Shoe Carnival Raises EPS Guidance and Aims for Majority Shoe Station Fleet by 2026 Amid Rebanner Strategy Driven Margin Expansion

Shoe Carnival raised its annual EPS guidance and aims to achieve a majority of Shoe Station fleet by 2026. The company's rebanner strategy drove a 270-basis-point expansion in gross margins to 38.8% in Q2 2025.

Shoe Carnival, Inc. (SCVL) reported strong second-quarter (Q2) 2025 results, with the company raising its annual earnings per share (EPS) guidance and setting ambitious targets for its Shoe Station fleet. The company's rebanner strategy, which focuses on transforming Shoe Carnival stores into Shoe Station outlets, drove a significant 270-basis-point expansion in gross margins to 38.8% in Q2 2025.

Mark Worden, President and CEO of Shoe Carnival, highlighted the company's progress during the earnings call, stating, "Our second quarter results demonstrate meaningful progress on our corporate strategy. We beat earnings consensus by over 20% and expanded gross margins 270 basis points to 38.8%, our strongest Q2 margin in years." He emphasized the company's rebanner strategy, noting that Shoe Station outperformed Shoe Carnival by over 10% on merchandise sales during Q2 and back-to-school season.

The company's net sales for Q2 2025 were $306.4 million, a 7.9% decrease from the prior year, driven by a strategic focus on higher-margin business. Shoe Station sales grew 1.6%, with essentially flat comparable store sales, while Shoe Carnival sales declined 10.1%. Gross profit margin reached 38.8%, a 270 basis point expansion versus last year, driven by disciplined pricing, favorable mix, and strategic inventory investments.

Shoe Carnival raised its annual EPS guidance to $1.70 to $2.10, increasing the low end by $0.10, and tightened its net sales guidance to $1.12 billion to $1.15 billion. The company also increased its gross profit margin guidance to 36.5% to 37.5%, reflecting the structural margin improvement from rebanners and disciplined pricing. For Q3, the company expects net sales of $290 million to $300 million and EPS of $0.50 to $0.55.

Patrick Edwards, Senior VP and CFO, noted that the company's cash and marketable securities totaled $91.9 million at quarter end, rising to over $148 million following August's performance. The company expects to reach a critical mass with Shoe Station representing the majority of its store fleet by back-to-school 2026, marking a pivotal shift in business strategy and financial outlook.

Management acknowledged that inventory levels remain elevated by design, supporting in-stock rates and margin expansion, and expects to normalize inventory levels in 2026, with timing dependent on tariffs and supply chain clarity.

References:
[1] https://seekingalpha.com/news/4492384-shoe-carnival-raises-annual-eps-guidance-and-targets-majority-shoe-station-fleet-by-2026-as