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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-21 · 296 added, 248 removed, 830 unchanged (40% of the section changed)

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Shoe Carnival, Inc.

is one of the nation’s largest omnichannel sellers of footwear for the family.

On December 3, 2021, we began operating under two banners:

Shoe Carnival and Shoe Station.

We furthered our acquisition strategy by acquiring all of the stock of Rogan Shoes, Incorporated (“Rogan’s”) in February 2024, which added 28 physical stores (25 in Wisconsin, 2 in Minnesota, and 1 in Illinois) to our portfolio, positioned us as the market leader in Wisconsin and established a store base in Minnesota, creating additional expansion opportunities.

Our goal is to be the leading family footwear retailer in the United States.

Our product assortment, whether shopping in a physical store or through our e-commerce sales channel, is primarily branded footwear and includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes.

Our typical physical store carries shoes in two general categories – athletics and non-athletics with subcategories for men’s, women’s and children’s, as well as a broad range of accessories.

is one of the nation’s largest omnichannel sellers of footwear for the family, and our goal is to be the leading family footwear retailer in the United States.

We carry shoes in two general categories – athletics and non-athletics with subcategories for men’s, women’s and children’s and we also carry certain accessories.

In addition to our physical stores, through our e-commerce sales channel, customers can purchase the same assortment of merchandise in all categories of footwear with expanded options in certain instances.

Our stores under the Shoe Carnival banner combine competitive pricing with a high-energy in-store environment that encourages customer participation.

Footwear in our Shoe Carnival physical stores is organized by category and brand, creating strong brand statements within the aisles.

These brand statements are underscored by branded signage on endcaps and in-line signage throughout the store.

Our signage may highlight a vendor’s product offerings or sales promotions, or may highlight seasonal or lifestyle statements by grouping similar footwear from multiple vendors.

The Shoe Station banner and retail locations serve a broader base of footwear customers.

The Shoe Station concept targets a more affluent footwear customer, and its product assortment includes higher end athletics and non-athletics shoes and more accessories.

Shoe Station has a strong track record of capitalizing on emerging footwear fashion trends and introducing new brands.

Recent Acquisition

On February 13, 2024, we acquired all of the stock of Rogan's, a privately-held 53-year-old work and family footwear company incorporated in Wisconsin, for an adjusted purchase price of $44.8 million, net of $2.2 million of cash acquired, which was paid with cash on hand.

Additional consideration of up to $5.0 million may be paid by the Company subject to the achievement of three-year growth targets.

Net sales from our Rogan’s operations were $80.3 million in Fiscal 2024.

More information about this acquisition can be found in Note 3 - “Acquisition of Rogan Shoes” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.

During Fiscal 2025, we operated two banners:

Shoe Carnival and Shoe Station.

For a description of these two banners, including the in-store environment, target customer and product assortment, see PART I, ITEM 1 of this Annual Report on Form 10-K.

As of our Fiscal 2025 year end, we operated 426 stores across 35 states and Puerto Rico, consisting of 144 Shoe Station locations and 282 Shoe Carnival locations.

As more fully described in PART I, ITEM 1 of this Annual Report on Form 10-K, at the end of Fiscal 2025, Shoe Station bannered stores represented approximately 34% of our total store fleet, compared to approximately 10% at the end of Fiscal 2024.

During Fiscal 2025, we rebannered 101 stores into Shoe Station stores, consisting of 73 Shoe Carnival stores and all 28 Rogan’s stores.

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.

That proposed name change remains on the June 2026 agenda.

The proposed corporate name change to Shoe Station Group, Inc.

reflects the Board’s conviction that the Shoe Station concept is our primary long-term growth vehicle.

Store Portfolio and Our Banner Strategy

The following tables set forth our physical store count for Fiscal 2025 and Fiscal 2024, as impacted by store rebanners, acquisitions, store openings and store closures.

January 31, 2026

Shoe Carnival

February 1, 2025

Shoe Carnival

As stated above, during Fiscal 2025, we rebannerd 101 stores into Shoe Station stores.

Over time this rebanner strategy has evolved.

Previous expectations were that approximately 70 additional stores would rebanner before Back-to-School in Fiscal 2026, with the Shoe Station stores then representing 51% of the current store fleet, and that over 90% of our fleet would operate as a Shoe Station store by the end of Fiscal 2028, with remaining locations to be evaluated for potential rebannering, outlet repositioning, or closure.

This transition to substantially all Shoe Station stores was expected to generate both inventory reductions, as Shoe Station’s merchandising model requires less inventory per store, as well as cost savings from reduced dual-brand complexity across merchandising, marketing, systems, supply chain and back office.

In evaluating the performance of the 101 stores that were rebannered in Fiscal 2025, particularly Net Sales in the second-half of Fiscal 2025, we observed that, while Shoe Station's e-commerce results have been a meaningful contributor to banner-level sales growth, demonstrating strong consumer response to the Shoe Station brand and assortment online, there was significant variability in in-store sales performance across rebannered locations, with some stores performing well and others not achieving anticipated results.

As a result, we made the strategic decision to slow the pace of store rebanners in Fiscal 2026 from previously announced timelines to allow time to identify which consumer demographics are responding most favorably to the Shoe Station format, to determine which marketing channels are most effective in driving new customer acquisition, and to refine product mix in rebannered stores to improve in-store conversion.

We now expect to rebanner approximately 21 stores during the first half of Fiscal 2026 while this evaluation is conducted.

The Shoe Station banner is expected to continue as our primary growth banner as we leverage our CRM customer data to identify opportunities both within our current markets as well as new markets outside of our current footprint that are best suited for the Shoe Station format.

