What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-12-05 compared with 2025-09-05 · 106 added, 96 removed, 164 unchanged (55% of the section changed)

4 unchanged sentences

These factors include, but are not limited to:

our ability to increase our comparable stores Net Sales and achieve expected operating results from rebannering Shoe Carnival locations into Shoe Station locations within expected time frames, or at all;

our ability to achieve expected operating results from, and planned growth of, our Shoe Station banner within expected time frames, or at all;

our ability to achieve expected operating results from, and planned growth of, our Shoe Station banner, including our ability to increase our comparable stores Net Sales from rebannering Shoe Carnival locations into Shoe Station locations and our ability to achieve expected cost savings, synergies and inventory reductions from operating principally under one banner, within expected time frames, or at all;

the impact of competition and pricing, including our ability to maintain current promotional intensity levels;

28 unchanged sentences

future stock repurchases under our stock repurchase program and future dividend payments.

For a more detailed discussion of risk factors impacting us, see the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

For a more detailed discussion of risk factors impacting us, see the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 and “Risk Factors” in PART II, ITEM 1A of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information to assist the reader in better understanding and evaluating our financial condition and results of operations.

We encourage you to read this in conjunction with our Condensed Consolidated Financial Statements and the notes thereto included in PART I, ITEM 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 as filed with the SEC.

This section of this Quarterly Report on Form 10-Q generally discusses our results for second quarter 2025 and second quarter 2024 and year-over-year comparisons between second quarter 2025 and second quarter 2024, as well as year-to-date results for, and comparisons between, the two periods.

Referred to herein, second quarter 2025 is the thirteen weeks ended August 2, 2025 and second quarter 2024 is the thirteen weeks ended August 3, 2024.

Also referred to herein, year-to-date 2025 is the twenty-six weeks ended August 2, 2025 and year-to-date 2024 is the twenty-six weeks ended August 3, 2024.

This section of this Quarterly Report on Form 10-Q generally discusses our results for third quarter 2025 and third quarter 2024 and year-over-year comparisons between third quarter 2025 and third quarter 2024, as well as year-to-date results for, and comparisons between, the two periods.

Referred to herein, third quarter 2025 is the thirteen weeks ended November 1, 2025 and third quarter 2024 is the thirteen weeks ended November 2, 2024.

Also referred to herein, year-to-date 2025 is the thirty-nine weeks ended November 1, 2025 and year-to-date 2024 is the thirty-nine weeks ended November 2, 2024.

Overview of Our Business

31 unchanged sentences

August 2, 2025

November 1, 2025

August 3, 2024

November 2, 2024

(1) Comparable stores Net Sales is a key performance indicator for us.

Comparable stores Net Sales include stores that have been open for 13 full months after such stores’ grand opening or acquisition prior to the beginning of the period, including those stores that have been relocated, remodeled or rebannered.

Therefore, stores recently opened, acquired or permanently closed are not included in comparable stores Net Sales.

Therefore, stores recently opened, acquired or permanently closed

are not included in comparable stores Net Sales.

We generally include e-commerce sales in our comparable stores Net Sales as a result of our omnichannel retailer strategy.

Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores.

Rogan’s comparable stores Net Sales are included in our comparable stores Net Sales quarterly

calculations beginning in second quarter 2025.

Rogan’s comparable stores Net Sales are included in our comparable stores Net Sales quarterly calculations beginning in the thirteen weeks ended August 2, 2025.

Rogan’s comparable stores Net Sales will begin to be included in our comparable stores Net Sales year-to-date and annual calculations beginning in Fiscal 2026.

The following table sets forth our results of operations expressed as a percentage of Net Sales for the periods indicated:

August 2, 2025

August 3, 2024

August 2, 2025

August 3, 2024

November 1, 2025

November 2, 2024

November 1, 2025

November 2, 2024

Cost of sales (including buying, distribution and

4 unchanged sentences

Income tax expense

Executive Summary for Second Quarter Ended August 2, 2025

Our second quarter 2025 Net Income was $19.2 million, or $0.70 per diluted share, and was lower than the $22.6 million, or $0.82 per diluted share, reported in second quarter 2024.

