Shoe Carnival Q1 2026 Earnings Report

Shoe Carnival EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.30
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.64

Shoe Carnival Revenue Results

• Actual Revenue: $277.72 million
• Expected Revenue: $285.16 million
• Beat/Miss: Missed by -$7.45 million
• YoY Revenue Growth: -7.60%

Shoe Carnival Announcement Details

• Quarter: Q1 2026
• Date: 5/30/2025
• Time: Before Market Opens
• Conference Call Date: Friday, May 30, 2025
• Conference Call Time: 9:00AM ET

Shoe Carnival (NASDAQ:SCVL), together with its subsidiaries, operates as a family footwear retailer in the United States. The company offers range of dress, casual, work, and athletic shoes, as well as sandals and boots for men, women, and children; and various accessories. The company also operates stores, and sells its products through online shopping at shoecarnival.com, as well as through mobile app. Shoe Carnival, Inc. was founded in 1978 and is headquartered in Evansville, Indiana.

Shoe Carnival Q1 2026 Earnings Call Transcript

Key Takeaways

• Shoe Station rebanner initiative delivered double-digit sales growth and accretive margins across suburban, rural and diverse markets, leading the company to accelerate the rollout to 80% of its fleet by March 2027.
• Reaffirmed FY25 guidance with net sales of $1.15 b–$1.23 b and EPS of $1.60–$2.10, as no material product cost or pricing pressures have emerged outside previous assumptions.
• Debt-free, cash-rich balance sheet grew to $93 m in cash, equivalents and marketable securities (up 30% YoY), funding early inventory investments and rebanner capex without leverage.
• Shoe Carnival banner comps declined in the high single digits in Q1, reflecting cautious consumer behavior among lower-income households and muted tax-refund season demand.
• Elevated inventory strategy up 4% YoY secures key branded assortments at favorable cost and supports in-stock positions, though consumer sentiment will drive back-to-school results.

Presentation

[Operator]

Good morning, and welcome to Shoe Carnival's First Quarter Earnings Conference Call. Today's conference call is being recorded and is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks today may contain forward looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements.

[Operator]

Forward looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of today's date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward looking statements discussed on today's conference call or contained in today's press release to reflect future events or developments. I will now turn the conference over to Mr. Mark Warden, President and CEO of Carnival for opening remarks. Mr. Warden, you may begin.

[Mark Worden, President & CEO at Shoe Carnival]

Good morning, everyone, and thank you for joining us today for Schuh Carnival's first quarter twenty twenty five earnings conference call. Joining me on today's call are Patrick Edwards, Chief Financial Officer and Tanya Gordon, Chief Merchandising Officer. The company's first quarter twenty twenty five results were better than expected with profits outperforming expectations by approximately 10%, our rebanner expansion plans delivering outstanding results and our debt free balance sheet getting even stronger. Given the volatility in the market and high levels of uncertainty the teams are navigating, I'm very pleased with our position as we start the second quarter. As I may be a contrarian on this next statement, but I'm starting to feel cautiously optimistic about back to school as we have a compelling assortment in hand and our product costs have not skyrocketed.

[Mark Worden, President & CEO at Shoe Carnival]

I would like to thank our vendor partners for their close collaboration and our merchant organization under Tanya's leadership for their tireless work ensuring we have our best foot forward for customers during back to school. Our Q1 financial results landed squarely within our annual guidance ranges. We have not yet experienced nor do we have visibility to any massive product cost or price increases outside of ranges considered in our guidance. This could evolve, but that is the situation now. Our singular corporate focus is to be the nation's leading footwear retailer for families.

[Mark Worden, President & CEO at Shoe Carnival]

We operate no wholesale businesses and this has us in a comparatively solid and flexible stance to shift our buying decisions as costs evolve. This does not mean we're immune to vendor price volatility. However, we enjoy a superior position compared to our competitors for two reasons. First, we do not have direct manufacturing exposure. Second, we're not locked into our own production commitments that could force uncompetitive decisions.

[Mark Worden, President & CEO at Shoe Carnival]

Additionally, our debt free balance sheet with expanded cash reserves compared to the end of Q1 last year had us poised to make opportunistic buys in this volatile time and capture margin growth prospects ahead. Given all these variables, the executive team does not view it appropriate to withdraw 2025 guidance and today are reaffirming our annual profit guidance as the most likely outcome. Turning to specifics of the quarter. Similar sales trends to last year continued across our banners and the family footwear industry. Schuh Station achieved industry leading growth again this quarter and Rogan's produced solid profitable results in line with our integration and synergy plans.

[Mark Worden, President & CEO at Shoe Carnival]

TrueCarnival declined similar to the industry and consistent with our annual guidance albeit on the lower side of sales ranges for Carnival. Our teams observed a cautious customer during the quarter with the Schuh Carnival lower income household. Tax refund season saw muted results as it appeared customer concerns about prices today and speculation of higher prices forthcoming kept a small segment on the sidelines. As previously shared, I do not anticipate a shoe carnival nor the family footwear industry return to profitable sales growth in the near term based on the current external conditions and soft consumer confidence we are seeing. However, implicit in our guidance range is a moderating sales decline trend in the back half of the year, primarily driven by Shoe Station momentum and expansion, compelling back to school assortments and encouraging progress on trade negotiations.

[Mark Worden, President & CEO at Shoe Carnival]

The organization's organic growth approach remains focused on expanding Shoe Station from the regional market leader it is today into a national footwear and accessories market leader. Shoe Station is our premium retail banner attracting higher income households, providing customers the top brands and assortments for both non athletic and athletic branded footwear, high levels of service and a welcoming contemporary shopping environment. It is a market leader in the Gulf Of America region and as we re bannered Shoe Carnival stores to Shoe Station stores in existing markets, we expected a positive customer response and we achieved them. Since our last earnings call, the re bannered results continue to be outstanding and I would like to now unpack the results, share key learnings we have gained and provide transparency to our accelerated plans and targets. First, Schuh Station grew sales 4.9% for the quarter driven by the rebanner approach growing sales low double digits.

