Shoe Carnival Stockpiles Inventory To Dodge Tariffs, Ramps Up Rebannering

Shoe Carnival, Inc. (NASDAQ:SCVL) on Friday reported first-quarter adjusted earnings per share of 49 cents, beating the analyst consensus estimate of 30 cents.

On a GAAP basis, Shoe Carnival registered net income per diluted share of 34 cents, compared with 63 cents a year ago.

The company estimates that first-quarter 2025 EPS was reduced by about 15 cents due to costs tied to its rebanner strategy, including store closures, construction, grand reopening delays, and customer acquisition expenses.

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The company said Shoe Station has been the fastest-growing retailer in its sector over the past two years, while Shoe Carnival and the broader family footwear industry have declined. Shoe Carnival aims to leverage this success by expanding Shoe Station from a Southeast leader to a national presence.

They tested rebannering 10 stores in FY2024 and converted 24 more in Q1 2025. Shoe Carnival is now accelerating this strategy, planning to have approximately 120 stores (28% of its fleet) operating as Shoe Station by the end of FY2025, with 51 additional conversions scheduled throughout the remainder of the year, including expansion into new markets.

Quarterly sales of $277.71 million (down 7.5% year over year) missed the Street view of $323.64 million. 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.

Shoe Carnival’s President and CEO, Mark Worden, reported strong first-quarter results, with profits exceeding expectations by about 10% despite a challenging economic and retail climate.

He highlighted the success of the Shoe Station growth strategy, which is delivering industry-leading sales growth and margin improvements across various markets, outperforming both Shoe Carnival and general industry trends.

Due to this success, the company is accelerating its “rebanner initiative,” now aiming for Shoe Station to represent over 80% of its store fleet by March 2027, a significant increase from the previous 51% target, he said.

This expansion is being funded by the company’s strong financial position, characterized by growing cash reserves and no debt, marking a pivotal shift from a traditional family footwear retailer to a premium, brand-focused national leader, Worden said.

The first quarter 2025 gross profit margin was 34.5%, down from 35.6% in the first quarter of 2024.

Shoe Carnival said it invested $16.8 million in additional merchandise inventory compared to the year-ago period. Additional inventory purchases were made in the quarter before the tariff increases were announced on April 2.

As of May 3, 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 the first quarter 2024.

Going ahead, the company said it is accelerating its rebanner strategy and now expects approximately 120 stores, or 28% of the store fleet, to operate as a Shoe Station store by the end of Fiscal 2025.

Shoe Carnival reaffirmed its FY2025 GAAP EPS outlook of $1.60 to $2.10, compared to the $1.94 estimate. The company also maintained its FY2025 sales guidance of $1.15 billion to $1.23 billion, compared with the $1.19 billion consensus.

Price Action: SCVL shares are trading higher by 4.77% to $19.32 at last check Friday.

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