In This Article:
Shoe Carnival is doubling down on its Shoe Station banner this year as the company looks to capitalize on the chain’s success in fiscal 2024.
The retailer is implementing a long-term strategy to “rapidly scale up” Shoe Station, which it acquired in 2021, into a “national footwear and accessories leader.” The company noted that the first investment phase is to convert 175 stores to the Shoe Station banner over the next 24 months. Once this phase is complete, the company noted that it expects to operate 218 Shoe Station stores, representing 51 percent of the its present store fleet.
More from Footwear News
-
Allbirds CEO Says New Shoe Launches Will Spark Growth by End of Year
-
Puma Reports 4% Rise in 2024 Sales, Lowers Profit Outlook for 2025
During fiscal 2025, the company noted that it expects to convert between 50 to 75 Shoe Carnival units to Shoe Station stores. The first-year investment is forecasted to decrease fiscal 2025 operating income by between $20 million to $25 million, inclusive of store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store’s grand opening and customer acquisition costs.
Shoe Carnival added that it expects this first-year investment will be recovered over a two-to-three-year period following a store’s grand opening. In fiscal 2027, the company expects that net sales from these converted stores will be over 10 percent higher and profit contribution will increase over 20 percent compared to the previous stores.
In fiscal 2026 and early fiscal 2027, the company said that the plan is to scale up further and complete 100 or more conversions with a first-year investment forecast between $22 million to $27 million and a similar path to payback of the investment of approximately two-to-three years.
This move follows a 10 store in-market test that was completed over the past year, where underperforming Shoe Carnival stores were closed, and new Shoe Station stores were opened in those markets. The company said that the customer response and business results “exceeded” its expectations on an aggregated basis with sales and profit contribution over 10 percent higher at the new Shoe Station stores versus Shoe Carnival stores.
Thursday’s growth strategy announcement comes at the same time the footwear retailer reported its fourth quarter 2024 and fiscal year-end results.
Net sales in fourth quarter 2024 were $262.9 million, compared to $280.2 million in the same time last year. Net income in Q4 was $14.7 million, or 53 cents per diluted share, compared to net income of $15.5 million, or 57 cents per diluted share, the same time last year.