[Mark Worden, President & CEO at Shoe Carnival]

The continued Shoe Station sales growth including comp growth in the quarter is in stark contrast to the family footwear industry and Shoe Carnival trends where both had comparable store declines in the high single digits during Q1. This creates an exciting national growth opportunity to scale up Shoe Station store counts to drive the overall corporation sales and profit growth impact. Previously, the leadership team shared a range for our Shoe Station rebannered plans between fifty seventy five stores during fiscal twenty twenty five. Based on the continued sharp superior performance of Shoe Station versus the industry and Shoe Carnival, we will complete all 75 rebanners this year, the top point of the range. These 75 stores will be completed on the following quarterly cadence.

[Mark Worden, President & CEO at Shoe Carnival]

24 were completed during Q1, '20 will be completed in Q2 of which three are completed, 25 will be completed during Q3 and six will be completed in Q4. To summarize the Shoe Station store count progression this fiscal year, the business started this year with 42 Shoe Station stores representing 10% of our store fleet. Today, we operate 70 Shoe Station stores representing 16% of the fleet and we plan to end fiscal twenty twenty five with approximately 120 Shoe Station stores representing 28% of the fleet. Given this rapid growth of Shoe Station, we will plan to disclose the banner sales growth ongoing starting now. Each month, our teams are discovering valuable insights to help us optimize our rollout plans as we enter new markets.

[Mark Worden, President & CEO at Shoe Carnival]

The corporation has already expanded significantly into new markets in Alabama, Mississippi, Georgia, Louisiana, South Carolina, Tennessee and Florida and will further extend our presence. As operations move beyond core markets into new states, the customer and market data highlighted a large set of stores with similar dynamics where Schuh Station should also surpass Schuh Carnival and those are being rebannered now. I would like to share four brief examples from q one stores rebannered to highlight real world learnings and what we are doing with those expanded insights as we move forward. Number one, Shoe Station entered the Atlantic Coast Of Florida, a very large opportunity for future growth. The team re bannered an underperforming Shoe Carnival store in a new market far from any other Shoe Station store.

[Mark Worden, President & CEO at Shoe Carnival]

This market had demographics that appeared on paper should work far better as a station, a more affluent trade area, skewed older customer base, and had a beachy vibe similar to many areas stationed thriving. On paper, this store is prototypical of one we expect to hit at least a double in baseball terms, but we hit a home run here with sales growth over 20%, strong AUR growth from a superior branded assortment and accretive margins. Our action step from this learning, the organization will continue re bannering and expanding in markets like this one on the East Coast. Number two, ChewStation entered a new rural market in Tennessee over an hour from any major city. This was previously an average performing Shoe Carnival store with typical rural community demographics.

[Mark Worden, President & CEO at Shoe Carnival]

Customer data alone didn't clearly indicate which banner would perform better. However, our analysis of local competition and available product assortments in that area pinpointed a gap that Shoe Station's unique merchandise mix could fill. And our prediction was accurate with sales growing over 20% versus the prior year and again higher AUR and accretive margins. Number three, the team executed the same type of re banner in a rural market in Alabama and results were even stronger. These home runs in rural markets where the brand has awareness and also where it does not gives us confidence to action rebannering our Shoe Carnival stores across rural markets in America.

[Mark Worden, President & CEO at Shoe Carnival]

Fourth, and very exciting and frankly a bit surprising, we re bannered a poorly performing Schuh Carnival store in a lower income, highly diverse market in Georgia, not in a major city. The executive team thought this might achieve flattish results or maybe even be rejected by the customer. We were wrong as this lower income customer also responded very strong to the new assortments just as well as the response in rural Tennessee and the affluent Florida beach town. This encouraging result could prove a game changer in how wide the scope is for Shoe Station customer acquisition as we go national. Action from this is the business will rebanner more stores like this one to validate if Shoe Station can consistently exceed industry benchmarks in diverse rural markets that are not affluent.

[Mark Worden, President & CEO at Shoe Carnival]

To summarize our field based learning to date, Shoe Station is outpacing the industry and Shoe Carnival quarter after quarter for over two years now. Three banner approaches generated oversized growth of sales, in fact exceeding Shoe Carnival sales by over 20% during the last five quarters since beginning this rollout, producing increased AURs and accretive product margins in markets we expected to win in more affluent, suburban, mature customers. These new learnings are substantial. Shoe Station also is transforming an average or poor performing Shoe Carnival into a growth store in Rural America in new markets, in Coastal America and is showing early signs of growth in diverse lower income areas outside major cities. With these results in hand, it is crystal clear that Shoe Station is the future of our organic growth and future of our store base.

[Mark Worden, President & CEO at Shoe Carnival]

The superior performance in regions quarter after quarter versus Shoe Carnival and the industry have provided us the customer data and the on the ground confidence to accelerate and increase our ambition with this approach. Today, I'm announcing an ambitious expansion. Shoe Station will represent over 80% of our store fleet on March 2027, up from our previous target of 51%. We're accelerating our investment to maximize this rollout before back to school 2026. By July 2026, at least 51% of our current store fleet will operate a Shoe Station.

[Mark Worden, President & CEO at Shoe Carnival]

I believe this expansion gives us the scale necessary to deliver total company comparable store growth starting in Q3 twenty twenty six as the strength and scale of Schuh's station will more than offset the ongoing challenges we expect to face with the Schuh Carnival banner. We can't wait. Tanya and I have been meeting extensively with our vendors and key stakeholders discussing this initiative. It is being met with great enthusiasm and support. Let me ask one question time and time again.

[Mark Worden, President & CEO at Shoe Carnival]

Will Shoe Station represent 100% of the current store fleet in the future? I can share the organization is deeply evaluating that. While I do not have a decision today, I can share we're planning steps in market during 2026 to help us answer that based on the customer. The key topic to learn about is how best to operate our urban stores and satisfy the needs of the low household income, highly diverse customer base in cities like Chicago or Houston. The answers aren't clear today, but I believe it is prudent to explore this topic and plan to begin testing in urban doors by early twenty twenty six.

