Shoe Carnival reported second-quarter Fiscal 2025 net sales of $306.4 million, a decrease of 7.9% compared to $332.7 million in Q2 Fiscal 2024. Comparable sales declined 7.5%, including a high-single digit decline at Shoe Carnival and break-even results at Shoe Station.
Despite the revenue decline, profits beat consensus by double digits, and gross margins reached 38.8%, expanding 270 basis points from the prior year. This margin expansion demonstrated the power of the company's rebanner strategy, driven by disciplined pricing and a favorable mix shift towards Shoe Station's merchandise.
Net income was $19.2 million, or $0.70 per diluted share, compared to $22.6 million, or $0.82 per diluted share, in Q2 Fiscal 2024. The company estimates Q2 2025 EPS included a $0.21 negative impact from rebanner investments, which are expected to pay back within two to three years.
The company updated its Fiscal 2025 outlook, raising the low end of its GAAP EPS guidance to a range of $1.80 to $2.10, from the previous $1.60 to $2.10. Net sales guidance was adjusted to $1.14 billion to $1.20 billion, from the prior $1.15 billion to $1.23 billion. This outlook anticipates slowing sales declines in the second half of the year, with total company comparable store growth expected to start in Q3 2026.
The rebanner strategy is accelerating, with 44 conversions completed year-to-date and an additional 58 stores expected to rebanner in the second half of Fiscal 2025, bringing the total to 145 Shoe Station stores by year-end. By Back-to-School 2026, Shoe Station is projected to be the majority concept, surpassing 215 stores and achieving the 51% threshold where portfolio growth is expected to offset legacy declines.
Shoe Carnival ended Q2 2025 debt-free with $91.9 million in cash, cash equivalents, and marketable securities. Fiscal August performance showed positive comparable sales, a significant improvement from Q2 trends and ahead of the projected timeline for returning to growth, validating the transformation's acceleration.
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