press release.

The operating income for the quarter stood at $18.6 million, reflecting higher selling, general and administrative (SG&A) costs tied to its ongoing rebannering strategy. Net income came in at $14.6 million.

The company ended Q3 debt-free with $107.7 million in cash, cash equivalents and marketable securities, marking an 18.2 per cent YoY increase. Consistent with the past two decades, operations and growth expenditure were fully funded through operating cash flow and reserves. The management reiterated confidence in the trajectory of its One Banner Strategy, highlighting margin gains and improved brand performance at Shoe Station, which continues to outpace the legacy Shoe Carnival banner.

“We’re consolidating to one brand because the performance gap is undeniable. Over time, this unlocks $20 million in savings and $100 million in working capital to fund growth from our debt-free balance sheet,” said Mark Worden, president and chief executive officer (CEO) at Shoe Carnival.

For the nine-month (9M) period, Shoe Carnival recorded net sales of $881.3 million, with gross profit for the 9M period decreasing to $326.4 million. The operating income fell to $55.8 million. Net income totalled $43.2 million, translating to diluted EPS of $1.57. Year-to-date (YTD) EPS included an estimated negative impact of $0.58 from rebannering activity. YTD capital expenditure reached $38.3 million, focused largely on rebannering efforts. Shoe Carnival also has $50 million remaining under its current share repurchase authorisation.

As of November 20, 2025, Shoe Station accounts for 144 stores, or 34 per cent of the company’s 428-store fleet—up sharply from 10 per cent at the start of FY25. Integration of the 28-store Rogan’s acquisition into Shoe Station was completed in October 2025, and its performance will be reported under the Shoe Station banner starting Q4 FY25.

The company aims to operate 215 Shoe Station stores by Back-to-School 2026, representing 51 per cent of the fleet, and expects well over 90 per cent of the fleet to convert by the end of fiscal 2028.

For FY26, the company has projected net sales to decline low-to-mid single digits in the first half before stabilising to flat-to-low single digit growth in the second half once Shoe Station crosses the 51 per cent threshold. EPS will be lower than fiscal 2025 due to reduced sales and investment costs. An inventory reduction of $50–60 million is anticipated, which is expected to more than fully fund the capital expenditure required for the rebannering programme.

The company has outlined FY26 as a key investment year to secure long-term gains from its One Banner Strategy. To reach the target of having 51 per cent of its fleet operating as Shoe Station by Back-to-School 2026, the company plans to rebanner 70 stores, supported by capital expenditure of $25–35 million and rebannering investment of $25–30 million. These costs include lost sales, store-closing expenses, inventory liquidation, additional depreciation and customer acquisition. Payback is expected within two to three years of each conversion.

The company expects significant benefits by the end of fiscal 2027 as the transition progresses. The strategy is forecast to deliver $20 million in annual cost savings through reduced brand complexity, alongside a $100 million reduction in inventory investment. Comparable store sales are projected to return to growth as Shoe Station becomes the dominant banner, while EPS is expected to expand as cost savings materialise and rebannering expenses gradually diminish, added the release.

ALCHEMPro News Desk (SG)