However, in markets where Shoe Carnival has historically been a dominant family footwear retailer, those stores will continue to operate under the Shoe Carnival banner.

The Shoe Carnival banner continues to serve an important customer base in a meaningful number of locations, and we expect to manage both banners accordingly.

Net Sales by Banner

For the past three fiscal years, Shoe Station has been a market leader in the Southeast, and, according to our view of available industry data, Shoe Station has been the fastest growing retailer in our industry in terms of Net Sales growth.

During the same period, our Shoe Carnival banner and the family footwear industry experienced comparable stores Net Sales declines.

Net Sales from our Shoe Station banner grew from $99.9 million in Fiscal 2022 (the first full year of our ownership) to $236.7 million in Fiscal 2025 (excluding Net Sales from Rogan’s, which are discussed below).

This increase included Net Sales growth of 4.5% in Fiscal 2023, 6.4% in Fiscal 2024, and 2.7% in Fiscal 2025 from both new stores and comparable store Net Sales increases.

The remaining increase resulted from base Net Sales that were transferred from Shoe Carnival as stores rebannered.

Conversely, Net Sales from our Shoe Carnival banner declined from $1.161 billion in Fiscal 2022 to $821.8 million in Fiscal 2025.

This decrease included Net Sales declines of 7.8% in Fiscal 2023, 5.7% in Fiscal 2024, and 7.7% in Fiscal 2025 from both net store closures and comparable store Net Sales declines.

The remaining decrease resulted from base Net Sales that were transferred to Shoe Station as stores rebannered.

With respect to Net Sales transferred between banners, we categorize Net Sales generated from a rebannered store as Shoe Station Net Sales beginning in the month following the month the store rebanners.

Net Sales in Fiscal 2024 and Fiscal 2025 that were transferred from Shoe Carnival to Shoe Station totaled $7.6 million and $111.3 million, respectively.

Approximately $149 million of Net Sales were reported as Shoe Carnival and Rogan’s Net Sales until they were rebannered in Fiscal 2025.

In Fiscal 2026, those Net Sales will be reported under the Shoe Station banner for the entirety of the year.

Rogan’s Net Sales were $75.6 million in Fiscal 2025 and $80.3 million in Fiscal 2024.

During Fiscal 2025, we transitioned to a more profitable Net Sales approach at Rogan’s, which resulted in Rogan’s generating more product margin in Fiscal 2025 compared to Fiscal 2024, despite the lower Net Sales.

With integration fully complete and synergies captured, we expect to no longer separate Rogan’s Net Sales from Shoe Station Net Sales beginning in Fiscal 2026.

Comparable Stores Net Sales

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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.

E-commerce sales channels associated with a physical store acquisition will not be included in comparable stores Net Sales until the initial physical stores are included.

The 21 original Shoe Station stores acquired and the www.shoestation.com e-commerce site that went live in early February 2023 were included in comparable stores Net Sales calculations beginning in first quarter 2023.

All of Rogan’s sales are excluded from our comparable stores Net Sales.

Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.

Fiscal 2023 consisted of the 53 weeks ended February 3, 2024, while Fiscal 2024 consisted of the 52 weeks ended February 1, 2025.

The 53 rd week in Fiscal 2023 caused a one-week shift in our fiscal calendar.

To minimize the effect of this fiscal calendar shift on comparable stores Net Sales, our reported annual comparable stores Net Sales results for Fiscal 2024 compare the 52-week period ended February 1, 2025 to the 52-week period ended February 3, 2024.

As such, changes in comparable stores Net Sales are not consistent with changes in Net Sales reported for the fiscal period.

Stores and Rebanner Strategy

We ended Fiscal 2024 with 430 stores, comprised of 360 Shoe Carnival stores, 42 Shoe Station stores and 28 Rogan's stores.

During Fiscal 2024 we opened four new Shoe Station stores and permanently closed two Shoe Carnival stores.

The 430 stores operated at the end of Fiscal 2024 was an all-time year end high for us.

We have been evaluating customer analytics and market data and developing strategies to expand Shoe Station since we acquired the chain in December 2021.

We believe that a national expansion opportunity exists in markets where the customer and/or market characteristics align better with the Shoe Station concept, rather than our Shoe Carnival concept.

A 10-store in-market test was completed during Fiscal 2024, where we closed underperforming Shoe Carnival stores and opened new Shoe Station stores in those markets.

The customer response and business results exceeded our success criteria on an aggregated basis, with sales and profit contribution over 10% higher at the new Shoe Station stores versus Shoe Carnival stores.

In March 2025, we announced a new long-term strategy to rapidly scale up Shoe Station into a national footwear and accessories leader.

The first investment phase will rebanner 175 stores to the Shoe Station banner over the next 24 months.

Once this phase is complete, we expect to operate 218 Shoe Station stores, representing 51% of our present store fleet.

During Fiscal 2025, we expect to rebanner between 50 to 75 Shoe Carnival stores to Shoe Station stores.

Total capital expenditures are expected to be in a range of $45 million to $60 million in Fiscal 2025 to support the rebanner strategy, compared to $33.2 million, $56.3 million and $77.3 million spent in Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.

As the rebanner strategy is implemented, it is expected to decrease our Operating Income by between $20 to $25 million in Fiscal 2025 due to store closing costs, amortization of new store construction costs, a four-to-six-week store closure period through each store’s grand opening and customer acquisition costs, with such costs recovered over a two-to-three-year period following a store’s grand opening.

More information about the rebanner strategy can be found in PART 1, ITEM 1, “Business—Our Stores—Rebanner Strategy” of this Annual Report on Form 10-K.

Executive Summary

During Fiscal 2024, our Net Sales of $1.2 billion were up $27.0 million, or 2.3%, compared to Fiscal 2023.

