Shoe Carnival Posts Strong Q1 Results, Outperforming Expectations

Shoe Carnival, Inc. (Nasdaq: SCVL) has released its first quarter fiscal 2025 results, showcasing a strong performance that exceeded market expectations. The company has also reaffirmed its fiscal 2025 outlook, highlighting strategic initiatives and future growth plans.

Shoe Carnival, Inc. Reports Strong Performance in First-Quarter FY’25 Results

Shoe Carnival, Inc. has reported its first quarter fiscal 2025 results, revealing a notable performance that surpassed market expectations. The company’s earnings per share (EPS) for the quarter stood at $0.34, significantly higher than the anticipated $0.27. This represents an over 10% outperformance, showcasing the effectiveness of the company’s strategic initiatives.

Despite a challenging retail environment, Shoe Carnival’s strategic transformation efforts have yielded positive results, with the Shoe Station banner contributing a 4.9% increase in net sales compared to the previous year.

However, the overall net sales for the company saw a decline of 7.5%, amounting to $277.7 million, down from $300.4 million in the first quarter of 2024. This decline was primarily due to a 10% drop in the Shoe Carnival banner’s net sales. The company’s rebanner strategy, which focuses on transforming stores to the Shoe Station brand, has been a key driver of the positive sales growth for Shoe Station, despite the overall decline in net sales.

Gross profit margins also saw a slight decrease, from 35.6% in the first quarter of 2024 to 34.5% in the current quarter. The decrease was attributed to deleverage from lower net sales, although there was a 50 basis point increase in merchandise margin.

The company’s selling, general, and administrative expenses (SG&A) decreased by $0.5 million, with rebanner strategy investments being offset by the timing of other store expenses. As a percentage of net sales, SG&A increased to 30.2% compared to 28.1% in the previous year.

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Shoe Carnival Reaffirms Fiscal 2025 Outlook

Shoe Carnival has reaffirmed its fiscal 2025 outlook, buoyed by the strong first quarter performance and the momentum of its rebanner strategy. The company expects net sales for the fiscal year to range between $1.15 billion to $1.23 billion, which represents a potential decrease of 4% or an increase of up to 2% compared to fiscal 2024. The guidance for GAAP EPS is set between $1.60 to $2.10, inclusive of the costs associated with the rebanner strategy’s initial year.

The company plans to continue its aggressive expansion of the Shoe Station banner, expecting it to represent over 80% of its store fleet by March 2027. This expansion is part of a broader strategy to transform Shoe Carnival from a traditional family footwear retailer to a premium brand-focused national leader in footwear. The company anticipates significant market share growth in regions where its Shoe Carnival concept has underperformed, leveraging the more productive Shoe Station store base.

Shoe Carnival also outlined its capital management and cash flow strategy, highlighting its financial strength with no debt and growing cash reserves. The company ended the first quarter with $93 million available for growth objectives and plans capital expenditures between $45 to $60 million for fiscal 2025. This financial stability positions Shoe Carnival to fund its expansion and rebanner initiatives without incurring debt. Additionally, the company continues to focus on shareholder returns, having paid a quarterly cash dividend of $0.15 per share, marking the 11th consecutive year of dividend increases.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.