Our second quarter 2025 results reflected $0.21 per diluted share of rebanner strategy investments.

Three strategic decisions shaped second quarter 2025.

First, we prioritized Gross Profit margin over pursuing lower-quality, lower-profit sales.

Second, we invested in inventory depth to improve availability for the third quarter 2025 Back-to-School period.

Third, we continued investing in our rebanner program despite market uncertainty.

We achieved a Gross Profit margin of 38.8%, up 270 basis points from second quarter 2024.

The increase included a 390 basis point increase in our merchandise margin, driven by disciplined pricing across all banners, a favorable mix shift toward Shoe Station’s higher income customers and strategic inventory investments that improved in-stock rates on key merchandise.

Executive Summary for Third Quarter Ended November 1, 2025

Our third quarter 2025 Net Income was $14.6 million, or $0.53 per diluted share, and was lower than the $19.2 million, or $0.70 per diluted share, reported in third quarter 2024.

Our third quarter 2025 results included $0.22 per diluted share of rebanner strategy investments.

Our Net Sales declined 3.2% in third quarter 2025 compared to third quarter 2024, primarily due to a 5.2% decline in Net Sales at our Shoe Carnival banner as we maintained pricing discipline despite pressure on lower-income consumers.

In contrast, our Shoe Station banner achieved Net Sales growth of 5.3% in third quarter 2025 compared to third quarter 2024, driven by our rebanner strategy including omnichannel growth.

Our Shoe Station banner’s Net Sales growth in third quarter 2025 compared to third quarter 2024 outperformed Shoe Carnival’s by 10.5 percentage points, highlighting the strength of the One Banner Strategy as more fully described below.

Our comparable stores Net Sales declined 2.7% and included comparable stores Net Sales growth in Back-to-School August.

Our Shoe Station banner grew comparable stores Net Sales mid-single digits in third quarter 2025, while comparable stores Net Sales at our Shoe Carnival banner declined mid-single digits and was the primary driver of our overall comparable stores Net Sales decline.

We achieved a Gross Profit margin of 37.6%, up 160 basis points from third quarter 2024.

The increase included a 190 basis point increase in our merchandise margin, driven by disciplined pricing across all banners, a favorable mix shift toward Shoe Station’s higher income customers and strategic inventory investments.

This more than offset 30 basis points of deleverage in buying, distribution and occupancy costs.

Our Net Sales declined 7.9% in second quarter 2025 compared to second quarter 2024.

This decline was primarily due to a 10.1% decline in Net Sales at our Shoe Carnival banner as we maintained pricing discipline despite pressure on the lower-income consumer.

In contrast, our Shoe Station banner achieved Net Sales growth of 1.6% in second quarter 2025 compared to second quarter 2024, driven by our rebanner strategy.

Our comparable stores Net Sales declined 7.5%, primarily due to a high-single digit comparable stores Net Sales decline at our Shoe Carnival banner, partially offset by break-even comparable stores Net Sales at our Shoe Station banner.

Earlier this year, we announced plans to grow our Shoe Station banner from a market leader in the Southeast into a national footwear and accessories leader.

As part of this plan, we rebannered 10 Shoe Carnival stores to Shoe Station stores during a test phase in Fiscal 2024 and have rebannered 44 stores in Fiscal 2025, of which 20 were rebannered in second quarter 2025.

With respect to these 54 rebannered stores and related omnichannel growth, in second quarter 2025, we achieved a low single-digit increase in Net Sales and an over 300 basis point increase in product margin.

On a year-to-date 2025 basis, these rebannered stores achieved the following:

• Mid single-digit comparable stores Net Sales growth, outperforming the comparable stores Net Sales decline at our Shoe Carnival banner by over 15%;

• Double-digit increases in average unit retail selling prices;

• Increased product margins;

• High single-digit growth in store-level profit.

