Executive Summary

Q1 FY2026 EPS of $0.34 beat S&P Global consensus $0.30 by ~13%; revenue of $277.7M was slightly below $280.7M consensus, while comps declined 8.1% as Shoe Carnival underperformed and Shoe Station outgrew the market . EPS consensus and revenue consensus from S&P Global: $0.297* and $280.7M*.
Gross margin was 34.5% (down 110 bps YoY) as merchandise margin rose 50 bps but BD&O deleverage on lower sales reduced GM by 160 bps; SG&A was flat YoY in dollars but rose to 30.2% of sales on rebanner costs .
Management reaffirmed FY2025 guidance (sales $1.15–$1.23B, EPS $1.60–$2.10, GM 35%–36%, SG&A $350–$360M, capex $45–$60M) and guided Q2 sales to $310–$320M, EPS $0.55–$0.65, GM 36%–36.5% .
Strategic pivot accelerated: Shoe Station to >80% of fleet by March 2027 (from 51% prior target), with Shoe Station +4.9% sales and positive comps in Q1 versus Shoe Carnival sales -10%; leadership expects company-wide comp growth to resume in Q3 FY2026 as mix shifts .

What Went Well and What Went Wrong

What Went Well
- Shoe Station outperformed: sales +4.9% YoY with positive comps, higher AUR, accretive product margins, and double‑digit store-level profit contribution increases; rebanner stores generated ~20%+ better sales than prior Shoe Carnival format across diverse markets .
- Merchandise margin expanded +50 bps despite a tough backdrop; EPS beat market expectations by ~10% per management .
- Financial flexibility intact: no debt; cash, cash equivalents and marketable securities increased ~$23.5M YoY to ~$93M; inventory invested early to secure costs and in-stocks for BTS/holiday .
What Went Wrong
- Top-line and comps: total sales -7.5% YoY to $277.7M; comparable sales -8.1% as the lower-income Shoe Carnival customer remained cautious and tax refund season was muted .
- Gross margin pressure: GM 34.5% (down 110 bps YoY) due to 160 bps BD&O deleverage on lower sales despite +50 bps merchandise margin .
- Category softness: women’s non-athletic comps down mid‑teens; children’s low‑teens; men’s non‑athletic low‑single-digit decline; Shoe Carnival comps down high‑single-digits; athletic outperformed but was still down mid‑single-digits overall (Shoe Station athletic grew low‑teens) .

Financial Results

Metric	Q1 FY2025 (May 4, 2024)	Q4 FY2025 (Feb 1, 2025)	Q1 FY2026 (May 3, 2025)
Revenue ($M)	$300.4	$262.9	$277.7
Gross Profit Margin %	35.6%	34.9%	34.5%
SG&A ($M)	$84.3	$77.6	$83.8
Operating Income ($M)	$22.5	$14.0	$12.0
Diluted EPS ($)	$0.63	$0.53	$0.34
Comparable Store Sales %	n/a	n/a	-8.1%

Segment/banners and KPIs

Banner trends (YoY): Shoe Station net sales +4.9%, positive comps; Shoe Carnival net sales -10.0%; Rogan’s >$19M sales both in Q1 FY2026 and prior-year Q1 .
Mix and category shares: Athletic 46% of revenue (mid‑single-digit decline overall; Shoe Station athletic grew low‑teens), Women’s non‑athletic 24% (mid‑teens decline), Men’s non‑athletic 7% (low‑single-digit decline), Children’s 18% (low‑teens decline; Shoe Station kids low‑single‑digit decline) .

Estimates vs. Actuals (S&P Global)

Metric	Consensus	Actual	Surprise
EPS	$0.297*	$0.34	+$0.043 (~+14%)*
Revenue ($M)	$280.7*	$277.7	-$3.0 (~-1.1%)*
Values retrieved from S&P Global.*

Why: EPS beat driven by +50 bps merchandise margin, accretive Shoe Station mix, and controlled SG&A dollars despite elevated % from rebanner costs; revenue headwind from Shoe Carnival banner and cautious lower‑income consumer offset Shoe Station strength .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	$1.15B–$1.23B	$1.15B–$1.23B	Maintained
GAAP EPS	FY2025	$1.60–$2.10	$1.60–$2.10	Maintained
Gross Profit Margin	FY2025	35%–36%	35%–36%	Maintained
SG&A	FY2025	$350M–$360M	$350M–$360M	Maintained
Capital Expenditures	FY2025	$45M–$60M (incl. $30M–$40M rebanners)	$45M–$60M (incl. $30M–$40M rebanners)	Maintained
Q2 Net Sales	Q2 FY2025	n/a	$310M–$320M	New Detail
Q2 EPS	Q2 FY2025	n/a	$0.55–$0.65	New Detail
Q2 Gross Margin	Q2 FY2025	n/a	36.0%–36.5%	New Detail
Rebannering P&L Impact	FY2025	OI down $20M–$25M; ~-$0.65 EPS	OI down $20M–$25M; ~-$0.65 EPS	Maintained

