Q1 2026 Shoe Carnival Inc Earnings Call
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.
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.
Operator: 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. 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.
These risk factors could cause the company's actual results to be materially different from those projected in such statements.
We're looking statements you 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.
Operator: 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.
Speaker Change: Company disclaims any obligation to update any other risk factors or to publicly announce any revision to the forward looking statements discussed on today's conference call or contained in todays press release to reflect future events or developments I will now turn the conference over to Mr. Mark Worden, President and CEO of shoe Carnival for opening remarks.
Operator: I will now turn the conference over to Mr. Mark Worden, President and CEO of Shoe Carnival for opening remarks. Mr. Worden, you may begin.
It's awarded you may begin.
Mark Worden: Good morning, everyone. And thank you for joining us today for Shoe Carnival's first quarter 2025 earnings conference call.
Good morning, everyone and thank you for joining us today for shoe carnivals first quarter 2025 earnings conference call.
Mark Worden: Joining me on today's call are Patrick Edwards, Chief Financial Officer, and Tanya Gordon, Chief Merchandising Officer. The company's first quarter 2025 results were better than expected, with profits outperforming expectations by approximately 10%. Our re-banner 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.
Speaker Change: Joining me on todays call are Patrick Edwards, Chief Financial Officer, and Tom You Gordon Chief Merchandising Officer.
The company's first quarter 2025 results were better than expected with profit outperforming expectations by approximately 10%.
Speaker Change: A rebound or expansion plans delivering outstanding results in our debt free balance sheet getting even stronger.
Speaker Change: 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.
Mark Worden: And 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. 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 Our Q1 financial results landed squarely within our annual guidance range. 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.
Speaker Change: It 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 cost have not skyrocketed.
Speaker Change: I would like to thank our vendor partners for their close collaboration and our merchant organization under Tony's leadership for their tireless work, ensuring we have our best foot forward for customers during back to school.
Speaker Change: Our Q1 financial results landed squarely within our annual guidance ranges we.
Speaker Change: We have not yet experienced nor do we have visibility to any massive product cost or price increases outside of range is considered in our guidance.
Mark Worden: This could evolve, but that is the situation now.
Speaker Change: Could evolve but that is the situation now.
Mark Worden: Our singular corporate focus is to be the nation's leading footwear retailer for families. 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. 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.
Speaker Change: Our singular corporate focus is to be the nation's leading footwear retailer for families.
Speaker Change: 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.
Speaker Change: However, we enjoy a superior position compared to our competitors for two reasons.
Speaker Change: We do not have direct manufacturing exposure.
Speaker Change: Second we're not locked into our own production commitments that could force uncompetitive decisions.
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.
Mark Worden: 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.
Given all these variables the executive team does not view it appropriate to withdraw 2025 guidance and today are reaffirming our annual profit guidance, that's the most likely outcome.
Mark Worden: Turning to specifics at the quarter. Similar sales trends to last year continue to cross our banners and the family footwear Shoe Station achieved industry-leading growth again this quarter, and Rogans produced solid, profitable results in line with our integration and synergy plan. Shoe Carnival 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 shoe carnival lower income house 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.
Speaker Change: Turning to the specifics of the quarter.
Speaker Change: Similar sales trends to last year continued across our banners in the family footwear industry shoe station achieved industry, leading growth again, this quarter and rogen produced solid profitable results in line with our integration and synergy plans.
Speaker Change: Shoe carnival declines similar to the industry and consistent with our annual guidance, albeit on the lower side of sales ranges for carnival.
Speaker Change: Our teams observe the cautious customer during the quarter with the shoe Carnival lower income households.
Speaker Change: 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.
Mark Worden: As previously shared, I do not anticipate that 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. The organization's organic growth approach remains focused on expanding ShoeStation 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 branded assortments for both non-athletic and athletic branded footwear, high levels of service, and a welcoming contemporary shopping environment.
As previously shared I do not anticipate a shoe carnival, nor the family footwear industry returned to profitable sales growth in the near term based on the current external conditions and soft consumer confidence we are seeing however.
Speaker Change: However, implicit in our guidance range as a moderating sales decline trend back half of the year, primarily driven by Schuh station momentum and expansion compelling back to school Assortments and encouraging progress on trade negotiations.
Speaker Change: 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.
Speaker Change: Shoes station is our premium retail banner, attracting higher income households, providing customers the top branded assortments for both non athletic and athletic brands had footwear high levels of service and a welcoming contemporary shopping environment.
Mark Worden: It is a market leader in the Gulf of America region. And as we rebattered shoe carnival stores to shoe station stores in existing markets, we expected a positive customer response.
Speaker Change: As a market leader in the Gulf of America region, and as we re battered shoe carnival stores to choose station stores in existing markets. We expected a positive customer response, and we achieve them.
Mark Worden: And we achieved Since our last earnings call, the re-banner 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, Shoe Station grew sales 4.9% for the quarter, driven by the re-banner approach, growing sales, low double-digit 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.
Speaker Change: Since our last earnings call. The rebound in results continued 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.
Speaker Change: First choose station grew sales four 9% for the quarter driven by the re banner approach growing sales low double digits.
Speaker Change: 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 digit store in Q1. This creates an exciting national growth opportunity to scale up shoes station store counts.
Speaker Change: To drive the overall corporation sales and profit growth impact.
Mark Worden: Previously, the leadership team shared a range for our shoe station rebounder plans between 50 and 75 stores during fiscal 2025. Based on the continued sharp, superior performance of Shoe Station vs. The Industry and Shoe Carnival, we will complete all 75 re-banners this year, the top point of the range. These 75 stores will be completed on the following quarterly cadence. Twenty-four were completed during Q1. Twenty will be completed in Q2, of which three are completed. Twenty-five 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.
Speaker Change: Previously the leadership team shared a range for our shoe station rebound or plans between 50 and 75 stores during fiscal 2025.
Speaker Change: Based on the continued sharp superior performance of shoes station versus the industry and shoe Carnival, we will complete all 75 re banners. This year the top point of the range.
Speaker Change: These 75 stores will be completed on the following quarterly cadence.
Speaker Change: 24 were completed during Q1 'twenty will be completed in Q2 of which three are completed.
Speaker Change: <unk> 25 will be completed during Q3 and six will be completed in Q4 two.
Speaker Change: 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 2025.
Mark Worden: Today, we operate 70 shoe station stores, representing 16% of the fleet, and we plan to end fiscal 2025 with approximately 120 shoe station stores, representing 28% of the fleet.
Speaker Change: With approximately 120, <unk> station stores, representing 28% of the fleet.
Mark Worden: Given this rapid growth of ShoeStation, we will plan to disclose the Banner's 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. The corporation has already extended 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 shoe stations should also surpass shoe carnivals, and those are being re-battered now.
Speaker Change: Given this rapid growth a few station we will plan to disclose the banner sales growth ongoing starting now.
Speaker Change: Each month, our teams are discovering valuable insights to help us optimize our rollout plans as we enter new markets. The corporation has already expanded significantly into new markets in Alabama, Mississippi, Georgia, Louisiana, South Carolina, Tennessee, and Florida and will further extend.
Speaker Change: Our presence.
Speaker Change: As operations move beyond core markets into new states, the customer and market data highlighted a large set of stores with similar dynamics, where shoe station should also surpassed shoe carnival and those are being re banner now.
Mark Worden: I would like to share four brief examples from Q1's Doors 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. 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 station thrives in.
Speaker Change: I would like to share four brief examples from Q1 stores re battered the highlight real world learnings and what we're doing with those expanded insights as we move forward.
Speaker Change: Number one.
Speaker Change: Eustachian entered the Atlantic Coast of Florida, a very large opportunity for future growth the.
Speaker Change: The team re battered and underperforming shoe carnival store in a new market far from any other shoe station store.
Speaker Change: This market has demographics that appeared on paper should work far better as a station a more affluent trade area skewed older customer base and added Beachy vibe similar to many areas station pricing on paper the stores prototypical of one we expect to hit at least doubled in baseball terms, but we hit a home run here with <unk>.