Fiscal 2023 contained a 53rd week of Net Sales totaling approximately $15 million, as described above.

In Fiscal 2024, Net Sales otherwise increased approximately $42 million, or 3.7%.

This increase resulted from continued growth from the Shoe Station banner’s 5.7% Net Sales increase and $80.3 million in Net Sales attributed to Rogan’s.

We also grew Net Sales during peak shopping periods throughout the year.

These areas of growth were partially offset by a 3.9% comparable stores Net Sales decline, driven primarily by Shoe Carnival declines during non-event periods.

Long-term Gross Profit margin expansion has been a key driver of our profit transformation, led by our targeted promotional plans, buying strategies and growth of our customer loyalty program, Shoe Perks.

During Fiscal 2024, our Gross Profit margin was above 35% for the fourth consecutive year.

Gross profit margin in Fiscal 2024 decreased 20 basis points compared to Fiscal 2023, primarily due to higher buying, distribution and occupancy costs (“BDO”) from operating more stores, partially offset by a 10 basis point increase in merchandise margins.

In Fiscal 2024, our Selling, General, and Administrative Expenses (“SG&A”) were higher than Fiscal 2023 by $9.8 million, primarily due to incremental costs associated with Rogan’s.

As market conditions softened in the third and

fourth quarters of Fiscal 2024 during non-event periods, we lowered selling costs at our comparable stores.

These lower selling expenses reflected optimized advertising spend, driven by our digital-first marketing strategy.

While Rogan’s costs were an additional expense in Fiscal 2024 compared to Fiscal 2023, those cost increases were mitigated by synergies captured during Fiscal 2024 from our accelerated integration of Rogan’s.

Fiscal 2024 Operating Income totaled $91.2 million, a decrease of 2.5% versus Fiscal 2023, primarily due to the extra week of sales in Fiscal 2023 and non-event period declines at Shoe Carnival stores, partially offset by Net Sales growth, principally from our Shoe Station and Rogan’s stores.

Primarily as a result of accelerated synergy capture, Rogan’s exceeded our initial $10 million Operating Income target for Fiscal 2024 by more than 20%.

Fiscal 2024 Net Income was $73.8 million, or $2.68 per diluted share, compared to Fiscal 2023 Net Income of $73.3 million, or $2.68 per diluted share.

The slight increase in Net Income reflected pandemic-related tax credits of $3.0 million associated with our acquisition of Rogan’s, included in Interest and Other Income, partially offset by lower Operating Income and a higher effective tax rate.

Capital Management and Inventories

Fiscal 2024 marked the 20th consecutive fiscal year end where we ended the fiscal year with no debt.

In each of the last four years, we have funded our operations and growth investments, including our acquisitions of Shoe Station and Rogan’s, without drawing on our credit facility.

We ended Fiscal 2024 with $123.1 million of Cash, Cash Equivalents and Marketable Securities.

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

Rogan’s comparable stores Net Sales were included in our comparable stores Net Sales quarterly calculations beginning in the thirteen weeks ended August 2, 2025 and will begin to be included in our comparable stores Net Sales annual calculations beginning in Fiscal 2026.

Fiscal 2025 Executive Summary

Our Fiscal 2025 Net Income was $52.3 million, or $1.90 per diluted share, and was lower than the $73.8 million, or $2.68 per diluted share, reported in Fiscal 2024.

We estimate our Fiscal 2025 Net Income per Diluted Share decreased by approximately $0.66 as a result of our rebanner-related investment, as more fully described below.

The decline in Net Income per Diluted Share was also impacted by certain tax credits and other benefits associated with the Rogan’s acquisition that totaled $0.19 in Fiscal 2024 and did not recur in Fiscal 2025.

Our Net Income per Diluted Share otherwise increased $0.07 year over year before the impact of these prior year Rogan’s acquisition related benefits and Fiscal 2025 rebanner investments.

Our Net Sales declined 5.6% in Fiscal 2025 compared to Fiscal 2024, primarily due to a 7.7% decline in Net Sales at our Shoe Carnival banner as we maintained pricing discipline despite pressure on lower-income consumers and reduced promotional marketing.

In contrast, our Shoe Station banner achieved Net Sales growth of 2.7% in Fiscal 2025 compared to Fiscal 2024, driven by our rebanner strategy, including omnichannel growth.

Therefore, our Shoe Station banner’s Net Sales growth in Fiscal 2025 compared to Fiscal 2024 outperformed Shoe Carnival’s Net Sales decline by 10.4 percentage points.

Our comparable stores Net Sales also declined 5.6% and included comparable stores Net Sales growth in Back-to-School August.

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

We achieved a Gross Profit margin of 36.6%, up 100 basis points from Fiscal 2024 and above 35% for the fifth consecutive year.

The increase included a 180 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 deliberate inventory management decisions made in anticipation of tariff cost increases that are expected to fully impact Fiscal 2026.

This increase was reduced by 80 basis points from buying, distribution and occupancy costs primarily due to deleverage on lower Net Sales.

Our Operating Income declined $24.4 million in Fiscal 2025 compared to Fiscal 2024.

We estimate our Fiscal 2025 Operating Income declined approximately $24.1 million, or $0.66 per diluted share compared to Fiscal 2024 as a result of rebanner-related investment due to lost sales during a four-to-six-week store closure period through each store’s grand opening, store closing costs and asset write-offs, additional depreciation of new store construction costs, customer acquisition costs and other costs.

This rebanner investment resulted in an approximate 0.5% reduction in Net Sales due to lost sales and an approximate 2.0% increase in our Selling, General and Administrative Expenses (“SG&A”) as a percent of Net Sales.

Capital expenditures supporting the rebanner initiative totaled approximately $37.1 million in Fiscal 2025.

