Shares of Shoe Carnival (NASDAQ: SCVL) rallied by 18% on Thursday after the footwear retailer reported second-quarter 2025 earnings that exceeded profit forecasts, overshadowing weaker revenue and a reduction in full-year sales guidance.
Strong earnings, weaker sales
The company posted earnings per share (EPS) of $0.70 for the quarter, surpassing consensus estimates by 12.9% and well above Wall Street’s $0.62 forecast.
The result marked a notable improvement in profitability even as revenue fell 7.9% year-on-year to $306.4 million, missing expectations of $318.3 million.
Gross profit margins expanded to 38.8%, up 270 basis points from a year earlier, as Shoe Carnival leaned on disciplined cost management and strategic inventory initiatives.
Same-store sales declined 7.5% compared to the prior year, reflecting ongoing pressures in consumer demand.
In the second quarter, Shoe Station reported a 1.6% increase in sales, while Shoe Carnival experienced a 10.1% decline as lower-income consumers remained under pressure.
Rogan’s generated more than $20 million in sales, in line with integration objectives.
Shoe Station delivered notable growth in children’s and adult athletic categories, coupled with margin expansion.
Both Shoe Carnival and Rogan’s also recorded comparable sales growth, reinforcing the company’s rebanner strategy.
Despite the revenue shortfall, the market reacted positively. Shares jumped 18.07%, reaching $25.42.
Shoe Carnival has increasingly focused on higher-margin categories and the expansion of its Shoe Station concept, aimed at attracting higher-income households.
The strategy is beginning to show traction, particularly in children’s and athletic footwear.
Outlook and guidance
Looking ahead, Shoe Carnival lowered its full-year revenue forecast to a midpoint of $1.14 billion, down from $1.19 billion previously.
The company now expects net sales between $1.120 billion and $1.150 billion.
Comparable store sales are projected to shift from high single-digit declines to low single-digit declines, supported by a gross margin outlook of 36.5% to 37.5%.
Despite the trimmed sales outlook, the company raised its annual EPS guidance to a range of $1.70 to $2.10 per share, above analysts’ expectations.
Management pointed to ongoing strategic initiatives as drivers of improved profitability.
CEO Mark Worden emphasized the company’s rebannered strategy and focus on premium brands, noting: “We set out to build a company that serves median income families with better brands and better experiences. Our rebannered strategy is working.”
Risks ahead
While the results and guidance highlight resilience, risks remain.
Potential supply chain disruptions, inflationary pressures, and a competitive retail landscape could weigh on future performance.
The broader footwear market also faces saturation risks, with peers engaging in aggressive pricing strategies.
Nonetheless, Shoe Carnival’s ability to expand margins and deliver earnings growth amid declining sales has reassured investors.
With strategic initiatives underway and financial strength to support its outlook, the company has positioned itself to navigate a challenging retail environment while sustaining shareholder confidence.
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