Mark Worden: 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 a creative margin. Our action step from this learning, the organization will continue re-bannering and expanding in markets like this one on the East Coast.
Speaker Change: Sales growth over 20% strong AUR growth from a superior brands that assortment and accretive margins.
Speaker Change: Our action step from this learning the organization will continue re battering and expanding in markets like this one on the east coast.
Mark Worden: Number two, Shoe Station 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. 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 the 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 creative margins. Number three, the team executed the same type of re-banner in a rural market in Alabama and results were even stronger.
Speaker Change: Or to choose station entered a new rural market in Tennessee.
Speaker Change: Or an hour from any major city.
Speaker Change: This was previously an average performing shoe carnival store with typical rural community demographics.
Speaker Change: Customer data alone didn't clearly indicate which banner we performed better however, our analysis of local competition and available product assortments in that area pinpointed a gap the shoe stations unique merchandise mix could fill in our prediction was accurate with sales growing over 20% versus the prior year and again.
Speaker Change: Higher AUR and accretive margins.
Speaker Change: Number three the team execute the same type of re banner in a rural market in Alabama and results were even stronger.
Mark Worden: These home runs in rural markets, where the brand has awareness and also where it does not, gives us confidence to action re-bannering our shoe carnival stores across rural markets in America.
Speaker Change: These homeruns in rural markets, where the brand has awareness and also where it does not gives us confidence to action refi entering our shoe carnival stores across rural markets in America.
Mark Worden: Fourth, and very exciting and frankly a bit surprising, we re-battered a poorly performing shoe 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. This encouraging result could prove a game-changer in how wide the scope is for shoe station customer acquisition as we go national.
Speaker Change: Fourth and very exciting and frankly, a bit surprising we rebounded a poorly performing shoe carnival store and a lower income highly diverse market in Georgia not in a major city.
Speaker Change: 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 to the rural Tennessee in the affluent Florida Beach down.
Speaker Change: This encouraging result could prove a game changer and how wide. The scope is for shoes station customer acquisition as we go national.
Mark Worden: Action from this is the business will re-banner more stores like this one to validate if Shoe Station can consistently exceed industry benchmarks in diverse rural markets that are not affluent.
Speaker Change: Action from this is the business will rebound or more stores like this one to validate a shoe station can consistently exceed industry benchmarks in diverse raw in markets that are not affluent.
Mark Worden: to summarize our field-based learning today. Shoe Station is outpacing the industry and Shoe Carnival quarter after quarter for over two years. The rebounder approach has 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.
Speaker Change: To summarize our field based learning to date.
Speaker Change: Shoe station is outpacing the industry and shoe carnival quarter after quarter for over two years out three bounder approach has 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 AUR.
Speaker Change: <unk> and accretive product margins and markets, we expected to win more affluent suburban mature customers.
Speaker Change: New learnings are substantial shoe station all sales is transforming an average or poor performing shoe carnival into a growth store in rural America, and new markets and coastal America and is showing early signs of growth in diverse lower income areas outside major cities.
Speaker Change: <unk>.
Mark Worden: 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. 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.
Speaker Change: 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.
Speaker Change: 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.
Mark Worden: Today, I'm announcing an ambitious expansion. Shoe Station will represent over 80 percent of our store fleet by March 2027, up from our previous target of 51 percent. 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 store. I believe this expansion gives us the scale necessary to deliver total company comparable store growth starting in Q3 2026. As the strength and scale of Shoe Station will more than offset the ongoing challenges we expect to face with the Shoe Carnival banner.
Speaker Change: I am announcing an ambitious expansion schuh station will represent over 80% of our store fleet March 2027 up from our previous target of 51%.
Speaker Change: We're accelerating our investment to maximize this rollout before back to school 2026.
Speaker Change: By July 2026 at least 51% of our current store fleet will operate issue station.
Speaker Change: I believe this expansion gives us the scale necessary to deliver total company comparable store growth starting in Q3 2026, as the strength and scale of shoes station will more than offset the ongoing challenges, we expect to face with the shoe Carnival banner, we can't wait.
Mark Worden: 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.
Tom: Tom you and I have been meeting extensively with our vendors and key stakeholders discussing this initiative it is being met with great enthusiasm and support.
Mark Worden: I'm asked one question time and time again, 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.
Tom: Let me ask one question time and time again, we'll shoe station represent 100% of the current store fleet in the future.
Tom: I can share the organization is deeply evaluating that.
Speaker Change: 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.
Speaker Change: The key topic to learn about 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.
Mark Worden: 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 2020. 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 story.
Speaker Change: The answers arent clear today, but I believe it is prudent to explore this topic and plan to begin testing in urban doors by early 2026.
Speaker Change: 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.
Mark Worden: I look forward to sharing more about our organic growth approach after back...
Speaker Change: Look forward to sharing more about our organic growth approach after back to school.
Mark Worden: 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 uncertainty. 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. Media pundits have warned about potential empty shelves across retailers. I want to assure you, our customers will find their favorite brands fully stocked across Shoe Station, Shoe Carnival, and Rogan's locations throughout 2025. One 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.
Speaker Change: 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.
Speaker Change: With our cash rich position, we determined the best approach to serve customers during back to school and holiday seasons was to invest early and key products maximize our in stock position and ensure our stores are fully prepared.
Speaker Change: 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 shoe station shoe Carnival and rogen locations throughout 2025.
Speaker Change: One specific inventory investment I'd like to call out our men's and women's performance running brands continued to deliver exceptional results across the company and are particularly strong with double digit growth issues station.
Mark Worden: We have the best-in-class brands, with the latest styles ready for back-to-school, with robust AURs over $130 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. No doubt, our exceptional merchants have exciting additions to our assortments coming before fiscal end. Shoe Carnival 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.
Speaker Change: We have the best in class brands with the latest styles ready for back to school with robust AUR is over $130 on average as always I am not going to share brand specific details for obvious competitive reasons, but I will share our merchant team is continually working with the worlds.
Speaker Change: Best brands to add sought after styles and the hottest brands no doubt our exceptional merchants have exciting additions to our assortments coming before fiscal end.
Speaker Change: Sure Carnival, Inc, strategically buying goods now at a lower cost basis, where appropriate.
Speaker Change: And if those cost increase for whatever reason this approach positions us well to gain margin go to market with a sharp price are both I'd like that competitive advantage and financial upside possibility.
Mark Worden: I like that competitive advantage and financial upside possibility. 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.
Speaker Change: The Corporation will maintain these higher inventory levels until we no longer see it has the best risk position for us at that point the team will reduce inventory levels, but only once we see limited risk of supply our cost disruption again with a balance sheet that grew cash compared to Q1 last year as we invested in more <unk>.
Speaker Change: Inventory and accelerated our capital plans the business is well positioned.
Mark Worden: In addition to our organic growth approach, Shoe Carnival remains committed to pursuing M&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. Our prior acquisitions have integrated smoothly, full synergies captured, and built our readiness for further acquisitions when the right opportunity at a fair valuation becomes available. Our M&A targeting focus is on market leading footwear retailers with scale, providing geographic expansion and or diversifying to a higher income customer base.
Speaker Change: In addition to our organic growth approach shoe Carnival remains committed to pursuing M&A to achieve our long term vision to be the nation's leading footwear retailer for families.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Our M&A targeting focus is on market, leading footwear retailers with scale, providing geographic expansion and or diversifying to a higher income customer base.
Mark Worden: The leadership team will pursue scale-changing M&A.
Speaker Change: The leadership team will pursue scale changing M&A.
Mark Worden: Turning briefly to an organizational topic, earlier this year, we designated our existing office in Fort Mill, South Carolina, small town, 15 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 team. 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.
Speaker Change: Turning briefly to an organizational topic earlier this year, we designated our existing office in Fort Mill, South Carolina small town 15 minutes South of Charlotte as our corporate HQ.
