Shoe Carnival’s stock soared nearly 15 percent in pre-market trading on Thursday as the company said its rebanner strategy is paying off.
The Fort Mill, S.C.-based footwear retailer reported net sales in the second quarter of fiscal 2025 of $306.4 million compared to $332.7 million in second quarter 2024, a decrease of 7.9 percent. Net income in Q2 was $19.2 million, or 70 cents per diluted share, compared to $22.6 million, or 82 cents per diluted share in the prior year.
The results beat analyst expectations which were expecting net sales in the second quarter of $299.02 million, with earnings per share of 50 cents.
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By banner, the company noted that Q2 divergent trends reinforced the company’s rebanner strategy with Shoe Station net sales growing 1.6 percent in the period and Shoe Carnival net sales declining 10.1 percent as the sub-$40,000 income consumer remained pressured. At Rogan’s, net sales exceeded $20 million in Q2, in line with integration plans.
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Mark Worden, president and chief executive officer of Shoe Carnival, reiterated in a statement that the company’s rebanner strategy continues to deliver strong results.
“Through year-to-date August, the Shoe Station banner is outperforming the Shoe Carnival banner by a wide margin, with margins up sharply over last year,” he said. “Our second quarter results demonstrate meaningful progress, with profits beating consensus by double digits and gross margins reaching 38.8 percent – our strongest Q2 margin performance in years.”
As of Aug. 2, the company operated 428 stores, including 313 Shoe Carnival stores, 87 Shoe Station stores, and 28 Rogan’s stores. The Shoe Station store count has more than doubled since second quarter 2024.
During the second quarter, the company completed 20 rebanner conversions, bringing year-to-date conversions to 44 stores. An additional 58 stores are expected to rebanner in the second half of fiscal 2025 (29 in third quarter and 29 in fourth quarter), bringing the total to 145 Shoe Station stores by year-end – representing 34 percent of the fleet.
“By back-to-school 2026, Shoe Station will be our majority concept, positioning us for sustained growth with a higher-income customer base, stronger margins, and improved returns,” Worden added.
The CEO also noted that as the company moved into back-to-school in early August, its 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,” Worden said. “This return to growth during our highest-stakes season – ahead of our projected timeline – validates that our transformation is accelerating.”
By banner, the company noted Shoe Station grew comparable sales high-single digits in August, driven by high-single digit growth in the children’s category and low-twenties growth in the adult athletics category with margin expansion.
At Shoe Carnival, the banner achieved positive children’s category comparable sales with margin growth while maintaining discipline in other categories, while Rogan’s also achieved comparable sales growth, in line with integration plans.
Looking ahead, the company has lowered its sales guidance for the year. Shoe Carnival now expects net sales in fiscal 2025 between $1.12 billion to $1.15 billion, compared to the previous range of $1.15 billion to $1.23 billion.
Shoe Carnival noted that its outlook anticipates that sales declines will slow in the second half of the year, with the midpoint implying a 3 percent decline versus the 7.7 percent year-to-date decline.
This improvement reflects the rebanner strategy’s momentum and strong event period performance, including August’s positive comparable sales. As Shoe Station grows, the company said it expects its gains will increasingly offset Shoe Carnival’s challenges.