We expect to rebanner an additional 58 stores in the second half of Fiscal 2025 (29 in third quarter 2025 and 29 in fourth quarter 2025).

As a result, approximately 145 stores, or one-third of our current store fleet, is expected to operate as a Shoe Station store by the end of Fiscal 2025, reflecting a further acceleration of our rebanner plan, including the rebannering of all Rogan’s stores, while also broadly

utilizing the Rogan’s tradename.

We continue to expect that 51% of our fleet will operate as a Shoe Station store by August 2026 and that over 80% of our current fleet will operate as a Shoe Station store by March 2027.

We view our rebanner strategy as the most effective method to stabilize and eventually grow our Net Sales and increase our market share and the productivity of our store base in areas where we underperformed, or believe we can perform even better, with our Shoe Station concept.

To achieve this growth, we expect a reduction in our annual Fiscal 2025 Operating Income of approximately $25 million for store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store's grand opening, customer acquisition costs and other costs.

We continue to estimate the payback of this investment over a two-to-three year period after a store’s grand opening.

During second quarter 2025, we estimate this rebanner strategy impacted our Operating Income by approximately $7.5 million, or $0.21 per diluted share, and in year-to-date 2025, we estimate this rebanner strategy impacted our Operating Income by approximately $13.0 million, or $0.36 per diluted share.

Both the quarter and year-to-date periods include an approximate 1% decline in Net Sales due to lost sales and an approximate 2% increase in our Selling, General and Administrative Expenses (“SG&A”) as a percent of Net Sales.

Additionally, we expect capital expenditures supporting the rebanner initiative to be in a range of $30 to $35 million in Fiscal 2025, of which approximately $20 million have been incurred in year-to-date 2025.

Though impacting near-term profitability, we expect these investments will position us for more sustainable performance in the future.

As a result, our Gross Profit increased to $111.8 million in third quarter 2025 compared to $110.4 million in third quarter 2024.

The Fiscal 2024 year-end marked the 20th consecutive year where we ended a fiscal year with no debt, fully funding our operations, acquisitions and investments from operating cash flow.

Through second quarter 2025, we also funded our operations, including our rebanner investments and inventory positions, without incurring any debt and grew our Cash, Cash Equivalents and Marketable Securities by $7.5 million compared to the end of second quarter 2024.

At the end of second quarter 2025, we had approximately $91.9 million of Cash, Cash Equivalents and Marketable Securities available and $99.0 million of available borrowings under our existing credit facility to fund our growth objectives.

Our Merchandise Inventories at the end of second quarter 2025 were $449.0 million, up approximately 5% compared to the end of second quarter 2024.

We increased our inventory positions this year in advance of our peak Back-to-School selling period and this improved availability of key merchandise drove margin expansion and positive comparable stores Net Sales during August 2025.

Through third quarter 2025, we also funded our operations, including our rebanner investments and inventory positions, without incurring any debt and grew our Cash, Cash Equivalents and Marketable Securities by $16.6 million, or 18.2%, compared to the end of third quarter 2024.

At the end of third quarter 2025, we had $107.7 million of Cash, Cash Equivalents and Marketable Securities and $99.0 million of available borrowings under our existing credit facility to fund our growth objectives.

Our Merchandise Inventories at the end of third quarter 2025 were $435.3 million, up approximately 7% compared to the end of third quarter 2024.

We increased our inventory positions this year, taking advantage of opportunistic buys for seasonal and in-demand merchandise.

This improved availability of key merchandise drove margin expansion in the second and third quarters of 2025 and positive comparable stores Net Sales during August 2025.

We believe our inventory on hand positions us well to navigate any potential supply chain disruptions.

We expect to normalize inventory levels during Fiscal 2026 as supply chain visibility improves.

Results of Operations for Second Quarter Ended August 2, 2025 Compared to Second Quarter Ended August 3, 2024

Net Sales were $306.4 million during second quarter 2025, a decrease of $26.3 million, or 7.9%, compared to second quarter 2024.