Speaker Change: This office is where I am based along with our senior leaders merchants marketers and our customer facing teams.
Speaker Change: It is also where we collaborate with our vendor partners post our annual shareholder meeting and conduct our board meetings and earnings calls as such the leadership team thought this office location with best serve as our corporate headquarters the.
Speaker Change: The organization also operates our shared service back office functions for Schuh station shoe Carnival, and rogen stores as well as our supply chain from our existing office and distribution center in Indiana.
Mark Worden: Our company has been here in the Charlotte suburb for a few years now, and we found it a great advantage for engaging more frequently with our vendors, helped attract the best talent, and provides us efficiencies to travel all over the country to be with our customers, vendors, and stakeholders.
Speaker Change: Our company has been here in the Charlotte suffer for a few years now and we founded a great advantage for engaging more frequently with our vendors helped attract the best talent and provides us efficiencies to travel all over the country to be with our customers vendors and stakeholders.
Patrick Edwards: With that, I would like to now hand over to Patrick to provide further details on our financials and results.
Speaker Change: 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&A with Patrick Tonya and myself Patrick.
Mark Worden: And then I will provide closing comments before opening the call for Q&A with Patrick, Tanya and myself.
Patrick Edwards: Patrick. 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 re-banner 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 $9.3 million, or $0.34 per diluted share, which exceeded analysts' consensus despite being lower than the $17.3 million, or $0.63 per diluted share we reported in Q1 of fiscal 2024.
Patrick: Thank you Mark and good morning, everyone. I am pleased to report that despite the challenging macroeconomic and retail environment, our first quarter profits outperformed market expectations by approximately 10%.
Patrick: While our profits are down compared to last year. This reflects our deliberate decision to invest in the re banner initiatives that Mark just outlined a choice that is already showing promising returns through SKU stations exceptional performance and our continued balance sheet strength.
Patrick: Our first quarter net income was $9 3 million or <unk> 34 per diluted share, which exceeded analysts' consensus despite being lower than the $17 3 million or <unk> 63 per diluted share we reported in Q1 of fiscal 2024.
Patrick Edwards: This year-over-year decrease primarily reflects the planned investments in the re-banner initiative that we estimated $0.15 in the quarter and the broader industry headwinds that Mark described. The encouraging story behind our better-than-expected profit performance is the early success we are seeing with ShoeStation. 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 re-ventured stores showed meaningful product margin improvement compared to their performance-issued carnival locations. These accretive product margins generated by the re-banner strategy, inclusive of re-bannered stores, contributed to our increased merchandise margin in the quarter.
Patrick: This year over year decrease primarily reflects the planned investments in the <unk> initiative that we estimate at <unk> in the quarter and the broader industry headwinds that Mark described.
Patrick: The encouraging story behind our better than expected profit performance is the early success, we are seeing with schuh station.
Patrick: As Mark highlighted while the broader family footwear industry declined shoe station achieved sales growth of four 9% in Wisconsin positive in the quarter.
Patrick: The impact goes beyond just sales.
Patrick: Our re banner stores showed meaningful product margin improvement compared to their performance is shoe carnival locations.
Patrick: 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: 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&L investment we are making this year. This re-banner 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: Store level profit contribution was also up double digits inclusive of ongoing amortization of the new capex investments and normal advertising costs.
Patrick: 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&L investment, we're making this year.
Speaker Change: This rebound our 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.
Patrick: I found the for example, as Mark shared particularly informative.
Patrick: Those locations showed varying degrees of improvement and profitable sales following re banner, providing us with valuable data to refine our approach going forward.
Patrick Edwards: 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 re-banner investments and increased our inventory levels. We ended the quarter with $93 million in cash, cash equivalents, and marketable securities, up over 30% or $23.5 million compared to the end of Q1 last year. We also continue to have no debt and nearly $100 billion of available credit.
Patrick: 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.
Patrick: 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 re banner investments and increased our inventory levels.
Patrick: We ended the quarter with $93 million in cash cash equivalents in marketable securities up over 30% or $23 5 million compared to the end of Q1 last year.
Patrick: We also continue to have no debt and nearly $100 million of available credit.
Patrick Edwards: This financial strength enabled the deliberate approach Mark described to increase our inventory levels, which are up 4% compared to last year. 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: This financial strength enabled the deliberate approach Mark described to increase our inventory levels, which were up 4% compared to last year.
Patrick: With respect to our on hand inventory there are a few concepts I would like to highlight.
Patrick: First our inventory has been secured at competitive costs and at levels that are expected to protect and perhaps increase our margins.
Patrick: We're maintaining an appropriate level of in stock positions across key categories that continue to support strong conversion rates.
Patrick: Further we believe our in stock inventory positions us well to navigate any potential future supply chain disruption.
Patrick: 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: 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 future.
Patrick: 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.
Patrick Edwards: Now, moving on to our broader financial results for our first quarter ended May 3, 2025, starting with net sales. In first quarter 2025, net sales totaled $277.7 million and compared to $300.4 million last year, a decline of 7.5%. Similar with declines across family footwear. Our comparable store sales were down 8.1%. 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.
Patrick: Now moving on to our broader financial results for our first quarter ended may three 2025, starting with net sales.
Patrick: In first quarter 2025, net sales totaled $277 7 million and compared to $304 million last year, a decline of seven 5% similar with declines across family footwear.
Patrick: Our comparable store sales were down eight 1%, our net sales and comp sales in the quarter were both impacted approximately 1% by loss sales associated with the 24 stores rebounded in the quarter in line with our expectations.
Patrick: Breaking down performance by storefront shoe station sales increased four 9% and were comp positive in the quarter.
Patrick Edwards: Rogan's achieved results in line with our Synergy and Integration plans with net sales above $19 million 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. 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 metric.
Patrick: <unk> achieved results in line with our synergy and integration plans with net sales above $19 million, both this year and last year.
Patrick: Shoe carnival experience the industry wide challenges that mark referenced with total sales declining 10% shoe.
Patrick: SKU Carnival's high singles comp decline in the quarter was the main driver of our overall comparable store sale decrease.
Patrick: Let me now provide some additional color on our performance by major footwear categories, which offers further insight into both our challenges and opportunities.
Patrick: Athletic footwear, which accounted for 46% of our revenue in the quarter was in greater demand and outperformed our overall comparable store metrics.
Patrick Edwards: The mid-singles decline in athletic footwear in the quarter reflects the relative resilience of our consumers' emphasis on casual and active lifestyle. 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. This category was most impacted by the cautious consumer behavior Mark described with Shoe Carnival's top decline, nearly double shoe station.
Patrick: The mid singles decline in athletic footwear in the quarter reflects the relative resilience of our consumers emphasis on casual and active lifestyles.
Patrick: Few stations 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.
Patrick: In womens 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.
Speaker Change: This category was most impacted by the cautious consumer behavior, Mark described with shoe carnivals comp decline nearly double shoe stations.
Patrick Edwards: 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 re-banner 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. The difference was particularly pronounced in casual footwear, with shoe stations 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.
Mark Worden: Within our shoe session 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 re banner initiatives and shoe stations appeal to a different customer demographic.
Mark Worden: Men's non athletic footwear, which represented 7% of our business in the quarter declined low singles compared to Q1 last year.
Mark Worden: Similar to women's we saw a significant divergence between the banners with schuh station, achieving low singles comp positive growth in this category.
Mark Worden: The difference was particularly pronounced in casual footwear with schuh stations expanded branded assortment and higher price points.
Mark Worden: Finally, children's footwear, representing 18% of our business in the quarter experienced a low teens decline versus the prior year.
Patrick Edwards: 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. 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.
Mark Worden: This category was particularly challenged by the low income consumers reduce spending however, shoe stations kids business declined only low singles significantly outperforming the company average this relative outperformance in the children's category at Schuh station is encouraging as we approach the important back to school season.
Mark Worden: Whats, particularly notable across all these categories is the consistent pattern of shoe station outperform and shoe carnival regardless of category.