Fiscal 2025 marked the 21st consecutive fiscal year we ended with no debt.

In each of the last five years, we have funded our operations and growth investments, including our acquisitions of Shoe Station and Rogan’s and our current

year rebanner and inventory investments, without drawing on our credit facility.

We ended Fiscal 2025 with $130.7 million of Cash, Cash Equivalents and Marketable Securities, up 6% compared to the end of Fiscal 2024 and $99.0 million of available borrowings under our existing credit facility to fund our growth objectives.

Cash flows from operations in Fiscal 2025 totaled $71.3 million.

In Fiscal 2024, we paid $44.8 million for Rogan’s with cash on hand.

Merchandise Inventories totaled $385.6 million at the end of Fiscal 2024, an increase of $39.2 million compared to the end of Fiscal 2023, primarily reflecting Rogan’s acquired inventory.

Merchandise Inventories supporting the Shoe Carnival and Shoe Station stores were slightly down on a unit basis at the end of Fiscal 2024 compared to the end of Fiscal 2023, but additional inventory purchases were made near Fiscal 2024 year end to support rebannering additional stores and, to a lesser extent, as a hedge against potential supply chain disruption from tariffs and port worker strikes.

Our Merchandise Inventories at the end of Fiscal 2025 were $439.6 million, up approximately 14% compared to the end of Fiscal 2024.

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

This strategy improved availability of key merchandise and drove margin expansion in Fiscal 2025.

We anticipate declines in Merchandise Inventories in Fiscal 2026 in a range of $50 to $65 million, as we expect to sell the remaining opportunistic pre-tariff and in-demand product purchased in Fiscal 2025 and increase promotional activity to work through excess inventory not part of our ongoing assortment, including legacy Shoe Carnival inventory, that will no longer be required as more Shoe Carnival stores rebanner.

The promotional activity necessary to sell this inventory is expected to reduce gross profit margins in Fiscal 2026 compared to the 36.6% gross profit margin achieved in Fiscal 2025.

Results of Operations

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Fiscal 2025 Compared to Fiscal 2024

Net Sales were $1.2 billion in Fiscal 2024 and increased 2.3%, or $27.0 million, compared to Fiscal 2023.

The increase was primarily due to continued growth from the Shoe Station banner’s 5.7% Net Sales increase and the acquisition of Rogan's in February 2024, which added Net Sales of $80.3 million.

Increases were partially offset by the extra week in the prior year, which reduced Net Sales approximately $15 million, and a 3.9% decrease in comparable stores Net Sales, primarily due to a mid-single digit decline from our Shoe Carnival bannered stores.

The comparable stores Net Sales decline resulted primarily from an approximate 5% decrease in traffic in our physical stores resulting in an approximate 6% decrease in units sold.

Net Sales were $1.135 billion during Fiscal 2025, a decrease of $67.6 million, or 5.6%, compared to Fiscal 2024.

The decrease was primarily due to a 7.7% Net Sales decline at our Shoe Carnival banner, as we maintained pricing discipline despite pressure on lower-income consumers and reduced promotional marketing.

This decrease was partially offset by continued growth from our Shoe Station banner, which contributed a 2.7% increase in Net Sales compared to Fiscal 2024.

Our 5.6% 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, while our Shoe Station banner comparable stores Net Sales increased low-single digits.

E-commerce sales were approximately 10% of merchandise sales in both Fiscal 2025 and Fiscal 2024.

Gross Profit was $428.8 million in Fiscal 2024, an increase of $7.4 million compared to Fiscal 2023, primarily due to the $27.0 million increase in Net Sales.

Gross Profit was $415.2 million in Fiscal 2025, a decrease of $13.6 million compared to Fiscal 2024.

Gross profit margin in Fiscal 2025 was 36.6% compared to 35.6% in Fiscal 2024.

This slight decrease was driven by stable merchandise margins that were up 10 basis points in Fiscal 2024 compared to Fiscal 2023 but were more than offset by BDO as a percentage of Net Sales that deleveraged 30 basis points on increased occupancy costs from operating more stores.

The 100 basis point increase in gross profit margin was driven by a 180 basis point increase in merchandise margin due to disciplined pricing, favorable mix shift toward Shoe Station's higher-income consumer, and deliberate inventory management decisions made in anticipation of tariff cost increases that are expected to fully impact Fiscal 2026.

This increase was partially offset by 80 basis points from buying, distribution and occupancy costs, primarily due to deleveraging on lower Net Sales in Fiscal 2025 compared to Fiscal 2024.

Selling, General and Administrative Expenses

SG&A increased $10.8 million in Fiscal 2025 to $348.4 million compared to $337.6 million in Fiscal 2024.

The increase was primarily due to incremental costs associated with Rogan's in Fiscal 2024, partially offset by lower selling costs at Shoe Carnival and Shoe Station stores, which reflected optimized advertising spend driven by our digital-first marketing strategy.

As a percentage of Net Sales, SG&A were 28.0% in Fiscal 2024, compared to 27.8% in Fiscal 2023.

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

As a percent of Net Sales, SG&A were 30.7% in Fiscal 2025 compared to 28.0% in Fiscal 2024, with the increase being due primarily to the rebanner costs incurred in Fiscal 2025, which increased SG&A as a percent of Net Sales by approximately two percentage points, and deleveraging from lower Net Sales outpacing cost control measures.

Interest and Other Income and Interest Expense

Changes in our Interest and Other Income and our Interest Expense increased our Income Before Income Taxes by $3.7 million in Fiscal 2024 compared to Fiscal 2023.

This increase was primarily due to pandemic-related tax credits of $3.0 million associated with our acquisition of Rogan's in February 2024 and also higher interest earned on invested cash balances.