The decrease was primarily due to a 10.1% Net Sales decline in the Shoe Carnival banner due to a decline in traffic and lost sales as impacted by our rebanner strategy.

The Shoe Carnival banner’s high-single digit comparable stores Net Sales decline was the main driver of our overall 7.5% comparable stores Net Sales decline.

These decreases were partially offset by continued growth from the Shoe Station banner’s 1.6% Net Sales increase compared to second quarter 2024.

E-commerce sales were approximately 8% of merchandise sales in second quarter 2025, compared to 9% in second quarter 2024.

Gross Profit was $118.8 million during second quarter 2025, a decrease of $1.1 million compared to second quarter 2024.

Gross profit margin in second quarter 2025 was 38.8% compared to 36.1% in second quarter 2024.

The increase in gross profit margin was driven by a 390 basis point increase in merchandise margin due to promotional and pricing strategies and the cost of inventory acquired.

This increase was partially offset by the deleveraging effect of buying, distribution and occupancy costs due to lower Net Sales in second quarter 2025 compared to second quarter 2024.

One Banner Strategy

Earlier this year, we announced our plan to grow our Shoe Station banner from a market leader in the Southeast into a national footwear and accessories leader.

As part of this plan, we rebannered 10 Shoe Carnival stores to Shoe Station stores during a test phase in Fiscal 2024.

As a result of divergent Net Sales trends between our Shoe Carnival and Shoe Station banners that we have experienced over time, including in third quarter 2025, we have rebannered 100 stores in year-to-date 2025, of which 56 were rebannered in third quarter 2025.

We now have 144 Shoe Station stores, inclusive of an additional store that rebannered after third quarter 2025 ended, which represents approximately 34% of our current store fleet, up from 10% of stores at the beginning of Fiscal 2025.

Stores rebannered during third quarter 2025 included Rogan’s store locations.

Our Rogan's stores are now fully integrated into the Shoe Station banner while continuing to broadly utilize the Rogan’s trade name.

Beginning in fourth quarter 2025, we will report Rogan's store results as part of the Shoe Station banner.

No additional stores are expected to rebanner in Fiscal 2025.

As a result of the rebannering completed in Fiscal 2025, we expect a reduction in our Fiscal 2025 Operating Income of approximately $25 million for store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store's grand opening, customer acquisition costs and other costs.

During third quarter 2025, we estimate these rebannering costs reduced our Operating Income by approximately $8.1 million, or $0.22 per diluted share, and in year-to-date 2025, we estimate rebannering costs reduced our Operating Income by approximately $21.1 million, or $0.58 per diluted share.

Third quarter 2025 included an approximate 0.5% reduction in Net Sales due to lost sales and an approximate 2.5% increase in our Selling, General and Administrative Expenses (“SG&A”) as a percent of Net Sales.

We continue to estimate the payback of this investment over a two-to-three year period after a store’s grand opening.

Capital expenditures supporting the rebanner initiative totaled approximately $31 million in year-to-date 2025.

We expect to have 215 Shoe Station stores by Back-to-School 2026, or approximately 51% of the current store base.

We revised our rebanner timeline and now expect that well over 90% of our fleet will operate as Shoe Station before the end of Fiscal 2028, compared to the previous expectation that 80% of the fleet would be rebannered by March 2027.

Remaining store locations will be evaluated for rebannering, outlet repositioning or closure.

To achieve this 51% threshold by Back-to-School in Fiscal 2026, we expect capital expenditures in a range of $25 million to $35 million and rebannering costs decreasing our Operating Income in a range of $25 million to $30 million.

Though impacting near-term profitability, we expect these investments will position us for more sustainable performance in the future.

As we move toward well over 90% of the store fleet operating as a Shoe Station store, we expect to realize cost savings from reduced dual-brand complexity across merchandising, marketing, systems, supply chain and back office, as well as a reduction in our inventory investment, as Shoe Station’s merchandising model requires less inventory per store to deliver a superior customer experience.

We expect full realization of these benefits by the end of Fiscal 2027, with some benefit expected in the second half of Fiscal 2026 after approximately 51% of our current fleet is expected to operate as a Shoe Station store.

