Shoe Station Group — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the quarter ended August 1, 2026, were $284.3 million, a decrease from $306.4 million in the second quarter of 2025.
• Year-to-date net sales for the first six months of 2026 were $555.0 million, a 5.0 percent decline compared to $584.1 million in the same period of 2025.
• Comparable store sales declined 7.1 percent in the second quarter of 2026 and 4.7 percent year-to-date.
• Gross profit margin was 31.9 percent in the second quarter of 2026, down from 38.8 percent in the second quarter of 2025; year-to-date gross margin was 32.6 percent compared to 36.7 percent in 2025.
• Net income for the second quarter of 2026 was $6.3 million ($0.23 per diluted share), compared to $19.2 million ($0.70 per diluted share) in the second quarter of 2025.
• Year-to-date net income was $0.6 million ($0.02 per diluted share), compared to $28.6 million ($1.04 per diluted share) in 2025.
• Year-to-date non-GAAP adjusted net income was $12.5 million ($0.45 per diluted share), excluding $13.6 million in non-recurring charges related to the CEO Transition and Strategic Review.
• SG&A expenses decreased $10.6 million to $83.0 million in the second quarter of 2026 (29.2 percent of sales) from $93.6 million (30.6 percent of sales) in 2025; year-to-date SG&A increased $1.7 million to $179.1 million (32.3 percent of sales) from $177.4 million (30.3 percent of sales).
• Year-to-date non-GAAP adjusted SG&A decreased $11.9 million compared to 2025.
• Cash, cash equivalents, and marketable securities totaled $131.6 million at quarter-end, an increase of $39.7 million from the second quarter of 2025.
• The company ended the second quarter of 2026 debt-free.
• Operating lease right-of-use assets were $334.2 million as of August 1, 2026.
• Merchandise inventories were $426.6 million as of August 1, 2026.

Guidance and Future Outlook

• Fiscal 2026 net sales guidance was lowered to a range of $1.100 billion to $1.111 billion, representing a 2 to 3 percent decline versus Fiscal 2025.
• Fiscal 2026 comparable store sales for the second half are expected to range from down 1 percent to up 1 percent.
• Fiscal 2026 GAAP EPS guidance is $0.32 to $0.47; non-GAAP adjusted EPS guidance is $0.75 to $0.90.
• Fiscal 2026 gross profit margin guidance is approximately 32.5 to 32.7 percent, reflecting 390 to 410 basis points of compression versus Fiscal 2025.
• Fiscal 2026 GAAP SG&A is expected to be approximately flat versus Fiscal 2025; non-GAAP adjusted SG&A is expected to decrease by approximately $14 million.
• Fiscal 2026 GAAP tax rate guidance is approximately 37 percent; non-GAAP adjusted tax rate guidance is approximately 27 percent.
• Management expects the promotional environment to persist through the balance of the year.
• The company is supporting the fall and holiday seasons with incremental advertising investment.

Business Segments and Product Lines

• Shoe Carnival banner net sales were $178.5 million (63 percent of total), declining 6.5 percent with comparable store sales down 6.3 percent.
• Shoe Station banner net sales were $105.7 million (37 percent of total), declining 8.4 percent with comparable store sales down 8.5 percent.
• Sales declines were attributed to an increasingly promotional marketplace and assortments not fully aligned with customer preferences.
• Back-to-school comparable store sales improved significantly, with August comparable store sales down low single digits, supported by improved and localized assortments.
• Through the four weeks ended August 29, 2026, net sales declined 3.3 percent and comparable store sales declined 2.7 percent.
• The company rebannered 20 Shoe Carnival stores into Shoe Station stores during the second quarter, bringing the year-to-date total to 21 rebanners; no additional rebanners are expected for the remainder of Fiscal 2026.
• The majority of fall merchandise has been allocated with localized assortments, with management citing an outstanding boot assortment.

Market and Competitive Landscape

• The footwear marketplace became increasingly promotional as the quarter progressed.
• The company priced competitively to protect market position.
• The company operates 421 stores in 35 states and Puerto Rico under its Shoe Carnival and Shoe Station banners.
• The company trades on The Nasdaq Stock Market LLC under the symbol SHOE.

Risks and Challenges

• Gross profit margins were pressured by increased promotional activity, liquidation of aged and excess inventory, and the prior-year benefit from raising prices in advance of tariff-related cost increases.
• Buying, distribution, and occupancy costs reduced gross profit margin by 60 basis points due to lower net sales.
• The effective tax rate for the year-to-date period was 81.8 percent, primarily due to the non-deductibility of a portion of severance paid as part of the CEO Transition; the adjusted tax rate was 26.8 percent.
• The press release lists numerous forward-looking risks including intense competition, consumer spending changes, supply chain disruptions, trade policy impacts, and cybersecurity risks.

Management Commentary and Tone

• Cliff Sifford, Interim President and Chief Executive Officer, stated that Q2 results reflected a promotional marketplace and merchandise assortment misalignment, but noted significant improvement in fiscal August back-to-school results.
• Management expressed confidence in the fall merchandise assortment and the value proposition supported by incremental advertising investment.
• Management confirmed the company enters the second half with no debt, $131.6 million in cash and marketable securities, and inventory positioned to serve customers.
• The tone indicates a focus on stabilizing sales through localized assortments and managing the promotional environment while maintaining financial strength.

Other Key Points

• On June 12, 2026, following shareholder approval, the company changed its name from Shoe Carnival, Inc. to Shoe Station Group, Inc., and its stock symbol changed to SHOE.
• The company incurred $13.6 million in non-recurring pre-tax charges in the first quarter of 2026 related to the CEO Transition and a strategic review of its rebanner strategy.
• Cash dividends declared per share were $0.17 in the second quarter of 2026 and $0.34 year-to-date.
• The company purchased $7.0 million of common stock for treasury during the first six months of 2026.
• A conference call was held on September 10, 2026, at 9:00 a.m. Eastern Time to discuss results.