Mark Worden: This reinforces our confidence in the rebound our strategy as a driver of future growth.
Mark Worden: 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.
Patrick Edwards: Moving on to gross profit. Q1 gross profit margin was 34.5%, consistent with expectations, and was lower than Q1 2024 gross profit margin by 110 basis points. BDNO resulted in 160 basis points of the decrease, most of which was deleveraged as a result of lower net cell. Our merchandise margins were higher in the quarter by 50 basis points, consistent with our profit objectives to not chase unprofitable sales and as impacted by benefits from the re-bannered store. First quarter 2025 SG&A was $83.8 million representing an approximate $500,000 decrease in the quarter versus 2024'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.
Mark Worden: Moving on to gross profit.
Mark Worden: Q1 gross profit margin was 34, 5% consistent with expectations and was lower than Q1 2024 gross profit margin by 110 basis points.
Mark Worden: <unk> resulted in 160 basis points of the decrease most of which was deleverage as a result of lower net sales or.
Mark Worden: Our merchandise margins were higher in the quarter by 50 basis points.
Mark Worden: Consistent with our profit objectives to not chase unprofitable sales and is impacted by benefits from the re banner stores.
Mark Worden: First quarter 2025, SG&A was $83 8 million, representing an approximate $500000 decrease in the quarter versus 2024 as first quarter.
Mark Worden: In the quarter selling expense increases associated with our re banner strategy were offset by the timing of selling expenses impacting other stores.
Patrick Edwards: As a percentage of net sales, SG&A in the quarter was 30.2 percent, up 2.1 percentage points from last year. 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 2025. Regarding the re-banner initiative that Mark outlined, we continue to expect $30 to $40 million of capital expenditures to complete the 75 re-banners this year.
Mark Worden: As a percentage of net sales SG&A in the quarter was 32% up two one percentage points from last year that increase is reflective of re banner cost in the quarter, including store closing cost amortization of new store construction costs and customer acquisition costs.
Mark Worden: Our first quarter tax rate was 28, 1% compared to 25, 4% last year.
Mark Worden: 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 2025.
Mark Worden: Regarding the re banner initiative that Mark outlined we continue to expect $30 million to $40 million of capital expenditures to complete the 75 re banners this year.
Patrick Edwards: During first quarter 2025, capital expenditures were $10 million for re-banners. In addition, we continue to expect a P&L investment of between $20 and $25 million, 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 store is grand opened, and write-offs of existing assets. We continue to expect this 20 to $25 million P&L investment to decrease our operating income in fiscal 2025 compared to fiscal 2024 in a range around 65 cents per share.
Mark Worden: During first quarter 2025 capital expenditures were $10 million for re banners.
Mark Worden: In addition, we continue to expect the P&L investment of between 20% and $25 million inclusive of amortization of the Capex investments other new store opening costs and customer acquisition costs.
Mark Worden: Sales reductions during the four to six week period, while the shoe Carnival stores closed and the shoe station stores Grand opened in write offs of existing assets.
Mark Worden: We continue to expect this 20% to 25 million P&L investment to decrease our operating income in fiscal 2025 compared to fiscal 2024, and a range of around 65 per share.
Patrick Edwards: The amount of the P&L investment estimated during the quarter was in line with expectations at approximately $5.5 million on a pre-tax basis, or $0.15 per share, inclusive of an approximate 1 percentage point decrease in our sales and an approximate 2 percentage point increase in our SG&A as a percent of net sales. When we analyze our capital allocation options, this two- to three-year payback period on this P&L investment makes the re-banner initiative the most compelling use of our resources. Few retail investments offer this combination of reasonable payback, proven execution, and strategic alignment.
Mark Worden: The amount of the P&L investment estimated during the quarter was in line with expectations at approximately $5 5 million on a pretax basis or <unk> 15 per share inclusive of an approximate one percentage point decrease in our sales and an approximate two percentage point increase in our SG&A as.
Mark Worden: As a percent of net sales.
Mark Worden: When we analyze our capital allocation options. This two to three year payback period on this P&L investment makes the re banner initiatives. The most compelling use of our resources few retail investments offer this combination of reasonable payback proven execution and strategic alignment.
Patrick Edwards: Moving on to our outlook. As Mark indicated, we are reaffirming our annual fiscal 2025 outlook, which calls for net sales of $1.15 billion to $1.23 billion, representing a range of down 4% to up 2% versus fiscal 2024. Gap EPS in a range of $1.60 to $2.10. gross profit margins in a range of 35% to 36%. SG&A in a range of $350 million to $360 million and CapEx in a range of $45 million to $60 million with $30 to $40 million for rebates. As a result of the changes taking place in fiscal 2025, we are providing additional information on the second quarter.
Mark Worden: Moving on to our outlook.
Mark Worden: As Mark indicated we are reaffirming our annual fiscal 2025 outlook, which calls for net sales of one 5 billion to $1, two 3 billion, representing a range of down 4% to up 2% versus fiscal 2024.
Mark Worden: GAAP EPS in a range of $1 60 to 210.
Mark Worden: Gross profit margins in a range of 35% to 36%.
Mark Worden: SG&A in a range of 350 million to $360 million.
Mark Worden: And capex in a range of $45 million to $60 million with $30 million to $40 million to re banners.
Mark Worden: As a result of the changes taking place in fiscal 2025, we are providing additional information on the second quarter.
Patrick Edwards: For Q2 specifically, we are forecasting net sales in a range of $310 million to $320 million 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%. 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 re-banner strategy and continued success in event period shopping. As more stores are re-bannered, we expect that shoe station scale will eventually begin to more substantially offset the industry declines impacting shoe carnival.
Mark Worden: For Q2, specifically, we are forecasting net sales in a range of $310 million to $320 million in EPS in a range of 55 to.
Mark Worden: To 65.
Mark Worden: We expect our Q2 gross profit margins to be in a range of 36% to 36, 5%.
Mark Worden: As Mark noted, we expect a moderating trend in our sales declines in the back half of the year.
Mark Worden: This moderating decline results from our re banner strategy and continued success and event period shopping.
Mark Worden: As more stores are re bantered, we expect that shoe station scale will eventually begin to more substantially offset the industry declines impacting shoe carnival.
Patrick Edwards: 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 position. As noted, we do expect our SG&A to increase in Q2 and Q3 above the $84 million expensed in Q1, reflective of the timing of our planned operating expense. However, if these moderating trends do not present within the expected time frame, the low end of our EPS guidance is a potential outcome.
Mark Worden: Second we are cautiously optimistic for our back to school shopping season that results in market share gain reflecting shoe station momentum and a compelling fresh assortment of branded merchandise.
Mark Worden: 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.
Mark Worden: As noted we do expect our SG&A to increase in Q2, and Q3 above the $84 million Expensed in Q1 reflective of the timing of our planned operating expenses.
Mark Worden: However, if these moderating trends do not present within the expected timeframe. The low end of our EPS guidance is a potential outcome.
Patrick Edwards: 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 Rebanner Initiative, with its compelling two- to three-year payback period, combined with our strength and balance sheet, provides us with a clear path forward despite current challenges. 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.
Mark Worden: 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 in industry headwinds our outperformance versus expectations reflects the early promise of our strategic direction.
Mark Worden: 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.
Mark Worden: We remain confident that these investments, though impacting near term profitability position us for more sustainable performance as we progress through our transformation.
Mark Worden: We are seeing encouraging early results with sharp sales gains over 20% better than shoe carnival in the quarter.
Patrick Edwards: Higher average unit retail selling prices from the branded assortment, accretive margins from re-bannered store locations, and increased profit contribution driven by controlled costs and stable labor efficiency metrics.
Mark Worden: Higher average unit retail selling prices from the branded assortment accretive margins from re bantered store locations and increased profit contribution driven by controlled cost and stable labor efficiency metrics.