[Mark Worden, President & CEO at Shoe Carnival]

We anticipate the potential for meaningful internal synergies and efficiencies if we were to learn that the station banner can better meet all of our store needs. I look forward to sharing more about our organic growth approach after back to school. Turning to our inventory strategy. We've made a deliberate decision to maintain elevated inventory levels in the current environment, leveraging our strong balance sheet to navigate marketplace uncertainties. With our cash rich position, we determined the best approach to serve customers during back to school and holiday seasons was to invest early in key products, maximize our in stock position and ensure our stores are fully prepared.

[Mark Worden, President & CEO at Shoe Carnival]

Media pundits have warned about potential empty shelves across retail this year. I want to assure you our customers will find their favorite brands fully stocked across Schuh Station, Schuh Carnival and Rogan's locations throughout 2025. '1 specific inventory investment I'd like to call out, our men's and women's performance running brands continue to deliver exceptional results across the company and are particularly strong with double digit growth at Shoe Station. We have the best in class brands with the latest styles ready for back to school with robust AURs over a hundred and $30 on average. As always, I'm not going to share brand specific details for obvious competitive reasons, but I will share our merchant team is continually working with the world's best brands to add sought after styles and the hottest brands.

[Mark Worden, President & CEO at Shoe Carnival]

No doubt, our exceptional merchants have exciting additions to our assortments coming before fiscal end. TrueCarnival Inc. Is strategically buying goods now at a lower cost basis where appropriate. And if those costs increase for whatever reason, this approach positions us well to gain margin, go to market with a sharp price or both. I like that competitive advantage and financial upside possibility.

[Mark Worden, President & CEO at Shoe Carnival]

The corporation will maintain these higher inventory levels until we no longer see it as the best risk position for us. At that point, the team will reduce inventory levels, but only once we see limited risk of supply or cost disruption. Again, with a balance sheet that grew cash compared to Q1 last year as we invested in more inventory and accelerated our capital plans, the business is well positioned. In addition to our organic growth approach, Shoe Carnival remains committed to pursuing M and A to achieve our long term vision to be the nation's leading footwear retailer for families. Our financial foundation started the year strong and despite the market volatility, our balance sheet is stronger now than a year or even two years ago.

[Mark Worden, President & CEO at Shoe Carnival]

Our prior acquisitions have integrated smoothly. Both synergies captured and built our readiness for further acquisitions when the right opportunity at a fair valuation becomes available. Our M and A targeting focus is on market leading footwear retailers with scale, providing geographic expansion and or diversifying to a higher income customer base. The leadership team will pursue scale changing M and A. Turning briefly to an organizational topic.

[Mark Worden, President & CEO at Shoe Carnival]

Earlier this year, we designated our existing office in Fort Mill, South Carolina, small town fifteen minutes south of Charlotte as our corporate HQ. This office is where I am based along with our senior leaders, merchants, marketers, and our customer facing teams. It is also where we collaborate with our vendor partners, host our annual shareholder meeting, and conduct our board meetings and earnings calls. As such, the leadership team thought this office location would best serve as our corporate headquarters. The organization also operates our shared service back office functions for Shoe Station, Shoe Carnival and Rogan stores as well as our supply chain from our existing office and distribution center in Indiana.

[Mark Worden, President & CEO at Shoe Carnival]

Our company has been here in the Charlotte suburb for a few years now. We found it a great advantage for engaging more frequently with our vendors, help to track the best talent, and provides us efficiencies to travel all over the country to be with our customers, vendors, and stakeholders. With that, I would like to now hand over to Patrick to provide further details on our financials and results and then I will provide closing comments before opening the call for Q and A with Patrick, Tanja and myself. Patrick?

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Thank you, Mark and good morning everyone. I'm pleased to report that despite the challenging macroeconomic and retail environment, our first quarter profits outperformed market expectations by approximately 10%. While our profits are down compared to last year, this reflects our deliberate decision to invest in the rebanner initiative that Mark just outlined, a choice that is already showing promising returns through Shoe Station's exceptional performance and our continued balance sheet strength. Our first quarter net income was $9,300,000 or $0.34 per diluted share, which exceeded analyst consensus despite being lower than the $17,300,000 or $0.63 per diluted share we reported in Q1 of fiscal twenty twenty four. This year over year decrease primarily reflects the planned investments in the rebanner initiative that we estimated $0.15 in the quarter and the broader industry headwinds that Mark described.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

The encouraging story behind our better than expected profit performance is the early success we are seeing with Shoe Station. As Mark highlighted, while the broader family footwear industry declined, Shoe Station achieved sales growth of 4.9% and was comp positive in the quarter. The impact goes beyond just sales. Our Rebannered stores showed meaningful product margin improvement compared to their performance at Shoe Carnival locations. These accretive product margins generated by the Re Banner strategy inclusive of Re Banner stores contributed to our increased merchandise margin in the quarter.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Store level profit contribution was also up double digits inclusive of ongoing amortization of the new CapEx investments and normal advertising costs. These early phase outcomes are compelling and in line with the modeling we discussed last quarter that supports a two to three year payback of the P and L investment we are making this year. This rebanner strategy is the best use of capital in our current portfolio of opportunities and these results strongly support acceleration of the approach that Mark outlined. I found the four examples Mark shared particularly informative. Those locations showed varying degrees of improvement in profitable sales following Re Banner, providing us with valuable data to refine our approach going forward.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

When Mark talks about Shoe Station representing 80% of our store fleet by March 2027, we see this as a path to restore and eventually grow our profit trajectory. Our financial foundation continues to be a competitive advantage with cash positions in a stronger position compared to the prior year even as we simultaneously accelerated rebannered investments and increased our inventory levels. We ended the quarter with $93,000,000 in cash, cash equivalents and marketable securities, up over 30% or $23,500,000 compared to the end of Q1 last year. We also continue to have no debt and nearly $100,000,000 of available credit. This financial strength enabled the deliberate approach Mark described to increase our inventory levels, which are up 4% compared to last year.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