Changes in our Interest and Other Income and our Interest Expense decreased our Income Before Income Taxes by $2.7 million in Fiscal 2025 compared to Fiscal 2024.

This decrease was primarily due to pandemic-related tax credits of $3.0 million recognized in Fiscal 2024 associated with our acquisition of Rogan's, partially offset by higher interest earned on invested cash balances.

The effective income tax rate for Fiscal 2025 was 25.7% compared to 24.3% for Fiscal 2024.

The higher effective tax rate was due to the decrease in tax benefits from share-settled equity awards in Fiscal 2024 and a state deferred tax benefit included in Fiscal 2023 that did not recur in Fiscal 2024, partially offset by impacts associated with our acquisition of Rogan’s.

The higher effective tax rate in Fiscal 2025 compared to Fiscal 2024 was due to discrete adjustments related to share-settled equity awards and favorable impacts recognized in Fiscal 2024 associated with our acquisition of Rogan’s.

Liquidity and Capital Resources

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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 other capital projects, including investments in new systems.

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.

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

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Net cash generated from operating activities was $71.3 million in Fiscal 2025 compared to $102.6 million during Fiscal 2024.

The decrease in operating cash flow was primarily driven by the timing of increased inventory purchases to support our rebanner strategy, new Shoe Station stores and, to a lesser extent, as a hedge against potential supply chain disruption from tariffs and port worker strikes, and the timing of prepaid contracts payments in Fiscal 2024 compared to Fiscal 2023.

Working capital increased on a year-over-year basis and totaled $405.7 million at February 1, 2025 compared to $353.5 million at February 3, 2024.

The increase was primarily attributable to higher Merchandise Inventories and Accounts Receivable, primarily due to the acquisition of Rogan's, higher cash balances and lower Accounts Payable, partially offset by an increase in Accrued and Other Liabilities.

Our current ratio was 4.1 as of February 1, 2025, compared to 3.8 as of February 3, 2024.

The decrease in operating cash flow was primarily driven by increased inventory purchases and the reduction in Net Income as a result of costs incurred to support our rebanner strategy.

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

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

We estimate that the OBBB decreased our cash paid for taxes in Fiscal 2025 by approximately 30%.

There was no material change in our effective income tax rate for Fiscal 2025 as a result of the OBBB.

Working capital increased on a year-over-year basis and totaled $437.7 million at January 31, 2026 compared to $405.7 million at February 1, 2025.

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

Our current ratio was 3.8 as of January 31, 2026, compared to 4.1 as of February 1, 2025.

Cash Flow - Investing Activities

Our cash outflows for investing activities are normally for capital expenditures.

During Fiscal 2024 and Fiscal 2023, we expended $33.2 million and $56.3 million, respectively, for the purchases of property and equipment, primarily related to store remodels and rebanners and opening four new Shoe Station stores.

During Fiscal 2025 and Fiscal 2024, we expended $44.7 million and $33.2 million, respectively, for the purchases of property and equipment, primarily related to rebanners, store remodels, and opening five new Shoe Station stores over both fiscal years.

Our Rogan’s acquisition in first quarter 2024 resulted in the payment of cash consideration of $44.8 million, net of cash acquired, in Fiscal 2024.

Additional information regarding the Rogan’s acquisition, including information on the additional contingent consideration of up to $5.0 million, can be found in Note 3 — “Acquisition of Rogan Shoes” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.

in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.

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 $14.4 million at February 1, 2025, compared to $12.2 million at February 3, 2024.

Additional information can be found in Note 4 — “Fair Value Measurements” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.

The balance of these Marketable Securities was $13.6 million at January 31, 2026, compared to $14.4 million at February 1, 2025.

Additional information can be found in Note 4 — “Fair Value of Financial Instruments” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.

Cash Flow - Financing Activities

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During Fiscal 2025, net cash used in financing activities was $18.9 million compared to $15.3 million during Fiscal 2024.

The decrease in net cash used in financing activities was primarily due to the repurchase of $5.4 million of shares in Fiscal 2023 under our Board of Directors’ authorized share repurchase program compared to none in Fiscal 2024 and the decrease in shares surrendered by employees to pay taxes on stock-based compensation awards, partially offset by increased dividend payments.

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

During Fiscal 2025 and Fiscal 2024, we did not borrow or repay funds under our Credit Agreement.

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

Letters of credit outstanding were $1.0 million at January 31, 2026, and our borrowing capacity was $99.0 million.

We also did not repurchase any shares under our share repurchase program in either Fiscal 2025 or Fiscal 2024.

Our Credit Agreement requires us to maintain compliance with various financial covenants.

See Note 10 – “Debt” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for a further discussion of our Credit Agreement and its covenants.

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

Store Rebanners, Openings and Closings – Fiscal 2025

As previously discussed, we plan to rebanner between 50 to 75 Shoe Carnival stores into Shoe Station stores in Fiscal 2025 as the first part of the first investment phase.

We plan to complete an additional 100 or more rebanners in Fiscal 2026 and early Fiscal 2027 as the second part of the first investment phase.

Once this investment phase is complete,

we expect to operate 218 Shoe Station stores, representing 51% of our present store fleet.

Additional rebanners may follow.

Increasing market penetration by adding new stores is also a key component of our growth strategy.

We were in compliance with these covenants as of January 31, 2026.

Store Rebanners, Openings and Closings

We ended Fiscal 2025 with 426 stores, comprised of 282 Shoe Carnival stores and 144 Shoe Station stores.

During Fiscal 2025, we rebannered 101 stores, consisting of 73 Shoe Carnival stores and all 28 Rogan’s stores.