Patrick Edwards: 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 June 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 Worden: 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 June 25, 2025 information about the annual meeting and related materials, including a proxy statement and annual report can be found on our investors website.
Mark Worden: Mark 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. 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.
Mark Worden: Mark.
Mark Worden: Thank you Patrick before we open the call for questions I want to emphasize the key takeaways that I believe our most important about our first quarter results and strategic direction.
Mark Worden: First our shoe station growth approach is working and working exceptionally well for.
Mark Worden: The re banner initiative has consistently yielded double digit sales growth and accretive merchants across diverse market types.
Mark Worden: This isn't just a regional success story limited to the Gulf States. 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.
Mark Worden: Second, we're implementing a disciplined approach to capital allocation. As Patrick outlined, the two to three year payback period on our re-banner 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&A opportunities when the right valuation presents itself. 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 costs, ensuring we'll be in stock for our customers while potentially benefiting from margin expansion if costs rise.
Mark Worden: Second we're implementing a disciplined approach to capital allocation.
Mark Worden: As Patrick outlined the two to three year payback period on our re banner investments makes this the best use of our capital.
Mark Worden: 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&A opportunities when the right valuation presents itself.
Mark Worden: Third we're executing inventory decisions that provide both defensive protection and offensive opportunity in.
Mark Worden: In the current uncertain environment, we have secured key products a favorable cost ensuring we will 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.
Mark Worden: 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. The early success of our re-banner 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.
Mark Worden: Testament to our disciplined financial management.
Mark Worden: Fourth while industry wide pressures continued to affect the lower income consumer we're seeing encouraging signals in our business two stations consistent superior performance demonstrates that our premium offering resonates with customers, who remain willing to spend on quality branded footwear.
Mark Worden: The early success of our re banner initiatives in diverse markets suggest theres broader appeal for the shoe station concept than we initially anticipated.
Mark Worden: Finally, I want to emphasize that we're building for the long term, while producing near term results.
Mark Worden: Our profits outperformed expectations this quarter, despite deliberate investments in our future.
Mark Worden: We believe the aggressive acceleration of our re-ventor initiative puts us on a path to generate total company comparable store growth starting in Q3 of 2026, 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. Our strong balance sheet, proven rebanner playbook, and experienced leadership team position us well to execute this vision despite the challenging environment.
Mark Worden: We believe the aggressive acceleration of our re banner initiatives puts us on a path to generate total company comparable store growth starting in Q3 of 2026 with Schuh station representing over 80% of our store base by March 2027.
Mark Worden: 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: Our strong balance sheet proven rebound, our playbook and experienced leadership team position us well to execute this vision despite the challenging environment.
Operator: With that, we'd be happy to take your questions.
Mark Worden: With that we'd be happy to take your questions. Operator, Please open the lineup for Q&A.
Operator: Operator, please open the line up for Q&A. We will now begin the question-and-answer session. To ask a question, press star 1 on your telephone keypad.
Speaker Change: We will now begin the question and answer session to ask a question press Star one on your telephone keypad. Our first question comes from the line of Sam Poser with Williams trading. Please go ahead.
Sam Poser: Our first question comes from the line of Sam Poser with Williams Trading. Please go ahead. Good morning. Thank you for taking my questions. I guess I have two that are top of mind.
Sam Poser: Good morning, Thank you for taking my questions I guess to the top of mind number one.
Mark Worden: Number one, with the decision With the decision to expand shoe station stores, or more quickly, is this really a situation where you're seeing the https://www.shoecarnivalinc.com 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 your private label, private brand exposure there, as you mentioned, you really don't have 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?
Speaker Change: The decision.
Speaker Change: With the decision to expand shoe station stores.
Speaker Change: Is.
Speaker Change: Yes more quickly.
Speaker Change: Is this really a situation where youre seeing the.
Speaker Change: <unk>.
Speaker Change: The outperformance there. We're also looking at the competitive set because if I think.
Speaker Change: Shoe Carnival goes up against I mean, I'll just name names shoe show rack room famous footwear.
Speaker Change: Maybe shoe sensation.
Speaker Change: Phil.
Speaker Change: And then DSW to a degree, but then you have shoe station that.
Speaker Change: Goes more directly up against lets say.
Speaker Change: ASW and.
Speaker Change: <unk>.
Speaker Change: Well it does compete to some degree with those others. It's less though so this can be more of a standalone situation and then looking at the private your private label private brand exposure there.
Speaker Change: There is you mentioned you really don't have the wholesale component of your business either so I mean, how much of that sort.
Speaker Change: Do you think is forming the outperformance and then informing the decisions that you're making.
Mark Worden: Hi, Sam, it's Mark. Thanks for that great question. I think you characterized it well, and I'd 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. So when we looked at it, we really see that 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 a 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.
Mark Worden: Hi, Sam it's mark Thanks for that Great question, I think you characterized it well and I build one thought pursue station, we see a lot of white space nationally, where the competitive set is not completely fulfilling what that higher end customer loss.
Mark Worden: When we looked at it we really see that.
Mark Worden: Moderate.
Speaker Change: Sure.
Speaker Change: 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.
Speaker Change: Higher end premium brands performance running womens is an unmet need that we are seeing whether its rural Tennessee or coastal Florida or as we move through Carolina.
Mark Worden: The unmet need is really capturing new customers at an exciting rate. So thanks for the question. I think you characterized Carnival spot-on, too. 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.
Speaker Change: The unmet need is really capturing new customers and an exciting right. So thanks for the question I think you characterized carnival Sato onto I think that absolutely is the competitive set the traditional family footwear statement is a different animal higher and going after white space that we see national over the decade ahead.
Mark Worden: I just want to follow real quick. You mentioned, Patrick, when you were going through the, you mentioned that dress shoes did well in shoe station. Do you think that that, I mean, 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?
Speaker Change: I just want to follow up real quick you mentioned.
Patrick: Patrick when you were going through the <unk>.
Patrick: You mentioned that dress shoes did well.
Speaker Change: In Schuh station do you think that that is.
Speaker Change: Is that really are mark of the same.
Speaker Change: Is that just another one on sort of is that another part of that proof point.
Mark Worden: Samus, Mark, I'm going to grab that. Absolutely. I think we offer to our customers a dress assortment that's very hard to curate in any of the competitive sets. Those competitors you mentioned would be the competitive set as well as the mall department stores. But Tanya's team's 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 a non-athletic dress or non-athletic period with the best athletic brands all under one house of brands. Thank you. Two great questions, Sam.
Speaker Change: Sam It's Marc I'm going to grab that absolutely I think we offer to our customers address the assortment, that's very hard to curate and any of the competitive set those competitors you mentioned would be the competitive side as well as the mall department stores, but <unk> got a spectacular women's and men's.
Speaker Change: Men's dress category with.
Speaker Change: Lighting brands higher AUR and profitable margins and that is a great competitive advantage to be able to get non athletic drafts or non athletic period with the best Athletic brands all under one house of brands.
Sam Poser: Thank you great question Sam.
Mark Worden: And then lastly, speaking of athletic, one of your competitors is getting the Jordan brand. And, you know, I thought that sort of Shoe Carnival was probably more of a natural fit there. But it appears that they have it exclusive for this year. Is that something we're going to see in the mix next year?
Sam Poser: Okay, and then lastly.
Sam Poser: Speaking of athletic one of your competitors is getting the Jordan brand.
Sam Poser: And.
Sam Poser: I thought that sort of shoe carnival was probably more of a natural fit there, but it appears that they have it exclusive to this year is that something we're going to see it.
Sam Poser: And the mix.
Tanya Gordon: And I'll just point this right to Tanya so she can welcome aboard and good luck and Carl misses you while he's on the beach. Hey, I'm going to grab that. That is a great brand, which we do not offer today.
Sam Poser: Next year and I'll just point this right Tanya so she could welcome.
Speaker Change: Welcome aboard and good luck.
Speaker Change: Carl This is rich on the beach somewhere.
Speaker Change: I'm going to grab that that is a great brand, which we do not offer today.
