Shoe Carnival, Inc. Q3 FY2025 earnings call

• Corporate name change to Shoe Station Group, pending shareholder approval in June 2026.
• Strong third quarter with EPS $0.53 and net sales $297.2M, exceeding consensus. Gross profit margin expanded 160 basis points due to disciplined pricing and shift to higher-income Shoe Station customers.
• Rebannering progress: 101 stores rebannered in fiscal 2025, now 428 stores (144 Shoe Station, 284 Shoe Carnival). Target to reach 51% Shoe Station stores by back-to-school 2026.
• Inventory and working capital: Plan to free up $100M in working capital by end of fiscal 2027 through superior merchandising at Shoe Station, which requires less inventory per store.
• Milestones: Fiscal 2026 is inflection year with 70 store conversions to reach 51% Shoe Station; fiscal 2027 expected to see $20M in cost savings, $100M working capital freed, and return to comparable sales growth.

Shoe Station net sales grew 5.3% with product margins expanding 260 basis points. Shoe Carnival net sales declined 5.2%. Athletics represented 51% of total sales, with Shoe Station's athletic business achieving double-digit growth. Non-athletics were 43% of Q3 total sales, with mid-single-digit comp declines. Shoe Station outperformed Shoe Carnival in major categories. Athletics was 51% of the business in the quarter, up from 49% last year, and was key to back-to-school comp positive results. Non-athletics were 43% of total sales, down 1% from last year.

• Net sales guidance: $1.12 billion to $1.15 billion.
• EPS guidance: Raised to $1.80 to $2.10.
• Q4 net sales forecast: $240 million to $270 million.
• Rebannering: 101 stores rebannered in fiscal 2025, no further rebanners expected in 2025.
• Fiscal 2026 and 2027: Continued investment, with fiscal 2027 expected to realize $20M in cost savings, $100M working capital freed, and return to comparable sales growth.

• Economic pressure on lower-income households affecting Shoe Carnival.
• Competitive response in lower-income segment driving margins down.
• Margin pressure from liquidating non-go-forward Shoe Carnival inventory.
• Tariff volatility impact on inventory if not managed effectively.

Q: Mitch Kummetz asked about rebannering drag, boot business improvement, and elevation of Shoe Station assortment.

A: Kerry Jackson and Tanya Gordon responded. Kerry discussed rebannering expenses and expected front-loading, Tanya noted boots saw double-digit increases in Q4. Mark Worden mentioned plans to further elevate Shoe Station's assortment with brand partners.

Q: Samuel Poser asked about Shoe Station store count, inventory decrease, inventory receipts, and clearance of Carnival inventory.

A: Mark Worden and Kerry Jackson responded. Mark discussed store count progress, inventory reduction plan, and aggressive liquidation of non-go-forward Shoe Carnival inventory. Kerry touched on inventory receipts and the need to sell through non-go-forward product.

Q: Jim Chartier asked about rebannering timeline and $20M savings.

A: Mark Worden responded, stating focus on reaching 51% Shoe Station by back-to-school 2026 and $20M savings expected to flow in fiscal 2028 as synergies materialize.