With respect to our on hand inventory, there are a few concepts I would like to highlight. First, our inventory has been secured at competitive costs and at levels that are expected to protect and perhaps increase our margins. Second, we're maintaining an appropriate level of in stock positions across key categories that continue to support strong conversion rates. Further, we believe our in stock inventory positions us well to navigate any potential future supply chain disruption. As Mark emphasized, we will adjust these inventory levels as conditions evolve, balancing working capital efficiency with ensuring product availability in an uncertain environment.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Our debt free position combined with increased liquidity on hand gives us flexibility in this volatile environment. While some competitors may need to pull back on investments due to leverage concerns, we were able to simultaneously invest in our long term vision and strengthen our financial position. Now moving on to our broader financial results for our first quarter ended 05/03/2025 starting with net sales. In first quarter twenty twenty five, net sales totaled $277,700,000 and compared to $300,400,000 last year, a decline of 7.5%, similar with declines across family footwear. Our comparable store sales were down 8.1%.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Our net sales and comp sales in the quarter were both impacted approximately 1% by lost sales associated with the 24 stores re bannered in the quarter in line with our expectations. Breaking down performance by storefront, Shoe Station sales increased 4.9% and were comp positive in the quarter. Rogan's achieved results in line with our synergy and integration plans with net sales above $19,000,000 both this year and last year. Shoe Carnival experienced the industry wide challenges that Mark referenced with total sales declining 10%. Shoe Carnival's high singles comp decline in the quarter was the main driver of our overall comparable store sale decrease.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Let me now provide some additional color on our performance by major footwear categories, which offers further insight into both our challenges and opportunities. Athletic footwear, which accounted for 46% of our revenue in the quarter was in greater demand and outperformed our overall comparable store metrics. The mid singles decline in athletic footwear in the quarter reflects the relative resilience of our consumers' emphasis on casual and active lifestyles. Shoe Station's athletic business grew low teens during the quarter demonstrating that even in a more competitive category, our premium banner positioning including in the performance running category resonates with consumers willing to invest in quality branded athletic footwear. In women's non athletic footwear, which represented 24% of our business in the quarter, we saw comp declines in the mid teens compared to the same period last year.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

This category was most impacted by the cautious consumer behavior Mark described with Shoe Carnival's comp decline nearly double shoe stations. Within our shoe station banner, women's non athletic was driven by stronger performance primarily in dress shoes. This notable outperformance compared to Carnival underscores the power of our rebanner initiative and Shoe Station's appeal to a different customer demographic. Men's non athletic footwear, which represented 7% of our business in the quarter, declined low singles compared to Q1 last year. Similar to women's, we saw a significant divergence between the banners, with Shoe Station achieving low singles comp positive growth in this category.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

The difference was particularly pronounced in casual footwear with Shoe Station's expanded branded assortment and higher price points. Finally, children's footwear representing 18% of our business in the quarter experienced a low teens decline versus the prior year. This category was particularly challenged by the low income consumers reduced spending. However, Shoe Station's kids business declined only low singles, significantly outperforming the company average. This relative outperformance in the children's category at Shoe Station is encouraging as we approach the important back to school season.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

What's particularly notable across all these categories is the consistent pattern of Shoe Station outperforming Shoe Carnival regardless of category. This reinforces our confidence in the Re Banner strategy as a driver of future growth. We believe the combination of upgraded store environments, enhanced brand presentations and higher service levels that characterize the Shoe Station format creates a compelling value proposition that resonates across multiple footwear categories. Moving on to gross profit. Q1 gross profit margin was 34.5% consistent with expectations and was lower than Q1 twenty twenty four gross profit margin by 110 basis points.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

BD and O resulted in 160 basis points of the decrease, most of which was deleverage as a result of lower net sales. Our merchandise margins were higher in the quarter by 50 basis points, consistent with our profit objectives to not chase unprofitable sales and is impacted by benefits from the re bannered stores. First quarter twenty twenty five SG and A was $83,800,000 representing an approximate $500,000 decrease in the quarter versus twenty twenty four's first quarter. In the quarter, selling expense increases associated with the Re Banner strategy were offset by the timing of selling expenses impacting other stores. As a percentage of net sales, SG and A in the quarter was 30.2%, up 2.1 percentage points from last year.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

That increase is reflective of rebanner costs in the quarter, including store closing costs, amortization of new store construction costs and customer acquisition costs. Our first quarter tax rate was 28.1% compared to 25.4% last year. This increase resulted from discrete adjustments this year and last year related to share settled equity awards. We anticipate a tax rate in a range around 26% for all of fiscal twenty twenty five. Regarding the rebanner initiative that Mark outlined, we continue to expect 30,000,000 to $40,000,000 of capital expenditures to complete the 75 rebanners this year.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

During first quarter twenty twenty five, capital expenditures were $10,000,000 for rebanners. In addition, we continue to expect the P and L investment of between 20,000,000 and $25,000,000 inclusive of amortization of the CapEx investments, other new store opening costs and customer acquisition costs, sales reductions during the four to six week period while the Shoe Carnival store is closed and the Shoe Station stores grand opened and write offs of existing assets. We continue to expect this 20,000,000 to $25,000,000 P and L investment to decrease our operating income in fiscal twenty twenty five compared to fiscal twenty twenty four in a range around $0.65 per share. The amount of the P and L investment estimated during the quarter was in line with expectations at approximately $5,500,000 on a pretax basis or $0.15 per share inclusive of an approximate one percentage point decrease in our sales and an approximate two percentage point increase in our SG and A as a percent of net sales. When we analyze our capital allocation options, this two to three year payback period on this P and L investment makes the Re Banner initiative the most compelling use of our resources.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Few retail investments offer this combination of reasonable payback, proven execution and strategic alignment. Moving on to our outlook. As Mark indicated, we are reaffirming our annual fiscal twenty twenty five outlook, which calls for net sales of $1,150,000,000 to $1,230,000,000 representing a range of down 4% to up 2% versus fiscal twenty twenty four GAAP EPS in a range of $1.6 to $2.1 gross profit margins in a range of 35% to 36% SG and A in a range of $350,000,000 to $360,000,000 and CapEx in a range of $45,000,000 to $60,000,000 with 30,000,000 to $40,000,000 for rebanners. As a result of the changes taking place in fiscal twenty twenty five, we are providing additional information on the second quarter. For Q2 specifically, we are forecasting net sales in a range of $310,000,000 to $320,000,000 and EPS in a range of $0.55 to $0.65 We expect our Q2 gross profit margins to be in a range of 36% to 36.5%.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