Tanya Gordon: As always, Sam, you'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 going to be able to continue with that double-digit growth trend I talked about a little earlier.
Speaker Change: 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.
Speaker Change: We are focused on the hottest category on athletics right now, which is performance running and have the best in class brand, New Assortments coming for back to school or we're going to be able to continue with that double digit growth trend I talked about a little earlier second and I'm not going to answer it but here's how I'm going to answer it for you.
Tanya Gordon: Second, and I'm not going to answer it, but here's how I'm going to answer it for you. Our merchant team is always working to add the brands our customers want.
Speaker Change: Our merchant team is always working at the ramp of our customers want most.
Mitch Kummetz: I have no doubt they will secure new brands before fifth build Once again, to ask a question, press star followed by the number one on your telephone keypad and our next question comes from the line of Mitch Kummetz with Seaport Research Partners.
Speaker Change: No doubt they will secure new brands for fiscal <unk>.
Speaker Change: Once again to ask a question press star followed by the number one on your telephone keypad and our next question comes from the line of Mitch <unk> with Seaport Research partners. Please go ahead.
Mitch Kummetz: Please go ahead. Uh, yeah, thanks for taking my questions. I think I got maybe a handful here, so I hope you'll indulge me.
Mitch <unk>: Yes, thanks for taking my questions I think I got maybe a handful here so.
Speaker Change: I hope, you'll indulge me Mark on the re banner examples <unk> provided especially the three that were kind of rural lower income.
Mark Worden: Mark, on the re-bannering examples 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 re-bannerings? You know, 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?
Speaker Change: <unk> initial results to how those locations might perform on a go forward basis I am just curious was there any.
Speaker Change: Kind of a unusual marketing that was put behind Booz re banners earnings.
Speaker Change: I'm wondering if maybe the consumers in those markets, we're kind of attracted.
Speaker Change: Something new in the area like is there anything about the initial results that you wouldn't think would continue as those stores are in those locations like that further down the road we go.
Mark Worden: You know, I've 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. And we read that as an incredibly encouraging thing, that if there's 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.
Speaker Change: 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.
Speaker Change: Last year, we had a store in rural America.
Speaker Change: Debt outstanding and got us invigorated to do more and more stores.
Speaker Change: Comping up again as we are in year or two without significant activity going on and we read that as incredibly encouraging things that it grew double digit in its first year, capturing new customers with the new assortments in higher AUR and a year or two it was able to sustain that hey, it's early and we've got a whole lot more.
Mark Worden: Hey, it's early, and we've got a lot more stores we'll keep evaluating, but we thought that was encouraging.
Speaker Change: We will keep evaluating but we thought that was encouraging second in the Tennessee or Florida example.
Mark Worden: Second, in this Tennessee or Florida example, you know, it's really looking at the competitive set and that we have that unique offering. Like Sam asked, it really is setting a white space where unless you want to go to an A or B mall where you could find similar non-athletic products, or say a Dick's 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.
Speaker Change: Just really looking at the competitive set and that we have that unique offering like Sam as it really is setting a white space, where unless you want to go to an a or B mall, where you could find similar non athletic products or say, it's exporting goods, where they have outstanding of course athletics, we offer all of that.
Speaker Change: Under one building. So you don't have to go to a mall and then exporting goods.
Speaker Change: Come straight to our installation get both of those things.
Mark Worden: So those are some early learnings. We're going to 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. Yep.
Speaker Change: So those are some early learnings, we're going to learn a lot more as we do.
Speaker Change: So 75, this year and we get towards.
Speaker Change: Above 51% at minimum by back to school next year, yes.
Mitch Kummetz: And then maybe for Patrick, I'm trying to understand The re-bannering impact. on the P&L for next year. I mean, so this year from an earning standpoint, it's a $0.65 drag on 75 stores. It looks to me that next year... you're going to be 2x plus in terms of the re-banner. So, should we think of why... $1.30 negative drag on EPS. And I would imagine there's some offset to that as you then You know, you're pulling the 65 cent drag out of the business this year and the next year plus you get the benefit of, you know, The performance of the re-banner stores, like, like, how should I think of it?
Speaker Change: And then maybe for Patrick.
Speaker Change: Trying to understand.
Speaker Change: The re banner impact.
Speaker Change: On the P&L for next year.
Speaker Change: So this year from an earnings standpoint, it's a 65% drag on 75 stores.
Speaker Change: It looks to me that next year.
Speaker Change: Youre going to be two X plus in terms of the reman earnings.
Speaker Change: So should we think of like.
Speaker Change: $1 30, net negative drag on EPS and I would imagine there is some offset to that as you then.
Speaker Change: Youre pulling the 65 cent drag out of the business. This year into next year, plus you get the benefit of.
Speaker Change: The performance of the re banner stores like how should I think of it I think prior to this acceleration like next year kind of looks like they might just be sort of a wash, but now I would think I would think re band rings youre going to be a drag on next year's earnings was that fair.
Patrick Edwards: 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 I would think re-bannerings are going to be a drag on next year's earnings. Is that fair?
Patrick Edwards: Hey, Mitch. Thanks for the question. You know, 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&L store-level profit contributions also increase. You know, 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 to $27 million of P&L investment, and that was to re-banner approximately 100 stores over the entire horizon through March of 2027.
Speaker Change: 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&L.
Speaker Change: Store level profit contributions also increase.
Speaker Change: And we pointed to the two to three year payback period and our results early on in this process are continuing to support that.
Speaker Change: With respect to next year, we've got a number out on the streets that was 22% to $27 million of P&L investment.
Speaker Change: And that was to re banner approximately 100 stores over the entire horizon through March of 2027 and that number has now been accelerated where we would expect to spend those sort of dollars by Q by the end of Q2 in advance of back to school now to meet that 51% goal that we.
Patrick Edwards: 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 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.
Speaker Change: So you are 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 cost identified and planned out through our <unk>.
Speaker Change: 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, but.
Patrick Edwards: But we do anticipate that there will be more costs beyond the $22 to $27 million that we've disclosed. Got it. That's helpful. Thank you. I saw a few more. On 2Q, you guys provided sales and earnings gross margin guide. I'm curious if there's anything you can say in terms of kind of what comp is embedded in that sales range. Is there anything you can say about kind of performance quarter to date? Amen.
Speaker Change: But we do anticipate that there will be more costs beyond the 22% to $27 million that we've disclosed.
Speaker Change: Got it that's helpful. Thank you I saw a few more on <unk>.
Speaker Change: You guys provided sales and earnings gross margin guide I'm curious if there's anything you can say in terms of kind of what.
Speaker Change: Comp is embedded in that sales range is there anything you can say about <unk>.
Speaker Change: Performance quarter to date.
Mitch <unk>: Hey, Mitch.
Mitch Kummetz: I would think through that guidance as a similar compact expectations with Shoe Carnival performing poorly like it has been and Shoe Station outperforming at similar rates we've just disclosed is our baseline assumption. Third time, um And then, Mark, I know you don't want to talk about brands necessarily, but 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 back to school. So, I mean, is it fair to say that in terms of what you're...
Speaker Change: Phase III that guidance has a similar comp expectations with shoe carnival.
Speaker Change: Poorly.
Speaker Change: As you station outperforming at similar rates with just disclose as our baseline assumption.
Speaker Change: Okay.
Speaker Change: And then Mark I know you don't want to talk about about.
Speaker Change: <unk> necessarily but.
Sam Poser: In your prepared remarks, you talked about an exciting addition to the Assortments and in response to Sam's question you talked about.
Sam Poser: On the performance running side, some new product for back to school. So I mean is it fair to say that in terms of what you are.
Mark Worden: The brands that you're adding for back to school, they're all on the shoe station side. Is that correct?
Speaker Change: The brands that you're adding for back to school. They are all on the shoe station side is that correct.
Mark Worden: I think 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 the world's best brands, ensuring we have all the 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 and getting her ready to go. And then I guess lastly, on the on the tariff side. Obviously, you guys haven't changed your guidance, I think, and you're prepared to mark.