During Fiscal 2025, we opened one new Shoe Station store and permanently closed five Shoe Carnival stores.

We believe our current Shoe Station store footprint provides for growth in new markets within the United States as well as fill-in opportunities within existing markets.

We expect to rebanner approximately 21 stores during the first half of Fiscal 2026, increasing the number of our Shoe Station stores to 165 by Back-to-School in Fiscal 2026, representing 39% of our current store base.

We expect a reduction in our Fiscal 2026 Operating Income of $10 to $15 million for continued rebanner investment to support stores rebannered in Fiscal 2025 and those that are planned to rebanner in Fiscal 2026, inclusive of expected lower margins to work through excess inventory as more stores rebanner.

We anticipate additional capital expenditures in Fiscal 2026 of between $5 to $7 million to support the rebanner initiative.

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

Increasing market penetration by adding new stores is also a key component of our long-term growth strategy.

We do not anticipate opening any new stores in Fiscal 2026 given our focus on rebannering and pursing acquisitions.

Future store growth may also be impacted by macroeconomic uncertainty, and our ability to identify desirable locations and/or acquisition partners.

We expect limited store closures over the next several years.

Future store growth may continue to be impacted by macroeconomic uncertainty, our ability to identify desirable locations and/or acquisition partners and increased focus on our store rebanner strategy.

Capital Expenditures – Fiscal 2026

Capital expenditures for Fiscal 2025 are expected to be between $45 million and $60 million, with approximately $35 million to $45 million to be used for new and rebannered stores and remodels 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 2026 are expected to be between $12 million and $18 million, inclusive of the $5 million to $7 million related to rebanner activity.

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

Furthermore, the actual amount of cash required for capital expenditures for store operations depends in part on the number of stores opened, rebannered, relocated and remodeled, and the amount of lease incentives, if any, received from landlords.

The number of new store openings and relocations will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending.

of new store openings and relocations will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending.

During Fiscal 2025, four quarterly cash dividends of $0.15 per share were approved and paid.

In Fiscal 2023, we paid quarterly cash dividends of $0.10 per share in our first and second fiscal quarters and $0.12 per share in the third and fourth fiscal quarters.

In Fiscal 2024, we paid four quarterly cash dividends of $0.135 per share.

During Fiscal 2025 and Fiscal 2024, we returned $16.7 million and $14.7 million, respectively, in cash to our shareholders through our quarterly dividends.

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The 2026 Share Repurchase Program replaced a $50 million share repurchase program that was authorized in December 2024, became effective January 1, 2025 and expired in accordance with its terms on December 31, 2025.

No shares were repurchased during Fiscal 2024 and shares totaling 230,696 were repurchased during Fiscal 2023 at a cost of $5.4 million.

No shares were repurchased during Fiscal 2025 or Fiscal 2024.

Rent-related payments made in Fiscal 2025 totaled $98.1 million.

As we are contractually obligated to make lease payments to landlords, estimated future payments to landlords and lease-related charges are expected to be significant

in future years and will increase in future years due to expected organic and acquired store growth.

As we are contractually obligated to make lease payments to landlords, estimated future payments to landlords and lease-related charges are expected to be significant in future years and will increase in future years due to expected organic and acquired store growth.

These payments include estimates for fixed minimum and contingent rent, estimated reimbursements to landlords for common area maintenance, taxes and insurance and other occupancy related charges.

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For per share amounts, the sum of the quarters may not equal the total year due to the impact of changes in weighted shares outstanding and differing applications of earnings as prescribed by accounting guidance.

2) The fourth quarter of Fiscal 2023 consisted of 14 weeks compared to 13 weeks in all other quarters presented.

We have three distinct peak selling periods:

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In instances when underperformance indicates the carrying value of a store’s assets may not be recoverable, we impair the store.

Although store closings could reduce our overall Net Sales volume, we believe that the store closings we effected in the last several fiscal years resulted in long-term improvements to our Operating Income and Diluted Net Income per Share.

Depending upon the results of lease negotiations with certain landlords of underperforming stores, we may increase or decrease the number of store closures in future periods.

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Therefore, our results of operations may be adversely affected in any quarter in which we incur pre-opening expenses related to the opening of new stores or incur store closing costs related to the closure of existing stores.

Store Openings, Closings and Impairment Charges – Impact on Fiscal 2024 and Fiscal 2023

In Fiscal 2024, we opened four new stores.

The initial average inventory investment for the new stores in Fiscal 2024 was $1.2 million, capital expenditures were $1.3 million and lease incentives received from our landlords were $425,000.

In Fiscal 2023, we opened five new stores.

The initial average inventory investment for the new stores was $1.0 million, capital expenditures were $1.7 million and lease incentives received from our landlord were $480,000.

Pre-opening expenses for the four stores opened in Fiscal 2024 included in Cost of Sales and SG&A were approximately $786,000, or an average of $197,000 per store.

Items classified as pre-opening expenses include rent, freight, advertising, salaries and supplies.

During Fiscal 2023, we expended $1.2 million, or an average of $237,000 per store, in pre-opening expenses for the five new stores.

Total store closing costs were $128,000 associated with the closing of two stores in Fiscal 2024 and $83,000 associated with the closing of two stores in Fiscal 2023.

There were no non-cash impairment charges recognized in Fiscal 2024 and Fiscal 2023.

In addition to non-cash impairment charges, store closing costs can include fixed asset write-offs, employee severance, lease termination fees, store tear-down and clean-up expenses and acceleration of expenses and deferred lease incentives.

In total, store opening and closing costs impacting SG&A were $616,000 in Fiscal 2024 and $891,000 in Fiscal 2023.

Store opening and closing costs included in Cost of Sales were expenses of $298,000 in Fiscal 2024 and $376,000 in Fiscal 2023.

