SHOE CARNIVAL INC Q4 FY2024 earnings call

• Fiscal 2024 was a profitable year with EPS at the top end of guidance, led by acquisitions, margin delivery, cost controls, and digital-first marketing.
• Announced a new strategic plan to scale Shoe Station from a regional retailer to a national footwear and accessories leader. Test of rebannering 10 stores showed Shoe Station was preferred by customers, with overall results exceeding success criteria.
• Intends to rebanner 50 to 75 stores in fiscal 2025, aiming for 51% of store fleet to be under Shoe Station in 24 months. The investment is expected to pay back in 2-3 years and increase store profits by over 20% in 2027.
• Committed to M&A, with strong balance sheet and cash flow, targeting market-leading footwear retailers for geographic expansion and higher-income customer base.
• Digital-first marketing approach continued to drive profitable growth, particularly during event periods.

In fiscal 2024, net sales totaled $1.2 billion, a growth of 2.3%. Shoe Station grew an industry-leading 5.7%. Rogan's achieved profitable results beyond expectations with integrations completed well ahead of target and full synergies captured. For Shoe Carnival, net sales in non-event periods were under pressure. In the fourth quarter, Shoe Carnival comparable sales declined 6.3% primarily due to non-event periods. Annual net sales for Shoe Carnival were impacted by mid-singles declines in non-event periods. Shoe Station contributed significantly to the overall sales growth with a 5.7% increase. Rogan's added approximately $16.5 million in revenues in the comparable 52 weeks last year.

• 2025 net sales expected to be in the range of $1.15 billion to $1.23 billion (down 4% to up 2%).
• GAAP EPS expected in the range of $1.60 to $2.10.
• Capital expenditures expected to be $45 million to $60 million, with $35 million to $45 million targeted for rebanners and other store growth.
• Rebannering investment is expected to pay back fully in a 2-3 year horizon and increase annual profit contribution to rebannered stores by over 20% in 2027.

• Inflationary pressures constraining purchases among lower-income households and urban consumers, leading to customer pullback in non-event periods for Shoe Carnival.
• Uncertainty surrounding tariffs and their impact on pricing, consumer confidence, and vendor relationships.
• Volatility with Hispanic customers affecting sales trends.

Q: About rebannering stores in market vs out of market A: Mark Worden said the 10-store test was in existing markets and performed well. The first tranche of 50 to 75 stores in 2025 is focused on filling gaps in existing markets where Shoe Station is known, with plans to expand into new markets later, confirming results through testing.

Q: On tariffs and pricing A: Carl Scibetta said vendor pricing is unsettled, with some price increases on individual items but no across-the-board changes for fall based on tariffs. Mark Worden added the guidance assumes modest price increases and would revisit if sharp implications from tariffs occur.

Q: On comps, margin, and first quarter EPS A: Patrick Edwards said for 2025, there would be some deleverage in margins due to expected sales decline, with midpoint expecting margin above 35% for the year. In the first quarter, sales trends resemble last year's non-event periods, and the rebannering impact is expected to be generally ratable between the first half and back half of the year, with $0.15 to $0.20 per quarter impact