Speaker Change: So that's what I'm most excited about to see our continued strength and Thats. Our focus of course, as we progress towards 80% or over 80% of the company being station. We're focused on building those relationships with the world's best brands, ensuring we have all of those worlds best brands. Some we don't have today, but tanya as aggressively.
Speaker Change: Leif scouring and meeting with people across all coasts.
Speaker Change: Over the last few weeks learning seeing what excites her and getting ready to go.
Speaker Change: And then I guess lastly on the on the tariff side.
Speaker Change: Obviously, you guys Havent changed your guidance.
Speaker Change: In your prepared remarks, Mark you said something like you haven't experienced any cost increases outside of the guy.
Mark Worden: Mark, you said something like, you know, you haven't experienced any cost increases outside of the guy. 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 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 brought a lot of inventory in early, but I mean, so no change at all, or is there anything more you can say there?
Speaker Change: That being said.
Speaker Change: Versus when you provided that initial guidance, we're not looking at a 30% China tariff versus 'twenty and we're now looking at it.
Speaker Change: 10% your universal tariff, which I believe didn't exist when you provided the initial guidance so.
Speaker Change: As there are essentially no no change at all in your thinking around tariffs in terms of kind of what the what vendor pricing.
Speaker Change: It looks like as you get further into the year I know you guys drive a lot of inventory in early but I.
Speaker Change: So no change at all or is there anything more you can say there.
Mark Worden: You know, again, I'm going to be a contrarian here. I feel really optimistic about how this is playing out, and in the longer term, FOSPR, 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. So comparatively, we're in great position with what we do, with what we control, and Tanya's doing a fantastic job, you know, working with our partners to help them get some things in here opportunistically. Our balance sheet's very strong, and with our cash position, Tanya and I have taken a position of let's bring in key brands, key products right this second at attractive prices and have been continuing to do so, whether that's for VCS or boots or sandals next year.
Speaker Change: I think that's going to be.
Speaker Change: Contrarian here I feel really optimistic about how this is playing out and in the longer term foster 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 so comparatively we're in great position.
Speaker Change: <unk> with what we do with what we control and Tanya to the fantastic job working with our partners to help them get some things in here Opportunistically, our balance sheet is very strong and with our cash positions on you and I have taken a position of let's bring in key brands key products right. The second at attractive prices and have been continue.
Speaker Change: To do so whether that's for bts or boots or sandals next year, great products at great prices are things that I like a lot. So I feel good about all of that and I said in my prepared remarks and of course.
Mark Worden: Great products at great prices are things I like a lot. So I feel good about all that. As 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 said 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.
Speaker Change: The vendors have to sort through a myriad of changing fluid things.
Speaker Change: To date, we've had nothing that surprised us.
Speaker Change: That could change tomorrow. So this is very fluid, but as I sit here today, much we've seen no cost or price.
Speaker Change: Change that materially impact, how we think about the shape of the year and we think about back to school or how we have a great relationship with any particular partner so.
Mark Worden: So I feel cautiously optimistic. 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 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.
Speaker Change: I feel cautiously optimistic 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 concerning is that endless barrage of the world is ending in the media and we keep hearing that is.
Speaker Change: It's a very small segment of our shoe carnival customer that is pulling back our shoe station customers expanding and so we feel good but consumer sentiment going into back to school is the one big question Mark that we will learn a lot more about.
Mark Worden: 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. Alright, thanks guys. Good luck.
Speaker Change: Okay.
Speaker Change: Alright, Thanks, guys. Good luck.
James Chartier: Our next question comes from a line of James Chartier from Moness Crispy Heart & Co. Please go ahead. Hi. Thanks for taking my question. Could you talk about trends during first quarter? How did March-April compare to February? And then, you know, what is kind of the Q-Q guidance assumed as to assume the trend for March-April continues or gets better or worse? Thanks.
Speaker Change: Our next question comes from the line of Jim Chartier from <unk> Crespi Hardt <unk> co. Please go ahead.
Speaker Change: Hi, Thanks for taking my question.
Speaker Change: Could you talk about trends during the first quarter, how did March April compared to February.
Speaker Change: And then what is kind of the Q2 guidance assume does assume the trend for March April continues or gets better or worse.
Mark Worden: Hey, Joe, it's Mark again. Yeah, February was tough. 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, shift later, and call victory. We'd say March-April combined was okay. Again, the trends we talked about weren't materially different across Carnival, did poorly across the months. Station was exciting. Rogans 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.
Marc: Hey, Joe It's Marc again February was tough.
Speaker Change: I said, we didn't see an exciting tax smiths season this year.
Speaker Change: As March April we look at those combined we think it's certainly logic for people that are separate that as Easter shifts later in the call victory. We'd said March April combined was okay again, the trends we've talked about work materially different crops carnival did poorly across the months.
Speaker Change: Station was exciting erosion deliver just as we thought so we didn't have a real material trends, Yes March April was better with the holiday there, but nothing I would pound our chest on about exciting consumer sentiment or trend other than what we've said about station.
Mark Worden: Nothing to share early May. We haven't seen any major changes in that.
Speaker Change: I'd like to share our early May we haven't seen any major changes in that so im going to ask Tonya, maybe just build on sharing your samples perspective on the first couple of months. So to see if you could hear hello to our new chief merchant sale.
Tanya Gordon: So I'm going to ask Tanya to maybe just build on sharing your samples perspective on the first couple months, so the team can hear hello to our new chief merchant, too. Yeah, sure. Thanks, Mark. So just to speak to sandals, which compromises a big portion of our women's business, it was a little softer than we initially planned. However, last year was our best sandal season that we've had in the history of the company, at least since I've been here, and that's 11 years of sandal season. So I went back and looked at the two-year stack, and based on the two-year stack, we were up low double digits.
Speaker Change: Yes, sure. Thanks, Mark So just to speak to sandals, which compromises a big portion of our women's business. It was a little softer than we initially planned however last year was our best sandal.
Speaker Change: Our best Sandal season that we've had in the history of the company at least since I've been here and that's 11 years of sandal season. So I really I went back and looked at the two year stack and based on a two year stack, we were up low double digits.
Tanya Gordon: So that makes me pretty happy sitting here today. So I feel good that the sandal trend, the seasonal trend is really normalizing, and we've enjoyed some increased AURs and increased margins in the sandal category. So I feel good about that.
Speaker Change: Now 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 <unk> and increased margins in the sandal category. So feel good about that.
Operator: Corey, thank you.
Speaker Change: Great. Thank you.
Sam Poser: Our next question is a follow-up from the line of Sam Poser with Williams Trading. Please go ahead. Thank you. Um, real quick, you decided the full year to be down four to up two, and then you called out that, and basically your comp and your short sales growth totaled pretty close. You also said that you anticipate that your over your sales will start to be up into 326.
Speaker Change: Our next question is a follow up from the line of Sam Poser with Williams trading. Please go ahead.
Sam Poser: Thank you.
Speaker Change: You guided the full year to be down four to up to but and then you called out that.
Speaker Change: Basically your comp and your store sale.
Speaker Change: Sales growth totaled pretty close.
Speaker Change: You also said that you anticipate that year over year sales will start to be up in Q3 2006.
Mark Worden: 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 two to four confidence? where Q4 could be up because you have You'll have you'll have all those conversions up and and you got a holiday with more shoe station stores open and so on and that drop and that could offset on lessening weakness at Shoe Carnival.
Speaker Change: Mhm.
Speaker Change: How do you get I mean, how do you foresee you even get to this high end.
Speaker Change: Of the trend this year, where are we most likely looking at a down $2 four comp situation.
Speaker Change: Where Q4 could be up because you have.
Speaker Change: You'll have you'll have all of those conversions up.
Speaker Change: He got holiday with more shoe station stores open and so on and that drop and that could offset.
Speaker Change: Lessening weakness at Truecar.
