Shoe Carnival has reported a mixed performance in its second quarter of FY25, with strong margin expansion offset by declining sales. 

The retailer’s gross profit margins improved by 270 basis points to 38.8 per cent, marking” its strongest Q2 margin in years”. However, net sales fell 7.9 per cent to $306.4 million, with comparable store sales declining 7.5 per cent.

This sales downturn was primarily driven by a high-single-digit drop at traditional Shoe Carnival stores, while Shoe Station locations remained stable.

As of August 2, Shoe Carnival operated 428 stores, including 87 Shoe Station locations. The company plans to increase this number to 145 by the end of fiscal 2025, with a long-term goal of surpassing 215 Shoe Station stores by Back-to-School 2026.

Central to its growth strategy is accelerating the rebanner initiative, which involves converting legacy Shoe Carnival stores into the Shoe Station brand. The company completed 20 such conversions during the quarter and plans an additional 58 in the second half of the fiscal year.

“Through year-to-date August, the Shoe Station banner is outperforming the Shoe Carnival banner by a wide margin, with margins up sharply over last year,” said Mark Worden, president and CEO.

“By Back-to-School 2026, Shoe Station will be our majority concept, positioning us for sustained growth with a higher-income customer base, stronger margins, and improved returns.”

Looking ahead, the company expects net sales between $1.12 billion and $1.15 billion, slightly below the previous guidance of $1.15 billion to $1.23 billion. 

The company anticipates that sales declines will ease in the second half, fueled by the rebanner strategy’s momentum and strong event-driven performance, including positive comparable sales in August.