Shoe Carnival, Inc. ( SCVL ) reported third-quarter sales of $297.155 million on Thursday, beating the street view of $296.333 million. Comparable store sales declined 2.7%.

The company said its One Banner Strategy is gaining traction. By banner, Shoe Station delivered 5.3% net sales growth with mid-single-digit comp gains.

On the earnings call, CEO Mark Worden said Shoe Station’s core customer, with a median household income $60,000-$100,000, is choosing premium products, seeking elevated service, and responding to the company’s brand positioning. 

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Shoe Carnival ( SCVL ) posted a 5.2% sales decline amid continued pressure on lower-income consumers. Worden said the traditional lower-income Shoe Carnival ( SCVL ) customer remains under economic pressure, prompting intense industry discounting that is pressuring margins.

He noted the company chose to maintain pricing discipline rather than chase traffic from this segment, which Shoe Carnival ( SCVL ) is intentionally moving away from. As a result, the retailer expanded product margins and avoided “unprofitable sales.”

Newly acquired Rogan’s contributed over $21 million in net sales, in line with integration expectations.

Gross profit increased to $111.8 million from $110.4 million in the prior year, driven by Shoe Station growth and disciplined pricing across all banners.

Gross profit margin climbed to 37.6%, an increase of 160 basis points from a year ago. Merchandise margin improved by 190 basis points during the quarter.

Management credited disciplined pricing, a richer mix of higher-income Shoe Station shoppers, and targeted inventory investments.

The company reported third-quarter adjusted earnings per share of 75 cents.

Shoe Carnival ( SCVL ) ended the third quarter of 2025 debt-free, and cash, cash equivalents, and marketable securities totaled $107.7 million at quarter’s end, an increase of 18.2% compared to the prior year.

The board has approved changing the company’s name to Shoe Station Group, Inc., pending shareholder approval in June 2026.

As of Nov. 20, Shoe Station accounts for 144 stores, or about one-third of the 428-store fleet. The company finished folding its 28 Rogan’s locations into the Shoe Station banner in October. Management plans to reach 215 Shoe Station stores by Back-to-School 2026, exceeding half of the total fleet.

By the end of fiscal 2028, more than 90% of locations are expected to operate as Shoe Station, with the rest reviewed for rebannering, outlet conversion or closure.

Investing For Payoff

The shift to a single Shoe Station banner is expected to unlock major operational and financial gains by fiscal 2027.

Management forecasts about $20 million in annual cost savings as duplicated brand functions are eliminated.

Inventory needs should fall by roughly $100 million as the Shoe Station model runs leaner per location.

Comparable sales are expected to improve once Shoe Station becomes the dominant banner across the fleet.

EPS growth is projected to accelerate into fiscal 2028 as transition costs fade and efficiency gains build.

For 2026, the company plans to rebanner 70 stores, requiring significant capital and triggering near-term pressure on sales and earnings.

Despite an expected sales decline in early 2026, inventory reductions of up to $60 million should fully fund the conversion program.

Outlook

Shoe Carnival ( SCVL ) raised its 2025 GAAP earnings outlook to a range of $1.80 to $2.10 per share, up from $1.70 to $2.10, compared with the $1.88 analysts expect.

The retailer reaffirmed its full-year sales forecast of $1.12 billion to $1.15 billion, in line with the $1.137 billion consensus estimate.

Shoe Carnival ( SCVL ) faces several risks as it transforms its business. Ongoing sales declines at the Shoe Carnival ( SCVL ) banner and the high cost of re-bannering could weigh on near-term profitability.

The company remains vulnerable to broader economic and consumer spending trends, and execution missteps in shifting toward more premium brands could slow progress. Additionally, planned inventory reductions may create short-term margin pressure.

Price Action: SCVL shares were trading lower by 5.69% to $15.75 at last check Thursday.

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