As Mark noted, we expect a moderating trend in our sales declines in the back half of the year. This moderating decline results from our rebannered strategy and continued success in event period shopping. As more stores are rebannered, we expect that Shoe Station scale will eventually begin to more substantially offset the industry declines impacting Shoe Carnival. Second, we are cautiously optimistic for a back to school shopping season that results in market share gain reflecting Shoe Station momentum and a compelling fresh assortment of branded merchandise. We expect this moderating sales trend in the back half of the year to be coupled with stable to improving margins as reflected by the value and strength of our inventory positions.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

As noted, we do expect our SG and A to increase in Q2 and Q3 above the $84,000,000 expensed in Q1, reflective of the timing of our planned operating expenses. However, if these moderating trends do not present within the expected timeframe, the low end of our EPS guidance is a potential outcome. In summary, our first quarter results demonstrate our ability to execute effectively in a challenging retail environment. While our profits are down year over year due to planned investments and industry headwinds, our outperformance versus expectations reflects the early promise of our strategic direction. The Re Banner initiative with its compelling two to three year payback period combined with our strengthened balance sheet provides us with a clear path forward despite current challenges.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

We remain confident that these investments though impacting near term profitability position us for more sustainable performance as we progress through our transformation. We are seeing encouraging early results with sharp sales gains over 20% better than Shoe Carnival in the quarter. Higher average unit retail selling prices from the branded assortment, accretive margins from re bannered store locations and increased profit contribution driven by controlled cost and stable labor efficiency metrics. Before I turn the call back to Mark for closing remarks and opening the line for questions, I would like to remind everyone that our Annual Meeting of Shareholders will be held on 06/25/2025. Information about the Annual Meeting and related material, including our proxy statement and annual report, can be found on our Investors website. Mark?

[Mark Worden, President & CEO at Shoe Carnival]

Thank you, Patrick. Before we open the call for questions, I want to emphasize the key takeaways that I believe are most important about our first quarter results and strategic direction. First, our Shoe Station growth approach is working and working exceptionally well. The rebanner initiative has consistently yielded double digit sales growth and accretive merchants across diverse market types. This isn't just a regional success story limited to The Gulf States.

[Mark Worden, President & CEO at Shoe Carnival]

We're seeing this performance in suburban markets, rural communities and even in areas with more diverse demographics. The data is compelling and provides us with the confidence to accelerate this transformation. Second, we're implementing a disciplined approach to capital allocation. As Patrick outlined, the two to three year payback period on our rebanner investments makes this the best use of our capital. We're making these investments from a position of financial strength with growing cash reserves and zero debt allowing us to pursue both organic growth and potential M and A opportunities when the right valuation presents itself.

[Mark Worden, President & CEO at Shoe Carnival]

Third, we're executing inventory decisions that provide both defensive protection and offensive opportunity. In the current uncertain environment, we've secured key products at favorable cost, ensuring we'll be in stock for our customers while potentially benefiting from margin expansion if cost rise. Importantly, we've managed to increase inventory while simultaneously growing our cash position, a testament to our disciplined financial management. Fourth, while industry wide pressures continue to affect the lower income consumer, we're seeing encouraging signals in our business. Shoe Station's consistent superior performance demonstrates that our premium offering resonates with customers who remain willing to spend on quality branded footwear.

[Mark Worden, President & CEO at Shoe Carnival]

The early success of our rebanner initiative in diverse markets suggests there's broader appeal for the shoe station concept than we initially anticipated. Finally, I want to emphasize that we're building for the long term while producing near term results. Our profits outperformed expectations this quarter despite deliberate investments in our future. We believe the aggressive acceleration of our rebetter initiative puts us on a path to generate total company comparable store growth starting in Q3 of twenty twenty six, with Shoe Station representing over 80% of our store base by March 2027. This is a pivotal moment for our company as we transform from a traditional family footwear retailer to a premium focused national leader in footwear.

[Mark Worden, President & CEO at Shoe Carnival]

Our strong balance sheet, proven rebanner playbook and experienced leadership team position us well to execute this vision despite the challenging environment. With that, we'd be happy to take your questions. Operator, please open the line up for Q and A.

[Operator]

We will now begin the question and answer session. Our first question comes from the line of Sam Poser with Williams Trading. Please go ahead.

[Sam poser, Equity Analyst at Williams Trading LLC]

Good morning. Thank you for taking my questions. I guess I have two that are top of mind. Number one, with the decision the decision to expand Shoe Station stores is more quickly, is this really a situation where you're seeing the the the outperformance there? You're also looking at the competitive set because if I think of, you know, Shoe Carnival goes up against I mean, I'll just name names, Shoe Show, Rack Room, Famous Footwear, Kohl's, maybe Shoe Sensation, while and and then DSW to a degree.

[Sam poser, Equity Analyst at Williams Trading LLC]

But then you have Shoe Station that goes more directly up against, let's say, a DSW and a Nordstrom rack. And while it does compete to some degree with those others, it's less so. So this can be more of a standalone situation and then looking at the private, your private label, private brand exposure there, as you mentioned, you really don't have, you know, a wholesale component of your business either. So, I mean, how much of that, you know, sort of do you think is forming the outperformance and then informing the decisions that you're making?

[Mark Worden, President & CEO at Shoe Carnival]

Hi, Sam. It's Mark. Thanks for that great question. I think you characterized it well, and I build one thought. For Shoe Station, we see a lot of white space nationally where the competitive set is not completely fulfilling what that higher end customer wants.

[Mark Worden, President & CEO at Shoe Carnival]

And, you know, when we looked at it, we really see that the moderate department store The moderate department store is really where we've seen that person looking for a place to shop. And that off mall, large square foot store with, you know, higher end premium brand performance running, women's is an unmet need that we are seeing, whether it's rural Tennessee or Coastal Florida or as we move through Carolina. The unmet need is really capturing new customers at an exciting rate. So thanks for the question. Think you characterized carnival spot on too.