On November 13, 2025, we announced that our Board of Directors unanimously approved changing our corporate name to Shoe Station Group, Inc., subject to shareholder approval at our Annual Meeting of Shareholders in June 2026.

Results of Operations for Third Quarter Ended November 1, 2025 Compared to Third Quarter Ended November 2, 2024

Net Sales were $297.2 million during third quarter 2025, a decrease of $9.7 million, or 3.2%, compared to third quarter 2024.

The decrease was primarily due to a 5.2% Net Sales decline at our Shoe Carnival banner due to a decline in traffic, as we maintained pricing discipline despite pressure on lower-income consumers, and lost sales as impacted by our rebanner strategy.

This decrease was partially offset by continued growth from our Shoe Station banner, which contributed a 5.3% increase in Net Sales compared to third quarter 2024.

Our 2.7% comparable stores Net Sales decline included an approximate 11% decrease in units sold, partially offset by pricing increases.

Our Shoe Carnival banner comparable stores Net Sales declined mid-single digits, and our Shoe Station banner comparable stores Net Sales increased mid-single digits.

E-commerce sales were approximately 10% of merchandise sales in third quarter 2025, compared to 11% in third quarter 2024.

Gross Profit was $111.8 million during third quarter 2025, an increase of $1.5 million compared to third quarter 2024.

Gross profit margin in third quarter 2025 was 37.6%, an increase of 160 basis points, compared to 36.0% in third quarter 2024.

The increase in gross profit margin was driven by a 190 basis point increase in merchandise margin due to disciplined pricing, favorable mix shift toward higher income Shoe Station customers and strategic inventory investments.

This increase was partially offset by the deleveraging effect of buying, distribution and occupancy costs due to lower Net Sales in third quarter 2025 compared to third quarter 2024.

Selling, General and Administrative Expenses

SG&A increased $3.7 million in second quarter 2025 to $93.6 million compared to $89.9 million in second quarter 2024.

The increase was due primarily to expenses associated with our rebanner strategy, partially offset by decreases in expenses impacting our other stores in second quarter 2025 compared to second quarter 2024.

As a percent of Net Sales, SG&A were 30.6% in second quarter 2025 compared to 27.1% in second quarter 2024, with the increase being due primarily to the rebanner costs incurred in second quarter 2025 and lower Net Sales.

The effective income tax rate for second quarter 2025 was 25.9% compared to 26.3% for second quarter 2024.

SG&A increased $7.4 million in third quarter 2025 to $93.2 million compared to $85.9 million in third quarter 2024.

The increase was due primarily to expenses associated with our rebanner strategy.

As a percent of Net Sales, SG&A were 31.3% in third quarter 2025 compared to 28.0% in third quarter 2024, with the increase being due primarily to the rebanner costs incurred in third quarter 2025 and lower Net Sales.

The effective income tax rate for third quarter 2025 was 25.5% compared to 24.7% for third quarter 2024.

Our provision for income taxes is based on the current estimate of our annual effective tax rate and is adjusted as necessary for quarterly events.

The lower effective tax rate in second quarter 2025 compared to second quarter 2024 was primarily due to nondeductible expenses incurred in Fiscal 2024 associated with the acquisition of Rogan’s.

The higher effective tax rate in third quarter 2025 compared to third quarter 2024 was primarily due to impacts of the Rogan’s acquisition in Fiscal 2024.

For the full 2025 fiscal year, we expect our tax rate to be approximately 26% compared to the 24.3% effective tax rate recognized during the full 2024 fiscal year.

Results of Operations Year-to-Date Through August 2, 2025 Compared to Year-to-Date Through August 3, 2024

Results of Operations Year-to-Date Through November 1, 2025 Compared to Year-to-Date Through November 2, 2024

Net Sales were $881.3 million during year-to-date 2025, a decrease of $58.7 million, or 6.2%, compared to year-to-date 2024.