Additional strategic guidance

Fleet mix: target >80% Shoe Station by March 2027; at least 51% by July 2026 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY2025, Q4 FY2025)	Current Period (Q1 FY2026)	Trend
Shoe Station rebanner/expansion	Pilot rebanners exceeded criteria; plan +25 more 1H FY2025	Accelerate to 75 rebanners in FY2025; >80% of fleet by Mar-2027; positive comps; +4.9% sales	Strongly positive acceleration
Inventory/costs/tariffs	Built inventory late FY2024 anticipating tariffs; still no debt	Elevated inventory to secure costs; no material vendor cost surprises yet; strong in-stock for BTS/holiday	Defensive + opportunistic
Macro/consumer	Hurricanes, warm weather affected Q3; Carnival pressured in nonevent periods -	Lower-income customer cautious; muted tax refund; expect moderating declines 2H	Mixed, cautious
Category performance	GM >35% streak; growth in event periods	Athletic resilient (46% mix), Shoe Station athletic +low‑teens; women’s non-athletic weaker	Mixed category divergence
M&A strategy	Rogan’s synergy > plan; M&A a growth lever	Pursue scale-changing M&A alongside rebanner	Ongoing interest
Capital returns	Dividend increased to $0.15; no buybacks; $50M authorization	Dividend maintained; Q2 dividend declared $0.15 on 6/30/25	Stable dividend policy

Management Commentary

“Profits outperformed expectations by approximately 10% despite the challenging macroeconomic and retail environment.”
“Shoe Station grew sales 4.9% for the quarter… in stark contrast to the family footwear industry and Shoe Carnival trends.”
“Shoe Station will represent over 80% of our store fleet by March 2027… By July 2026, at least 51% of our current store fleet will operate [as] Shoe Station.”
“Q1 gross profit margin was 34.5%… BD&O resulted in 160 basis points of the decrease… merchandise margins were higher… by 50 basis points.”
“We ended the quarter with $93 million in cash, cash equivalents, and marketable securities… We also continue to have no debt.”

Q&A Highlights

Competitive positioning: Shoe Station targets higher-income and premium brands, addressing white space vs. traditional family footwear; strong dress and performance running assortments seen as differentiators .
Rebannering P&L drag and cadence: FY2025 drag ~$0.65 EPS; acceleration pulls $22–$27M of future P&L investment into 1H to reach 51% mix by July 2026; additional costs for late FY2025/FY2026 TBD .
Tariffs: No material vendor cost/price changes beyond what’s contemplated in guidance; early inventory buys to secure costs; biggest variable is consumer sentiment into BTS .
Potential for 100% Shoe Station: Under evaluation; if data supports serving urban low‑income markets better with Station, synergies/efficiencies could be meaningful; by Mar-2027 Carnival likely <100 stores .

Estimates Context

EPS beat and revenue slight miss versus S&P Global consensus: $0.34 vs $0.297 EPS*, $277.7M vs $280.7M revenue* . Values retrieved from S&P Global.*
Implications: modest top‑line underperformance offset by mix/margin execution and controlled SG&A dollars; near‑term Street EPS likely nudged up for FY2025 low-to-mid range given Q2 guide and reaffirmed FY outlook, while revenue estimates may remain conservative given Carnival pressure and comps backdrop .

Key Takeaways for Investors

Acceleration to a premium-heavy fleet is the core thesis: Shoe Station’s ongoing outperformance, scale-up to >80% by 2027, and positive comps support mix-led margin durability and a return to comp growth by Q3 FY2026 .
Near-term P&L dilution (~$0.65 EPS in FY2025) is a deliberate investment with 2–3 year payback; Q2 guide suggests improving GM to 36–36.5% as mix/cost positions help .
Balance sheet optionality (no debt, ~$93M liquidity) enables opportunistic inventory positioning and potential M&A without leverage-driven constraints .
Watch catalysts: vendor brand additions in performance running; Station expansion cadence (20 in Q2, 25 in Q3); BTS share gains; and any early read on Station’s performance in new/urban markets .
Risks: sustained weakness of lower‑income consumer at Carnival; BD&O deleverage if sales remain soft; tariff/regulatory volatility; execution risk in rapid rebannering -.
Trading setup: EPS beat vs. slight revenue miss, reaffirmed FY guide, and expanded Station ambition skew narrative constructive; evidence of Station-driven comp inflection or Q2 margin delivery (36%+) likely to be incremental positives .

SHOE CARNIVAL INC (SCVL)·Q1 2026 Earnings Summary