[Mark Worden, President & CEO at Shoe Carnival]

I think that absolutely is the competitive set, the traditional family footwear. Station's a different animal, higher end, going after white space that we see national over the decade ahead.

[Sam poser, Equity Analyst at Williams Trading LLC]

And I just wanna follow real quick. You mentioned, I, Patrick, when you were going through the you you mentioned that dress shoes did well in Shoe Station. Do you think that that I mean, is is that really part, Mark, of the same is that just another one of sort of a is that another part of that proof point?

[Mark Worden, President & CEO at Shoe Carnival]

Same as Mark. I'm gonna grab that. Absolutely. I think we offer to our customers a dress assortment that's very hard hard to curate in any of the competitive set. Those competitors you mentioned would be the competitive set as well as the mall department stores.

[Mark Worden, President & CEO at Shoe Carnival]

But Tanya's team has got a spectacular women's and men's dress category with exciting brands, high AURs and profitable margins. And that is a great competitive advantage to be able to get nonathletic dress or nonathletic period with the best athletic brands all under one house of brands. But thank you. Two great questions, Sam.

[Sam poser, Equity Analyst at Williams Trading LLC]

Okay. And then lastly, speaking of athletic, one of your competitors is getting the Jordan brand. And, you know, I had thought that sort of Shoe Carnival was probably more of a natural fit there, but and it appears that they have it exclusive for this year. Is that something we're gonna see in the mix next year? And I'll just point this right to Tanya so she could welcome aboard and good luck, and Carl misses you while he's on the beach somewhere.

[Mark Worden, President & CEO at Shoe Carnival]

Hey, I'm going grab that. That is a great brand, which we do not offer today. As always, Sam, we're not going to share forward looking brand information with our competitors on the line, but I'll share two things. We are focused on the hottest category in athletics right now, which is performance running and have the best in class brands, new assortments coming for back to school, and we're gonna be able to continue with that double digit growth trend I talked about a little earlier. Second, and I'm not gonna answer it, but here's how I'm gonna answer it for you.

[Mark Worden, President & CEO at Shoe Carnival]

Our merchant team is always working to add the brands our customers want most. I have no doubt they will secure new brands before fiscal end.

[Operator]

And our next question comes from the line of Mitch Kummetz with Seaport Research Partners. I

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

think I got maybe a handful here. So I hope you'll indulge me. Mark, on the rebannery you provided, especially the three that were kind of rural, lower income, how instructive are those initial results to how those locations might perform on a go forward basis? I'm just curious. Was there any, you know, kind of unusual marketing that was put behind those rebannerings?

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

You know, I'm I'm wondering if maybe the consumers in those markets were kind of attracted to something new in the area. Like, is there anything about the initial results that you wouldn't think would continue, you know, as those stores are in those locations, like, the further down the road we go?

[Mark Worden, President & CEO at Shoe Carnival]

Yeah. I got one that I didn't talk about, but I can build on that. We're just starting to lap the stores we did last year. And so last year, we had a store in Rural America that just did outstanding and got us invigorated to do more and more stores. It's comping up again as we're in year two without, you know, significant activity going on.

[Mark Worden, President & CEO at Shoe Carnival]

And we read that as an incredibly encouraging thing that it grew double digit in its first year, capturing new customers with the new assortments and higher AURs. And in year two, it was able to sustain that. Hey. It's early, and we've got a lot more stores we'll keep evaluating, but we thought that was encouraging. Second, in the Tennessee or Florida example, you know, it's really looking at the competitive set and that we have that unique offering.

[Mark Worden, President & CEO at Shoe Carnival]

Like Sam asked, it really is setting a white space where unless you wanna go to an a or b mall where you could find similar nonathletic products or, say, a big sporting goods where they have outstanding, of course, athletics, We offer all of that stuff under one building. So you don't have to go to a mall and then to a Dick's Sporting Goods. You can come straight to our place and get both of those things.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

So those are some early learnings. We're gonna learn a lot more as we do, you know, the full 75, this year, and, you know, we get towards, well, above 51 at minimum by back to school next year.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

Yep. And then I'm maybe for Patrick, I'm I'm to understand the the the rebannering impact on the p and l for next year. I mean so this year, from an earnings standpoint, it's a 65¢ drag on 75 stores. It looks to me that next year, you're gonna be two x plus in terms of the rebate earnings. So should we think of, like, a dollar 30 net you know, negative drag on EPS?

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

And I would imagine there's some offset to that as you then you know, you're pulling the 65¢ drag out of the business this year and the next year, plus you get the benefit of, you know, the performance of the re bannered stores. Like like, how should I think of it? I think prior to this acceleration like next year kind of looked like it might just be sort of a wash. But now I would think rebannnerings are going to be a drag on next year's earnings. Is that fair?

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

Hey, Mitch. Thanks for the question. We're really excited about the 10% revenue growth that we saw last year on these Re banners and we're excited this year as we continue to see the double digit growth in sales that Mark talked about and seeing down the P and L store level profit contributions also increase. And we pointed to the two to three year payback period and our results early on in this process are continuing to support that. With respect to next year, we've got a number out on the street that was $22,000,000 to $27,000,000 of P and L investment and that was to re banner approximately 100 stores over the entire horizon through March of twenty twenty seven.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

That number has now been accelerated where we would expect to spend those sort of dollars by the end of Q2 in advance of back to school now to meet that 51% goal that we had. So you're correct. All of that all of those costs that we've disclosed previously have been accelerated into the first two quarters. With respect to what happens in Q3 and Q4 and into Q1 of next year, We don't exactly have all of those costs identified and planned out through our process yet. So there's still work for us to do on that front and additional information that we'll provide at a later date.

[Patrick Edwards, Senior VP, CFO, Secretary & Treasurer at Shoe Carnival]

But we do anticipate that there will be more cost beyond the $22,000,000 to $27,000,000 that we've disclosed.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

Got it. That's helpful. Thank you. I just have a few more. On 2Q, you guys provided sales and earnings gross margin guide.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

I'm I'm curious if there's anything you can say in terms of kinda what comp is embedded in that sales range. Is there anything you can say about kinda performance quarter to date?

