Shoe Station Group posted a sharp earnings miss for the second quarter of fiscal 2026, with diluted GAAP EPS of $0.23 falling well below Wall Street’s consensus estimate of $0.3433, as net sales dropped 7.2% to $284.3 million from $306.4 million a year earlier.
The company, which operates under two banners—Shoe Carnival and Shoe Station and officially adopted its new name in June—also reported comparable store sales declined 7.1%, compared with a 7.5% fall in the year-ago quarter. Shoe Carnival comps fell 6.3% on net sales of $178.5 million, while Shoe Station comps dropped 8.5% on $105.7 million in sales.
Gross profit margin contracted sharply to 31.9%, a drop of 690 basis points year over year, driven in part by a 630-basis-point decline in merchandise margin. Selling, general and administrative expenses totalled $83.0 million, down $10.6 million from a year ago, with SG&A as a percentage of sales improving to 29.2% from 30.6%. Net income fell to $6.3 million from $19.2 million.
Management pointed to customer traffic, not pricing, as the primary headwind. Interim President and CEO Cliff Sifford said lower prices alone did not draw customers through the door. “When the assortment and sizing based on the customer that shops the store is wrong, promotion cannot fix it,” Sifford said during the earnings call.
The company’s e-commerce business provided a bright spot, with online comparable sales rising 18.8% across both banners, offsetting a 9.5% decline in store-only comps. Category performance was mixed: adult athletic, which accounts for roughly 37% of sales, declined mid-single digits overall, though men’s athletic was down only about 1% and running grew in both genders. Women’s non-athletic, roughly 23% of sales, fell high single digits, while children’s shoes also declined high single digits. Men’s work boots were a rare positive, comping up about 2%.
Sifford expressed confidence in the upcoming seasonal merchandise. “I believe our boot assortment is outstanding, the strongest we have offered in several years, and boots are the most important fall category in family footwear,” he said.
For the first half of fiscal 2026, net sales totalled $555.0 million, down 5.0%, with comparable store sales down 4.7%. GAAP net income was $631,000, or $0.02 per diluted share, which included $13.6 million of non-recurring charges related to the CEO transition and strategic review. Non-GAAP adjusted net income was $12.5 million, or $0.45 per diluted share.
In August, fiscal third quarter to date, comparable store sales declined 2.7% and net sales fell 3.3%, marking an improvement from the second quarter. Shoe Carnival specifically was down less than 1% for the month. E-commerce continued double-digit growth.
Shoe Station issued an updated full-year outlook, projecting second-half comparable store sales to range from down 1% to up 1%, full-year net sales of $1.1 billion to $1.111 billion, down about 2% to 3% from fiscal 2025, and GAAP EPS of $0.32 to $0.47. Adjusted EPS is guided to $0.75 to $0.90. Full-year gross margin is expected to be 32.5% to 32.7%, implying roughly 390 to 410 basis points of compression from fiscal 2025. Adjusted SG&A is expected to decline by about $14 million, including increased advertising spend.
On the balance sheet, the company held $131.6 million in cash equivalents and marketable securities, up $39.7 million year over year, with zero debt outstanding and $99 million available under its $100 million credit facility. Inventory ended the quarter at $426.6 million, down 5.0% from a year earlier, with inventory per store down 3.6%. Shoe Station also paid its 57th consecutive quarterly dividend.
The company submitted initial tariff refund claims in July following a February Supreme Court ruling striking down certain tariffs under the International Emergency Economic Powers Act, expecting total claims of approximately $1.2 million. Store impairment charges totalled $396,000 on four stores during the quarter, bringing year-to-date impairments to $6.7 million on 11 stores.
Shares fell 6.46% in pre-market trading to $12.10 from a previous close of $12.93. The stock has traded between $10.20 and $24.21 over the past 52 weeks and carries a dividend yield of 5.26%.