The decrease was primarily due to a 10.0% Net Sales decline in the Shoe Carnival banner due to a decline in traffic and lost sales as impacted by our rebanner strategy.

The Shoe Carnival banner’s high-single digit comparable stores Net Sales decline was the main driver of our overall 7.9% comparable stores Net Sales decline.

These decreases were partially offset by continued growth from the Shoe Station banner’s 2.9% Net Sales increase compared to year-to-date 2024.

E-commerce sales were approximately 9% of merchandise sales in both year-to-date 2025 and year-to-date 2024.

The decrease was primarily due to an 8.5% Net Sales decline at our Shoe Carnival banner due to a decline in traffic and lost sales as impacted by our rebanner strategy.

This decrease was partially offset by continued growth from our Shoe Station banner, which contributed a 3.8% increase in Net Sales compared to year-to-date 2024.

Our 6.3% comparable stores Net Sales decline included an approximate 13% decrease in units sold, partially offset by pricing increases.

Our Shoe Carnival banner comparable stores Net Sales declined high-single digits, and our Shoe Station banner comparable stores Net Sales increased low-single digits.

E-commerce sales were approximately 9% of merchandise sales in year-to-date 2025, compared to 10% in year-to-date 2024.

Gross Profit was $326.4 million during year-to-date 2025, a decrease of $10.7 million compared to year-to-date 2024.

Gross profit margin in year-to-date 2025 was 37.0% compared to 35.9% in year-to-date 2024.

The increase in gross profit margin was driven by a 230 basis point increase in merchandise margin due to promotional and pricing strategies and the cost of inventory acquired.

This increase was partially offset by the deleveraging effect of buying, distribution and occupancy costs due to lower Net Sales in year-to-date 2025 compared to year-to-date 2024.

The increase in gross profit margin was driven by a 220 basis point increase in merchandise margin due to disciplined pricing, favorable mix shift toward higher income Shoe Station customers and strategic inventory investments.

This increase was partially offset by 110 basis points from buying, distribution and occupancy costs, primarily due to deleveraging on lower Net Sales in year-to-date 2025 compared to year-to-date 2024.

Selling, General and Administrative Expenses

SG&A increased $10.6 million in year-to-date 2025 to $270.6 million compared to $260.0 million in year-to-date 2024.

The increase was due primarily to expenses associated with our rebanner strategy, partially offset by decreases in expenses impacting our other stores in year-to-date 2025 compared to year-to-date 2024.

The increase was due primarily to expenses associated with our rebanner strategy, partially offset by decreases in selling expenses impacting our other stores in year-to-date 2025 compared to year-to-date 2024.

As a percent of Net Sales, SG&A were 30.7% in year-to-date 2025 compared to 27.7% in year-to-date 2024, with the increase being due primarily to the rebanner costs incurred in year-to-date 2025 and lower Net Sales.

3 unchanged sentences

The effective income tax rate for year-to-date 2025 was 26.2% compared to 25.5% for year-to-date 2024.

The higher effective tax rate in year-to-date 2025 compared to year-to-date 2024 was due to discrete adjustments recorded in both Fiscal 2025 and Fiscal 2024 related to share-settled equity awards, offset by nondeductible expenses incurred in Fiscal 2024 associated with the acquisition of Rogan’s.

The higher effective tax rate in year-to-date 2025 compared to year-to-date 2024 was due to discrete adjustments recorded in both Fiscal 2025 and Fiscal 2024 related to share-settled equity awards.

Liquidity and Capital Resources

Our primary sources of liquidity are $91.9 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of second quarter 2025, cash generated from operations and availability under our $100 million Credit Agreement.

Our primary sources of liquidity are $107.7 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of third quarter 2025, cash generated from operations and availability under our $100 million Credit Agreement.

We believe our resources will be sufficient to fund our cash needs, as they arise, for at least the next 12 months.

Our primary uses of cash are normally for working capital, which are principally inventory purchases, investments in our stores, such as rebanners and new stores, remodels and relocations, distribution center initiatives, lease payments associated with our real estate leases, potential dividend payments, potential share repurchases under our share repurchase program and the financing of capital projects, including investments in new systems.

repurchases under our share repurchase program and the financing of capital projects, including investments in new systems.