Critical Accounting Policies

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Merchandise Inventories – Our Merchandise Inventories are stated at the lower of cost or net realizable value as of the balance sheet date and consist primarily of dress, casual and athletic footwear for women, men and children.

The cost of our merchandise is determined using the first-in, first-out valuation method (“FIFO”).

cost of our merchandise is determined using the first-in, first-out valuation method (“FIFO”).

For determining net realizable value, we estimate the future demand and related sale price of merchandise in our inventory.

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We reduce the value of our inventory to its estimated net realizable value where cost exceeds the estimated future selling price.

Merchandise Inventories as of February 1, 2025 totaled $385.6 million, representing approximately 34% of total assets.

Merchandise Inventories as of January 31, 2026 totaled $439.6 million, representing approximately 37% of total assets.

Merchandise Inventories as of February 1, 2025 totaled $385.6 million, representing approximately 34% of total assets.

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therefore, no quantitative assessment was performed and no impairment was recorded.

With respect to the trade names, we tested their carrying amounts for impairment in Fiscal 2024 at the Shoe Station store set and Rogan’s store set levels using respective revenue growth and discount rate assumptions and assumed royalty rates.

With respect to the Shoe Station and Rogan’s trade names, we elected to bypass the qualitative assessment and performed a quantitative assessment in Fiscal 2025 for each trade name.

In the current year, revenue supporting the Rogan’s trade name included Rogan’s stores that were co-branded as “Shoe Station at Rogan’s” and the business-to-business operations solely branded as “Rogan’s Work.” These stores and business-to-business operations continue to

broadly use the Rogan’s trade name.

Both the Shoe Station and Rogan’s data sets were assessed using respective revenue growth, discount rate and royalty rate assumptions.

Significant changes in our estimates and assumptions could affect our fair value calculations.

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therefore, no impairments were recorded.

Leases – We lease our retail stores, our Evansville distribution center and office space for our Southern office.

Leases – We lease our retail stores, our Evansville distribution center and our corporate headquarters in Fort Mill, South Carolina.

We also enter into leases of equipment and other assets.

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In accordance with Accounting Standards Codification Topic No.

842 – Leases (“ASC 842”), on the lease commencement date we recognize a right-of-use asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term.

842 – Leases , on the lease commencement date we recognize a right-of-use asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term.

The weighted average discount rate utilized in Fiscal 2025 and Fiscal 2024 was 5.1% and 4.7%, respectively.

For new leases, renewals or amendments and when we make material investments in leased properties pursuant to our emerging rebanner strategy or store modernization plan, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.

For new leases, renewals or amendments and when we make material investments in leased properties pursuant to our rebanner strategy or other modernization investments, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.

These estimates and assumptions can impact:

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(3) the term over which leasehold improvements for each store are amortized;

and (4) the values and lives of adjustments to initial and

modified right-of-use assets.

and (4) the values and lives of adjustments to initial and modified right-of-use assets.

The amount of amortized rent expense would vary if different estimates and assumptions were used.

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Significant judgment is required in determining our annual tax expense and evaluating our tax positions.

As a part of this process, deferred tax assets and liabilities are recognized based on the difference between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

Our temporary timing differences relate primarily to inventory, property and equipment, right-of-use assets, operating lease liabilities, goodwill and non-amortizing intangible assets.

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(1) Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.

Unless otherwise stated, references to years 2024, 2023, 2022, 2021 and 2020 relate respectively to the fiscal years ended February 1, 2025, February 3, 2024, January 28, 2023, January 29, 2022 and January 30, 2021.

Unless otherwise stated, references to years 2025, 2024, 2023, 2022 and 2021 relate respectively to the fiscal years ended January 31, 2026, February 1, 2025, February 3, 2024, January 28, 2023 and January 29, 2022.

Fiscal 2023 consisted of 53 weeks and fiscal years 2025, 2024, 2022 and 2021 all consisted of 52 weeks.

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

(4) Average sales per store includes e-commerce sales that are in close proximity to a physical store.

(4) Average sales per store includes e-commerce sales in states with a physical store location.

(5) Average sales per square foot includes net e-commerce sales.

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

(6) In fiscal years 2021 and 2020, average sales per store and average sales per square foot include only Shoe Carnival banner stores.

(7) On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock.

All share and per share amounts have been adjusted retroactively for all periods presented.

(6) In fiscal year 2021 average sales per store and average sales per square foot include only Shoe Carnival banner stores.

QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK

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We have audited the accompanying consolidated balance sheets of Shoe Carnival, Inc.

and subsidiaries (the "Company") as of February 1, 2025 and February 3, 2024, the related consolidated statements of income, shareholders’ equity, and cash flows, for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 21, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the "Company") as of January 31, 2026, and February 1, 2025, the related consolidated statements of income, shareholders’ equity, and cash flows, for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026, and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 26, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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• We tested the operating effectiveness of the Company’s internal control over the valuation of inventory, including the review and determination of the anticipated net realizable value of merchandise inventories compared to the cost value of inventory on-hand.

• We tested the recorded inventory reserve by developing an expectation based on the prior year inventory reserve balance relative to the merchandise inventory balance at the prior year balance sheet date and compared it to the actual reserve recorded in the current year.

• We tested the recorded inventory reserve by developing an expectation for the amount of the inventory reserve and comparing our expectation to the amount recorded by management.

• We evaluated the reasonableness of management’s determination of the net realizable value of inventory by:

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Stock-based compensation

Balance at January 28, 2023

Balance at February 3, 2024

Dividends ($ 0.54 per share)

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compensation awards

Purchase of common stock for

Stock-based compensation

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Stock-based compensation

Balance at February 1, 2025

Balance at January 31, 2026

See notes to consolidated financial statements.

