US' Shoe Carnival Q2 net income falls 15% as sales decline 7.9%

The gross profit eased to $118.8 million; however, the gross profit margin expanded to 38.8 per cent from 36.1 per cent, reflecting disciplined pricing, a favourable merchandise mix, and strategic inventory investments.

Selling, General and Administrative (SG&A) expenses rose to $93.6 million, partly due to costs linked with rebanner conversions. Operating income decreased to $25.2 million from $30.1 million a year earlier, while net income declined 14.8 per cent to $19.2 million, or $0.70 per diluted share. Earnings per share (EPS) included a $0.21 negative impact from rebanner investments, with store closures and higher SG&A tied to conversions.

Shoe Station continued to outperform, with net sales up 1.6 per cent, supported by higher-income customers. Shoe Carnival’s net sales declined 10.1 per cent, reflecting pressure on lower-income consumers, while Rogan’s delivered over $20 million in sales, in line with integration plans, Shoe Carnival said in a press release.

As of August 2, 2025, Shoe Carnival operated 428 stores: 313 Shoe Carnival, 87 Shoe Station, and 28 Rogan’s. The Shoe Station counts more than doubled versus Q2 FY24. During the quarter, 20 rebanner conversions were completed, bringing year-to-date conversions to 44.

A further 58 conversions are planned for H2, bringing Shoe Station to 145 stores by year-end—34 per cent of the fleet. By Back-to-School 2026, the company expects Shoe Station to exceed 215 stores, crossing the critical 51 per cent threshold to offset legacy declines.

Rebanner investments, estimated at $25 million for FY2025, are projected to impact EPS by $0.36 this year, but management anticipates payback within two to three years.

“Our second quarter results demonstrate meaningful progress, with profits beating consensus by double digits and gross margins reaching 38.8 per cent—our strongest Q2 margin performance in years,” said Mark Worden, president and chief executive officer (CEO) at Shoe Carnival. “As we moved into Back-to-School in early August, our execution hit a higher level. We delivered positive comparable store sales for the Company and margin expansion across all banners during the period that drives approximately 25 percent of our annual profits. This return to growth during our highest-stakes season - ahead of our projected timeline - validates that our transformation is accelerating.”

For the first half (H1) of FY2025, net sales dropped 7.7 per cent to $584.1 million. Gross profit totalled $214.6 million, while SG&A expenses edged up to $177.4 million. Operating income fell to $37.2 million from $52.6 million in the prior year, and net income stood at $28.6 million, or $1.04 per diluted share.

For fiscal 2025 (FY25), Shoe Carnival has raised the lower end of its EPS guidance, now expecting GAAP EPS of $1.7 to $2.1. Net sales are projected at $1.12–$1.15 billion, below the prior $1.15–$1.23 billion range, reflecting rebanner-related store closures. The company forecasts gross margin between 36.5–37.5 per cent, SG&A of $355–$360 million, and capital expenditures of $45–$55 million, with $30–$35 million allocated to rebanners.

The company expects sales declines to moderate in H2, with the midpoint of guidance implying a 3 per cent decline versus the 7.7 per cent decline year-to-date. Management noted that Shoe Station’s growth should increasingly offset Shoe Carnival’s challenges, though EPS remains subject to macroeconomic uncertainty and traffic volatility.

ALCHEMPro News Desk (SG)