As part of our growth strategy, we have also pursued strategic acquisitions of other footwear retailers.

1 unchanged sentence

Net cash generated from operating activities was $37.3 million in year-to-date 2025 compared to $58.1 million in year-to-date 2024.

The decrease in operating cash flow was primarily driven by increased inventory purchases in advance of our peak Back-to-School selling period, the timing of prepaid contract payments and expenses to support our rebanner strategy.

Working capital increased on a year-over-year basis and totaled $417.6 million at August 2, 2025 compared to $377.1 million at August 3, 2024.

The increase was primarily attributable to higher Merchandise Inventories, a higher cash balance and lower Accounts Payable.

Our current ratio was 3.7 as of August 2, 2025 compared to 3.4 as of August 3, 2024.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBB").

The decrease in operating cash flow was primarily driven by increased inventory purchases and reduction in Net Income to support our rebanner strategy.

Working capital increased on a year-over-year basis and totaled $431.7 million at November 1, 2025 compared to $391.3 million at November 2, 2024.

The increase was primarily attributable to higher Merchandise Inventories and a higher cash balance, partially offset by higher Accounts Payable.

Our current ratio was 4.1 as of November 1, 2025 compared to 3.9 as of November 2, 2024.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the "OBBB").

The OBBB makes key elements of the Tax Cuts and Jobs Act permanent, including 100% bonus depreciation and domestic research cost expensing.

7 unchanged sentences

We invest in publicly traded mutual funds designed to mitigate income statement volatility associated with our non-qualified deferred compensation plan.

The balance of these Marketable Securities was $13.2 million at August 2, 2025, compared to $14.4 million at February 1, 2025 and $12.8 million at August 3, 2024.

The balance of these Marketable Securities was $13.3 million at November 1, 2025, compared to $14.4 million at February 1, 2025 and $13.9 million at November 2, 2024.

Additional information can be found in Note 5 — “Fair Value Measurements” to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q.

4 unchanged sentences

During year-to-date 2025, net cash used in financing activities was $14.7 million compared to $11.6 million during year-to-date 2024.

The increase in net cash used in financing activities was primarily due to the increase in shares surrendered by employees to pay taxes on stock-based compensation awards and increased dividend payments.

The increase in net cash used in financing activities was primarily due to increased dividend payments and the increase in shares surrendered by employees to pay taxes on stock-based compensation awards.

Credit Agreement

2 unchanged sentences

Material covenants associated with the Credit Agreement require that we maintain a minimum net worth of $250 million and a consolidated interest coverage ratio of not less than 3.0 to 1.0.

We were in compliance with these covenants as of August 2, 2025.

We were in compliance with these covenants as of November 1, 2025.

The Credit Agreement contains certain restrictions.

1 unchanged sentence

The Credit Agreement stipulates that cash dividends and share repurchases of $15 million or less per fiscal year can be made without restriction as long as there is no default or event of default before and immediately after such distributions.

We are also permitted to make acquisitions and pay cash dividends or repurchase shares in excess of $15 million in a fiscal year provided that (a) no default or event of default exists before and immediately after the transaction and (b) on a proforma basis, the ratio of (i) the sum of (A) our consolidated funded indebtedness plus (B) three times our consolidated rental expense to (ii) the sum of (A) our consolidated EBITDA plus (B) our consolidated rental expense is less than 3.5 to 1.0.

the sum of (A) our consolidated EBITDA plus (B) our consolidated rental expense is less than 3.5 to 1.0.

Among other restrictions, the Credit Agreement also limits our ability to incur additional secured or unsecured debt to $20 million.

2 unchanged sentences

During year-to-date 2025, we did not borrow or repay funds under the Credit Agreement.

Letters of credit outstanding were $1.0 million at August 2, 2025 and our borrowing capacity was $99.0 million.

