Shoe Carnival Plots ‘Rapid’ Growth Strategy For Shoe Station Banner as It Reports Q4 Earnings
Shoe Carnival is doubling down on its Shoe Station banner this year as the company looks to capitalize on the chain’s success in fiscal 2024.
The retailer is implementing a long-term strategy to “rapidly scale up” Shoe Station, which it acquired in 2021, into a “national footwear and accessories leader.” The company noted that the first investment phase is to convert 175 stores to the Shoe Station banner over the next 24 months. Once this phase is complete, the company noted that it expects to operate 218 Shoe Station stores, representing 51 percent of the its present store fleet.
During fiscal 2025, the company noted that it expects to convert between 50 to 75 Shoe Carnival units to Shoe Station stores. The first-year investment is forecasted to decrease fiscal 2025 operating income by between $20 million to $25 million, inclusive of store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store’s grand opening and customer acquisition costs.
Shoe Carnival added that it expects this first-year investment will be recovered over a two-to-three-year period following a store’s grand opening. In fiscal 2027, the company expects that net sales from these converted stores will be over 10 percent higher and profit contribution will increase over 20 percent compared to the previous stores.
In fiscal 2026 and early fiscal 2027, the company said that the plan is to scale up further and complete 100 or more conversions with a first-year investment forecast between $22 million to $27 million and a similar path to payback of the investment of approximately two-to-three years.
This move follows a 10 store in-market test that was completed over the past year, where underperforming Shoe Carnival stores were closed, and new Shoe Station stores were opened in those markets. The company said that the customer response and business results “exceeded” its expectations on an aggregated basis with sales and profit contribution over 10 percent higher at the new Shoe Station stores versus Shoe Carnival stores.
Thursday’s growth strategy announcement comes at the same time the footwear retailer reported its fourth quarter 2024 and fiscal year-end results.
Net sales in fourth quarter 2024 were $262.9 million, compared to $280.2 million in the same time last year. Net income in Q4 was $14.7 million, or 53 cents per diluted share, compared to net income of $15.5 million, or 57 cents per diluted share, the same time last year.
The company noted that the impact of the extra 53rd week and the retail calendar shift benefited fourth quarter 2023 by approximately $20 million. Without this benefit, net sales otherwise increased in Q4 2024 by approximately $2 million, primarily driven by Shoe Station, the Rogan’s acquisition in 2024, and growth during both the November and December holiday shopping periods.
For the full year, Shoe Carnival saw net sales increase 2.3 percent to $1.20 billion, compared to $1.18 billion in fiscal 2023. Net income for fiscal 2024 grew to $73.8 million, or $2.68 per diluted share, compared to net income of $73.3 million, or $2.68 per diluted share, in the prior year.
This increase resulted from continued growth from Shoe Station’s 5.7 percent net sales growth and over $80 million in net sales from Rogan’s. These areas of growth were partially offset by a 3.9 percent comparable store sales decline, driven by Shoe Carnival declines during nonevent periods, the company noted.
“For the 20th consecutive year, we ended the year with no debt and cash flow generation that fully funded our growth initiatives, acquisitions, and operations,” Mark Worden, president and chief executive officer of Shoe Carnival, said in a statement. “We completed a full year of in-market testing for our Shoe Station growth strategy, and the customer response drove results that exceeded my expectations.”
Looking ahead, the company expects net sales in fiscal 2025 to be between $1.15 billion and $1.23 billion, representing a range of down 4 percent to up 2 percent versus fiscal 2024. Earnings per share for the year are expected to be in the range of $1.60 to $2.10.