[Mark Worden, President & CEO at Shoe Carnival]

Hey, Mitch.

[Mark Worden, President & CEO at Shoe Carnival]

I would think through that guidance as a similar comp expectations with True Carnival performing poorly like it has been and True Station outperforming at similar rates we've just disclosed is our baseline assumption.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

Okay. And then, Mark, I know you don't want talk about brands necessarily, but you you you you you in your prepared remarks, you talked about an exciting addition of assortments. And in response to Sam's question, you talked about, you know, on the, performance running side, some new product for for back to school. So is it I mean, is it fair to say that in terms of what your the brands that you're adding for back to school, they're all on the shoe station side. Is that correct?

[Mark Worden, President & CEO at Shoe Carnival]

I'd say that's what I'm most excited about to see our continued strength, and that's our focus, of course, as we progress towards 80% or over 80% of the company being stationed. We're focused on building those relationships with, you know, the world's best brands, ensuring we have all those world's best brands. Some we don't have today, but Tanya is aggressively scouring and meeting with people across all coasts, over the last few weeks, learning, seeing what excites her, getting ready to go.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

And then I guess lastly on the on the tariff side, obviously, you you you guys haven't changed your guidance. I think in your prepared remarks, Mark, you said something like, you know, you haven't experienced any cost increases outside of the guide. That being said, you know, versus when you provided that initial guidance, you know, we're now looking at a 30% China tariff versus 20, and we're now looking at a a 10% universal tariff, which I believe didn't exist when you provided the initial guidance. So is there essentially no change at all in your thinking around tariffs in terms of kind of what vendor pricing might look like as you get further into the year? I know you guys bought brought a lot of inventory in early, but, I mean so so no change at all, or

[Mark Worden, President & CEO at Shoe Carnival]

or is there anything more you can say there? You know, again, I'm gonna be a contrarian here. I I feel really optimistic about how this is playing out. And in the longer term, thoughts for, you know, jobs coming to America is a good thing for our footwear in the long term. In the short term, near term, comparatively, as I said in my prepared remarks, we're not a wholesaler.

[Mark Worden, President & CEO at Shoe Carnival]

So comparatively, we're in great position with what we do, with what we control. And Tanya is doing a fantastic job, you know, working with our partners to help them get some things in here opportunistically. Our balance sheet is very strong and with our cash position, Sonya and I have taken a position of let's bring in key brands, products right this second at attractive prices and have been continuing to do so. Whether that's for BTS or boots or sandals next year, great products at great prices are things I like a lot. So I feel good about all that.

[Mark Worden, President & CEO at Shoe Carnival]

And I said in my prepared remarks, and of course, we're not naive, the vendors have to sort through a myriad of changing fluid things. To date, we've had nothing that surprised us. That could change tomorrow if this is very fluid. But as I sit here today, Mitch, we've seen no cost or price change that materially impact how we think about the shape of the year, how we think about back to school, or how we have a great relationship with any particular partner. So I I feel cautiously optimistic.

[Mark Worden, President & CEO at Shoe Carnival]

The one thing that we don't have a good read on is consumer sentiment. Right? Cost and price isn't what's spooking us. What is, you know, concerning is the endless barrage of the world is ending in the media, and we keep hearing that. It's a very small segment of our shoe carnival customer that is pulling back.

[Mark Worden, President & CEO at Shoe Carnival]

Our shoe station customer is expanding. And so we feel good, but consumer sentiment going into back to school is the one big question mark that we'll learn a lot more about.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

All right. Thanks guys. Good luck.

[Operator]

Our next question comes from the line of Jim Chartier from Monness, Crespi, Heart and Co. Please go ahead.

[Jim Chartier, Analyst at Monness, Crespi, Hardt & Co., Inc]

Hi. Thanks for taking my question. Could you talk about trends during the first quarter? How did March, April compare to February? And then what is kind of the 2Q guidance assumed?

[Jim Chartier, Analyst at Monness, Crespi, Hardt & Co., Inc]

Does it assume the trend for March, April continues or gets better or worse?

[Mark Worden, President & CEO at Shoe Carnival]

Thanks. Jim. It's Mark again. Yeah. February was tough.

[Mark Worden, President & CEO at Shoe Carnival]

As I said, we didn't see an exciting tax miss season this year. As March, April, we look at those combined. We think it's silly logic for people to separate that as Easter shifts later and call victory. We'd say March, April combined was okay. Again, the trends we talked about weren't materially different across.

[Mark Worden, President & CEO at Shoe Carnival]

Carnival did poorly across the months. Station was exciting. Rogan delivered just as we thought. So we didn't have a real material trend. Yes, March, April was better with the holiday there, but nothing I would pound our chest on about exciting consumer sentiment or trends other than what we've said about station.

[Mark Worden, President & CEO at Shoe Carnival]

There's nothing to share early May. We haven't seen any major changes in that. So I'm gonna ask Tanya to maybe just build on, sharing your samples perspective on the first couple of months so that he could hear, hello to our new chief merchant too.

[Tanya Gordon, EVP & Chief Merchandising Officer at Shoe Carnival]

Yeah. Sure. Thanks, Mark. So, just to speak to, sandals, which compromises a a big portion of our women's business, it was a little softer than we initially planned. However, last year was our best sandal our best sandal season that we've had in the history of the company, at least since I've been here, and that's eleven years of sandal season.

[Tanya Gordon, EVP & Chief Merchandising Officer at Shoe Carnival]

So I really I went back and looked at the two year stack. And based on the the two year stack, we were up low double digits. So that makes me pretty happy sitting here today. So feel good that the sandal trend, the seasonal trend is really normalizing, And we've gotten we've enjoyed some increased AURs and increased margins in the sandal category. So feel good about that.

[Jim Chartier, Analyst at Monness, Crespi, Hardt & Co., Inc]

Great. Thank you.