Letters of credit outstanding were $1.0 million at November 1, 2025 and our borrowing capacity was $99.0 million.

The terms “net worth”, “consolidated interest coverage ratio”, “consolidated funded indebtedness”, “consolidated rental expense”, “consolidated EBITDA”, “base rate” and “Adjusted Term SOFR” are defined in the Credit Agreement.

1 unchanged sentence

Capital Expenditures

Capital expenditures for Fiscal 2025, including actual expenditures in year-to-date 2025, are expected to be between $45 million and $55 million, with approximately $30 million to $35 million to be used for rebannered stores, approximately $5 million for other store growth and approximately $10 million to $15 million for upgrades to our Evansville distribution center and e-commerce platform, various other store improvements, continued investments in technology and normal asset replacement activities.

Capital expenditures for Fiscal 2025, inclusive of the approximate $31 million of rebanner capital expenditures in year-to-date 2025, are expected to be between $45 million and $55 million.

The resources allocated to projects are subject to near-term changes depending on potential inflationary, supply chain and other macroeconomic impacts.

3 unchanged sentences

We currently have 428 stores and we believe our current store footprint provides for growth in new markets within the United States as well as fill-in opportunities within existing markets.

We plan to rebanner 58 additional stores into Shoe Station stores in the second half of Fiscal 2025 and plan to complete additional rebanners in Fiscal 2026 and early Fiscal 2027.

We continue to expect that over 50% of our present store fleet will operate as Shoe Station stores by Back-to-School 2026 and over 80% of our present store fleet will operate as Shoe Station stores by March 2027.

In Fiscal 2025, we rebannered 24 Shoe Carnival stores in the first quarter and 20 Shoe Carnival stores in the second quarter.

We also opened new Shoe Station stores and closed Shoe Carnival stores in the twenty-six weeks ended August 2, 2025 and August 3, 2024 as follows:

Twenty-six Weeks Ended August 2, 2025

In third quarter 2025, we rebannered 28 Shoe Carnival stores and all 28 Rogan’s locations.

One store was rebannered after the end of third quarter 2025, and we expect no additional rebanners in Fiscal 2025.

We also opened new Shoe Station stores and closed Shoe Carnival stores in the thirty-nine weeks ended November 1, 2025 and November 2, 2024 as follows:

Thirty-nine Weeks Ended November 1, 2025

Shoe Carnival

Twenty-six Weeks Ended August 3, 2024

Thirty-nine Weeks Ended November 2, 2024

Shoe Carnival

We expect limited store openings and closures in the near term as we execute our rebanner strategy and increase our scale through acquisitions.

We expect limited store openings and closures in the near term as we execute our One Banner Strategy and increase our scale through acquisitions.

We expect to have 215 Shoe Station stores by Back-to-School 2026, or approximately 51% of our current store base.

We have revised our rebanner timeline and now expect that well over 90% of our fleet will operate as Shoe Station before the end of Fiscal 2028, compared to our previous expectation that 80% of our fleet would be rebannered by March 2027.

The remaining locations will be evaluated for rebannering, outlet repositioning or closure.

To achieve this 51% threshold by Back-to-School 2026, we expect capital expenditures in Fiscal 2026 to be similar to Fiscal 2025 in a range of $25 to $35 million.

Dividends and Share Repurchases

On June 25, 2025, the Board of Directors approved the payment of a second quarter cash dividend paid to our shareholders.

The quarterly cash dividend of $0.15 per share was paid on July 21, 2025 to shareholders of record as of the close of business on July 7, 2025.

In second quarter 2024, the dividend paid was $0.135 per share.

On September 23, 2025, the Board of Directors approved the payment of a third quarter cash dividend paid to our shareholders.

The quarterly cash dividend of $0.15 per share was paid on October 20, 2025 to shareholders of record as of the close of business on October 6, 2025.

In third quarter 2024, the dividend paid was $0.135 per share.

During year-to-date 2025 and 2024, we returned $12.6 million and $11.0 million, respectively, to our shareholders through our quarterly cash dividends.

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis