Shoe Carnival, Inc. (SCVL Quick QuoteSCVL - Free Report) reported third-quarter fiscal 2025 results, wherein both top and bottom lines met the Zacks Consensus Estimate. Both metrics declined year over year. Also, Comparable store sales declined in the fiscal third quarter.

Shoe Carnival reported earnings per share (EPS) of 53 cents, down 24.3% from 70 cents reported in the year-ago quarter. The company estimates that rebanner investments reduced EPS by approximately 22 cents in the third quarter of fiscal 2025.

Net sales amounted to $297.2 million, down 3.2% year over year. Comparable store sales declined 2.7% year over year in the quarter under review. 

Across banners, fiscal third-quarter 2025 results continued to emphasize the momentum behind the One Banner Strategy announced on Nov. 13, 2025. Shoe Station delivered a 5.3% increase in net sales, reflecting a mid-single-digit gain in comparable store sales and a 260 basis-point expansion in product margins. 

Shoe Carnival reported a 5.2% decline in net sales and a mid-single-digit drop in comparable store sales, as lower-income customers remained under pressure. Rogan’s generated more than $21 million in net sales, in line with integration plans.

Shoe Carnival’s Margin & Cost Details

Gross profit increased 1.3% year over year to $111.8 million, driven by Shoe Station’s growth and disciplined pricing across all banners. The adjusted gross margin of 37.6% expanded 160 basis points year over year. 

Merchandise margin improved 190 basis points due to disciplined pricing, a favorable shift toward higher-income Shoe Station customers, and strategic inventory investments. These gains more than offset roughly 30 basis points of deleverage in buying, distribution and occupancy costs.

Selling, general and administrative expenses increased 8.6% year over year to $93.2 million. As a percentage of net sales, selling, general and administrative expenses increased 340 bps year over year to 31.4%. 

Operating income decreased 24.1% year over year to $18.6 million. We note that, as a percentage of net sales, this metric declined 170 bps year over year to 6.3% in the fiscal third quarter.

SCVL’s Store Update

As of Nov. 20, 2025, the company operated 428 stores across 35 states and Puerto Rico under the Shoe Carnival and Shoe Station banners.

One Banner Strategy Update of SCVL

The company provided an update on the One Banner Strategy, noting that on Nov. 13, 2025, its board of directors unanimously approved changing the corporate name to Shoe Station Group, Inc., a change that remains subject to shareholder approval at the annual meeting in June 2026. 

As of Nov. 20, 2025, Shoe Station accounts for 144 of its 428 stores, representing 34% of the fleet, a substantial increase from 10% at the beginning of fiscal 2025. The company completed the integration of the 28-store Rogan’s acquisition into the Shoe Station banner in October 2025, and beginning in the fourth quarter of fiscal 2025, Rogan’s results will be included within Shoe Station reporting.

The company remains on schedule to operate 215 Shoe Station locations by Back-to-School 2026, at which point it is expected to represent 51% of the fleet. By the end of fiscal 2028, more than 90% of all stores are expected to operate under the Shoe Station banner, with any remaining locations evaluated for conversion, repositioning as outlet stores, or potential closure.

The company’s transition to operating primarily under the Shoe Station banner is expected to deliver substantial value. Annual cost savings of approximately $20 million are anticipated as a result of reduced complexity across merchandising, marketing, systems, supply chain and back-office functions. 

Inventory investment is expected to decline $100 million, or 20-25%, since Shoe Station’s merchandising model requires less inventory per store while still providing an enhanced customer experience. Comparable store sales are projected to return to growth as Shoe Station becomes the dominant banner. Earnings per share are also expected to grow as cost savings are realized, rebanner-related investments taper off and sales growth resumes. This growth is anticipated to accelerate into fiscal 2028 as the One Banner Strategy approaches completion.

Shoe Carnival’s Financial Health Snapshot

The company ended the quarter with cash and cash equivalents of $94.4 million, a long-term portion of operating lease liabilities of $310.9 million and total shareholders’ equity of $683.2 million.

As of Nov. 20, 2025, the company had $50 million remaining available under its current share repurchase authorization. SCVL did not engage in any share repurchase activity during the quarter.

Consistent with the past 20 consecutive years, the company fully funded its operations and growth initiatives using operating cash flow and existing cash reserves. It expects to continue generating sufficient liquidity to self-fund the One Banner Strategy while supporting other strategic opportunities. In the past nine months of fiscal 2025, capital expenditures totaled $38.3 million, primarily directed toward supporting rebannered stores.

SCVL’s Fiscal 2025 Outlook

The company reaffirmed its fiscal 2025 net sales outlook and updated EPS guidance following third-quarter results and accelerated rebanner execution. Net sales are expected in the range of $1.12 billion to $1.15 billion. EPS for fiscal 2025 is now expected in a range of $1.80 to $2.10, reflecting an increase of 10 cents at the lower end of the range.

SCVL Stock Past Three-Month Performance

Image Source: Zacks Investment Research

Fiscal 2026 Guidance of SCVL

For fiscal 2026, net sales are expected to decline in the low-to-mid single digits during the first half of the year before returning to flat-to-low single-digit growth in the second half as Shoe Station surpasses 51% of the store base. EPS for fiscal 2026 is projected to be lower than fiscal 2025, reflecting the combined impact of reduced sales and rebanner investments. Inventory reductions of approximately $50-$60 million are expected, more than fully funding the planned rebanner capital expenditures.

Shares of this Zacks Rank #3 (Hold) company have lost 20.5% in the past three months compared with the industry’s decline of 1.6%.

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