[Operator]

Our next question is a follow-up from the line of Sam Poser with Williams Trading. Please go ahead.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thank you. Real quick, you've guided the full year to be down 4% to up two, and then you called out that and and basically, comp and your store sales growth totaled pretty close. You also said that you anticipate that year over year sales will start to be up in q three twenty six. How how do you get I mean, how do you foresee you even get to this high end of the trend this year? Or are we most likely looking at a down to the four comp kind of situation where q four could be up because you have you'll have you'll have all those conversions up and and you got holiday with more Shoe Station stores open and so on. And that drop and that could offset, you know, on on lessening weakness at Shoe Car.

[Mark Worden, President & CEO at Shoe Carnival]

Clear, Sam. So, Mark, again. We see the pace moderating as the two things you laid out happen. More shoe station percent of total fleet, continued success on that, and that starts to dampen the continued negative results we expect on Carnival. We foresee that when we get to 51% of the fleet being few stations, that Q3 twenty twenty six becomes that pivotal moment where we go comp positive, and we can't wait to get there.

[Mark Worden, President & CEO at Shoe Carnival]

In the back half of the year, you're right. Some things have to go our way for the sales to hit the high end of our guidance. It's not implicit. But, you know, if things were to go our way with, you know, back to school season being not just a market share gain, which we expect, but a consumer sentiment helps us, we can start to see moderating trends towards the flattish results in q three with potential for even better in Q4. That's not our expectation implicit in the mid zone, but is it possible?

[Mark Worden, President & CEO at Shoe Carnival]

Absolutely. As we have very strong market share growth plans that we are confident about for BCF holiday and into next year. But I would think about it more like you said, that mid to lower end of the range is the right way to think about the sales. And I think I addressed it. True Carnival was very much on the low end of our expectations during the start of the year, and we anticipate that likely doesn't change.

[Sam poser, Equity Analyst at Williams Trading LLC]

And then secondly, you how what like, can you talk about your use of of private label both at Shoe Carnival and how and and what's going on with the private label product that you have at Shoe Station? I mean, it's it's like a it it appears to be for a promotional vehicle on key items at Schuh Carnival. I'm wondering what that percent is and then how do you utilize it at station?

[Mark Worden, President & CEO at Shoe Carnival]

I think we're very small percent under 10% is private label and smaller than that. You didn't ask it, and a very small percent has any exposure to the high power country risk. So it's almost de minimis. We we do see a unique role for having private label and shoe stations that provide, you know, women's nonathletic uniqueness and, you know, traffic driving activity as we continue to develop that. So we're excited about the role it can play, but let's make no mistake.

[Mark Worden, President & CEO at Shoe Carnival]

We are a house of brands. Shoe Station is a house of the best brands. That's our vision, and private label will be a small place to fill in maybe a price point, maybe a promotional point, or something unique. But we will have the best brands at high AURs and robust margins at Shoe Station.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thank you very much.

[Mark Worden, President & CEO at Shoe Carnival]

Thank you, Sam.

[Operator]

Our final question is a follow-up from the line of Mitch Kummetz with Seaport Research Partners. Please go ahead.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

Yes. Thanks again. Mark, you made the comment that you will be evaluating whether or not it makes sense for Shoe Station to become a % of the total business. When I when I kinda do my math on store count, you know, assuming that the four twenty nine sort of stays four twenty nine over the next couple of years, Rogan stays around 28, and you grow station to be 80% of the total. That that that puts Carnival down to, like, around 60 stores or some somewhere in that neighborhood.

[Mitch Kummetz, Senior Analyst at Seaport Research Partners]

I don't know if you can endorse the math, but if that is somewhat correct, does it make sense for Shoe Carnival to be a 60 store concept? And if it if it at at that level, it seems like it would have to be very concentrated within just a few days. I wouldn't think that that would make sense to have, like, 60 ish stores over, you know, 20 something states across The US. Can you say anything along about that?

[Mark Worden, President & CEO at Shoe Carnival]

Yeah. Happy to, Mitch. So your math's not wrong. It'd be under a hundred stores for the Shoe Carnival banner by the time you get to March 2027 on this announcement, so that's accurate. And you're right.

[Mark Worden, President & CEO at Shoe Carnival]

There will be significant synergy, internal efficiencies that can be gained if we learn that the Schuh Carnival banner customers can better be served by Shoe Station in those particularly urban markets concentrated with lower income diverse households. And we believe it is a high possibility it can, but we don't have to prove points for me to say it today, and I don't wanna get ahead of myself. But I wanna be real transparent. I like the potential synergies that could come from that. We are going to answer that question within market data to see if that's the right path for our customers and shareholders.

[Mark Worden, President & CEO at Shoe Carnival]

I hope that is the outcome that the data shows us because that leads to an even more profitable 2027 and beyond for our corporation. But I don't know now. We'll take the steps to do that at latest by early twenty twenty six. And if opportunity presents towards the end of this fiscal year, we might get an early start in trying to learn that. So great question. More to come after back to school.

[Operator]

And that will conclude our question and answer session. And I will now hand the call back over to Mark Worden for closing remarks.

[Mark Worden, President & CEO at Shoe Carnival]

Thank you for your questions and joining us today. I hope you can hear we are incredibly excited about our news that Shoe Station is working incredibly well with customers, our partners, and our stakeholders, and we are accelerating this to be the largest portion of our corporation and we believe the fastest growing. It's our path back to comp growth as we get into the back half of '26 and profit accretion is on the horizon as we look to '27. It's a big investment now, but it's absolutely the right thing as we pursue, you know, being the leading family footwear across America. I wanted to take the chance again to welcome Tanya to our leadership team.

[Mark Worden, President & CEO at Shoe Carnival]

So excited to have her here and for all of you to get to know her. So wishing you all a great summer, and we'll talk to you after back to school.

[Operator]

This concludes today's conference call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Mark Worden, President & CEO
• Patrick Edwards, Senior VP, CFO, Secretary & Treasurer
• Tanya Gordon, EVP & Chief Merchandising Officer

Analysts

• Sam poser, Equity Analyst at Williams Trading LLC
• Mitch Kummetz, Senior Analyst at Seaport Research Partners
• Jim Chartier, Analyst at Monness, Crespi, Hardt & Co., Inc