Shoe Carnival is switching things up.
The company has been engaging in tests of replacing some of its namesake stores with one of its other banners, Shoe Station.
The shoe retailer went into the experiment by defining success as 3% to 5% annual sales growth. That is approximately the breakeven point for the investment required to close an existing Shoe Carnival store and open a new Shoe Station store in the market.
In its first test locations, stores that were switched performed “exceptionally well,” CEO Mark Worden said on the company’s latest earnings call.
Worden expected those inaugural store switches to go well. The first test markets included three stores in Alabama and Mississippi, where Shoe Station has high brand awareness. “These three stores did more than succeed, though,” with all three locations notching 15% increases year over year, the CEO told analysts on Thursday.
Growth at those locations was achieved across athletic and nonathletic categories, and men’s and women’s. Moreover, each location saw profits jump 20% compared to the year prior.
Due to the results, Shoe Carnival is expanding the scope of its testing and changing six or seven stores to become Shoe Stations this fall. The company is focusing its tests on Southern states where Shoe Station is known but “not the market leader,” according to Worden.
Shoe Carnival acquired Shoe Station, which was up until then a family-owned company, for $67 million in late 2021. This February, the company announced it acquired Rogan’s Shoes for $45 million in a deal meant to advance the larger company strategy to become “the nation's leading family footwear retailer.” Executives have said that Shoe Carnival aims to be a multi-billion dollar brand.
“Shoe Station and Rogan’s both demonstrate our successful approach to M&A as a key component of our long-term growth strategy,” Worden said this spring. “To date, we've largely focused on acquisitions that provide market leadership in their regions, are profitable and give us the opportunity to expand our market presence or further penetrate existing markets.”
The company recently reported “record” net sales in Q2 that surpassed “all previous second quarter sales in our company’s history,” according to a company press release. Net sales increased nearly 13% year over year to $332.7 million, and the company delivered double-digit growth in the Shoe Station banner.
Shoe Carnival raised its guidance for the year, and now expects net sales to be between $1.23 billion and $1.25 billion, compared to previous guidance of $1.21 billion to $1.25 billion.
The company operates 430 stores, with nearly 370 under the Shoe Carnival name and 34 under the Shoe Station banner. It has a strategic plan in place to surpass 500 stores in its fleet by 2028.