Mark Worden: 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 shoe stationed, that Q3 2026 becomes that pivotal moment where we go comp positive, and we can't wait to get there. 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.
Sam Poser: Clear Sam.
Sam Poser: Mark again, we see the pace moderating as the two things you laid out happen more shoes station percent of total fleet continued success on that and that starts to dampen. The continued negative results we expect on carnival.
Speaker Change: Darcy that when we get 51% of the <unk>.
Speaker Change: Fleet being few station that Q3, 2026 becomes a pivotal moment, where we go comp positive.
Speaker Change: Can't wait to get there in the back half of the year Youre right. So the things have to go our way for the sales to hit the high end of our guidance, it's not implicit but if things were to go our way with back to school season being not just a market share game, which we expect but a consumer sentiment helps us.
Mark Worden: 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 game, which we expect, but a consumer sentiment helps us, we can start to see moderating trends turn to flash results in Q3, with potential for even better in Q4. That's not our expectation implicit in the mid-zone, but is it possible? Absolutely, as we have very strong market share growth plans that we are confident about for BCF holiday and into next year. But I wouldn't think about it more like you said, that mid to lower end of the range is the right way to think about the sales.
Speaker Change: You can start to see moderating trends towards a flattish results in Q3 with potential for even better in Q4, that's not our expectation implicit in the mid zone, but.
Speaker Change: Is it possible absolutely as we have very strong market share growth plans. So we are confident about four bcf holiday and into next year, but I wouldn't 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 this shoe carnival was very much on.
Mark Worden: And I think I addressed it, shoe carnival was very much on the low end of our expectations during the start of the year, and we anticipate that likely something.
Speaker Change: The low end of our expectations during the start of the year and we anticipate that likely doesn't change.
Mark Worden: And then secondly, can you talk about your use of private label both at Shoe Carnival and what's going on with the private label product that you have at Shoe Station? It appears to be a promotional vehicle on key items at Shoe Carnival. I'm wondering what that percent is and then how do you utilize it at Station? I think we're very small percent, under 10% is private label and smaller than that, if you didn't ask it, and a very small percent has any exposure to the high tariff country risks. So it's almost a minimus. We do see a unique role for having a private label in shoe stations that provide women's non-athletic uniqueness and traffic-driving activity as we continue to develop that.
Speaker Change: And then and then secondly.
Speaker Change: What like can you talk about your use of.
Speaker Change: Private label, both at shoe Carnival, and how and what's going on with the private label product that you have.
Speaker Change: At Schuh station.
Speaker Change: It's like a.
Speaker Change: It appears to be a promotional vehicle on key items at shoe Carnival I'm wondering what that percent is and then how do you utilize it.
Speaker Change: Station.
Speaker Change: I'd say, we're very small percent under 10% is private label and smaller than that you didn't ask it in a very small percent of any exposure to the high country risks. So it's almost de minimis.
Speaker Change: We do see a unique role or having private label and shoe stations that provide women's non athletic uniqueness and traffic driving activity as we continue to develop that.
Mark Worden: So we're excited about the role it can play, but let's make no mistake, 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.
Speaker Change: We're excited about the role it can play but less.
Speaker Change: No mistake, we are a house of brands shoe station as a house the best brands, that's our vision and private label will be a small place to fill in maybe a price point, maybe our promotional point or something unique but we will have the best brands.
Speaker Change: Hi, Aur's and robust margins issue station.
Sam Poser: Thank you very much. Thank you, Sam.
Speaker Change: Thank you very much.
Sam Poser: Thank you Sam.
Mitch Kummetz: Our final question is a follow-up from the line of Mitch Kummetz with Seaport Research Partners.
Speaker Change: Our final question is a follow up from the line of Mitch <unk> with Seaport Research partners. Please go ahead.
Mark Worden: Please go ahead. Yeah, thanks again. Mark, you made the comment that you will be evaluating whether or not it makes sense for Shoe Station to become 100% of the total business. When I kind of do my math on store count, you know, assuming that the $4.29 sort of stays $4.29 over the next couple of years, Rogan stays around 28. Can you grow Station to be 80% of the total? That puts Carnival down to like around 60 stores or somewhere in that neighborhood. 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 at that level it seems like it would have to be very concentrated within just a few days.
Sam Poser: Yes, Thanks again, Mark you made the comment.
Speaker Change: We'll be evaluating whether or not it makes sense for schuh station would be kind of a 100%.
Speaker Change: Of the total business.
Speaker Change: But when I kind of do my math of store count assuming that the $4 29 sort of stage 429 over the next couple of years.
Speaker Change: Rogen stays around 2008, and you grow station to be 80% of the total.
Speaker Change: It puts carnival down.
Speaker Change: Down to like around 60 stores or somewhere in that neighborhood.
Speaker Change: I don't know if youre going to dwarfs, the math, but if that is somewhat correct.
Speaker Change: Does it make sense for shoe carnival to be 60 store.
Speaker Change: Concept.
Speaker Change: And at that level. It seems like it would have to be very concentrated within just a few.
Mark Worden: I wouldn't think that it would make sense to have like 60-ish stores over you know 20 something states across the U.S.
Speaker Change: I wouldn't think that that would make sense to have like 60 ish stores over 20, something states across the U S and U K anything along about that.
Mark Worden: Can you say anything along about that? Yeah happy to Mitch. So if your math's not wrong it'd be under 100 stores per the Shoe Carnival banner by the time you get to March 2027 on this announcement so that's accurate and you're right there will be significant synergy, internal efficiencies that can be gained if we learn that the Shoe Carnival banner, customers can better be served by Shoe Station in those particularly urban markets. concentrated with lower income diverse households. We believe it is a high possibility it can, but we don't have the proof points for me to say it today.
Speaker Change: Yeah happy to niche.
Speaker Change: Youre maps not wrong it would be under 100 stores first with the shoe Carnival banner by the time you get to in March 2027 on this announcement so that's accurate.
Speaker Change: And you're right.
Speaker Change: There will be significant.
Speaker Change: Synergy.
Speaker Change: Internal efficiencies that can be gained if we learn that the shoe carnival banner customers can better be served by schuh station in those particularly urban markets.
Speaker Change: Constant traded with lower income diverse households.
Speaker Change: We believe it is a high profitability it can but we don't have to proof points for me to say is today and I don't want to get ahead of myself, but I want to be real transparent I liked 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 I hope that is.
Mark Worden: And I don't want to get ahead of myself, but I want to 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. 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 2026. And if opportunity presents towards the end of this fiscal year, we might get an early start trying to learn.
Speaker Change: 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 will take the steps to do that.
Speaker Change: At the latest by early 2026.
Speaker Change: And if opportunity presents towards the end of this fiscal year, we might get an early start to trying to learn that.
Mark Worden: So, great questions. More to come after breakfast.
Speaker Change: So great question more to come after back to school.
Mark Worden: And that will conclude our question and answer session, and I will now hand the call back over to Mark Worden for closing remarks. 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 fast is growing. It's our path back to constant growth as we get into the back half of 26, and profit accretion is on the horizon as we look to 27.
Speaker Change: And that will conclude our question and answer session and I will now hand, the call back over to Mark Gordon for closing remarks.
Speaker Change: Thank you for the 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 are.
Speaker Change: Our partners and our stakeholders and we are accelerating this to be.
Speaker Change: The largest portion of our corporation and we believe the fastest growing it's our path back to growth as we get into the back half of 2006 and profit accretion is on the horizon as we looked at 2007, the big investments now, but it's absolutely the right thing as we pursue being the leading family footwear across.
Mark Worden: 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.
Mark Worden: I wanted to take the chance again to welcome Tanya to our leadership team. 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.
Speaker Change: I wanted to take the chance again to welcome Tanya to our leadership team. So excited to have her here and for all of you to get to know her.
Speaker Change: Wishing you all a great summer and talk to you after back to school.
Operator: This concludes today's conference call. Thank you all for joining. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you all for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yes.