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Stock-based compensation

(Gain) Loss on retirement and impairment of assets, net

Loss (Gain) on retirement and impairment of assets, net

Deferred income taxes

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Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.

Unless otherwise stated, references to years 2024, 2023 and 2022 relate to the fiscal years ended February 1, 2025 (“Fiscal 2024”), February 3, 2024 (“Fiscal 2023”) and January 28, 2023 (“Fiscal 2022”), respectively.

Fiscal 2023 consisted of 53 weeks while Fiscal 2024 and Fiscal 2022 consisted of 52 weeks.

Unless otherwise stated, references to years 2025, 2024 and 2023 relate to the fiscal years ended January 31, 2026 (“Fiscal 2025”), February 1, 2025 (“Fiscal 2024”) and February 3, 2024 (“Fiscal 2023”), respectively.

Fiscal 2025 and Fiscal 2024 consisted of 52 weeks while Fiscal 2023 consisted of 53 weeks.

Use of Estimates in the Preparation of Consolidated Financial Statements

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Cash and Cash Equivalents

We had Cash and Cash Equivalents of $ 108.7 million at February 1, 2025 and $ 99.0 million at February 3, 2024.

Credit and debit card receivables and receivables due from a third party totaling $ 6.9 million and $ 7.2 million were included in cash equivalents at February 1, 2025 and February 3, 2024 , respectively.

We had Cash and Cash Equivalents of $ 117.1 million at January 31, 2026 and $ 108.7 million at February 1, 2025.

Credit and debit card receivables and receivables due from a third party totaling $ 5.9 million and $ 6.9 million were included in cash equivalents at January 31, 2026 and February 1, 2025 , respectively.

Credit and debit card receivables generally settle within three days ;

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We consider all short-term investments with an original maturity date of three months or less to be cash equivalents.

As of February 1, 2025 and February 3, 2024 , all invested cash was held in money market mutual funds.

As of January 31, 2026 and February 1, 2025 , all invested cash was held in money market mutual funds.

While investments are not considered by management to be at significant risk, they could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

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We account for our leases in accordance with Accounting Standards Codification Topic No.

842 - Leases (“ASC 842”).

842 - Leases.

We evaluate whether a contract is an operating or finance lease at its inception or at its acquisition.

Substantially all of our leases are operating leases as of February 1, 2025, however, as a result of the acquisition of Rogan's, we also acquired certain assets subject to finance leases.

Substantially all of our leases were operating leases as of January 31, 2026;

however, as a result of the acquisition of Rogan's, we also acquired certain assets subject to finance leases.

The finance lease assets and related current liabilities and noncurrent liabilities were recorded in Other Noncurrent Assets, Accrued and Other Liabilities and Other long-term liabilities, respectively.

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The measurement of ROU assets and liabilities excludes amounts related to variable payments related to lease components (such as contingent rent payments based on performance), variable payments related to non-lease components (such as CAM, real estate taxes and insurance) and leases with an initial term of 12 months or less.

For new leases, renewals or amendments, or when we make material investments in leased properties pursuant to our emerging rebanner strategy or modernization plan, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.

For new leases, renewals or amendments, or when we make material investments in leased properties, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.

These estimates and assumptions can impact:

(1) lease classification and the related accounting treatment;

(2) rent holidays, escalations or deferred lease incentives, which are taken into consideration when calculating straight-line expense;

(2) rent holidays, escalations or deferred lease incentives, which are taken into consideration when calculating straight-line

(3) the term over which leasehold improvements for each store are amortized;

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Goodwill and Intangible Asset Impairment Testing

Goodwill recorded on our Consolidated Balance Sheets resulted from our acquisitions of Shoe Station, Inc.

(“Shoe Station”) and Rogan's and is based on a fair value allocation of the purchase price at the time of the respective acquisitions.

Goodwill recorded on our Consolidated Balance Sheets resulted from our acquisitions of substantially all of the assets and liabilities of Shoe Station, Inc.

(“Shoe Station”) and all of the common stock of Rogan's and is based on a fair value allocation of the purchase price at the time of the respective acquisitions.

Goodwill is charged to expense only when it is impaired.

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Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

(In thousands, except per share data)

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The computation of Diluted Net Income per Share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of stock-based compensation arrangements involving restricted stock, restricted stock units and performance stock units.

No unvested stock-based awards were excluded from the computation of Diluted Net Income per Share for Fiscal 2024 or Fiscal 2023, and approximately 7,000 unvested stock-based awards were excluded for Fiscal 2022 because the impact would be anti-dilutive.

No unvested stock-based awards were excluded from the computation of Diluted Net Income per Share for Fiscal 2025, Fiscal 2024 or Fiscal 2023.

Litigation Matters

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New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The guidance improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The ASU became effective for fiscal years beginning after December 15, 2023.

We adopted ASU 2023-07 for Fiscal 2024 retrospectively to all periods presented in the financial statements.

See Note 6 – ''Segment Reporting'' for additional information.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments in the ASU should be applied on a prospective basis, but retrospective application is permitted.

We are continuing to evaluate the impact of this new guidance but believe the adoption will not have a material impact on our consolidated financial statements.

The ASU became effective for fiscal years beginning after December 15, 2024.

We adopted this ASU as required and the additional disclosures required can be found in Note 12 – “Income Taxes.”

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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The amendments in the ASU should be applied on a prospective basis, but retrospective application is permitted.

We are evaluating the impact of this new guidance but believe the adoption will not have a material impact on our consolidated financial statements.

We are currently evaluating the impact of this guidance on our Consolidated Financial Statements and related disclosures.

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

The OBBB made key elements of the Tax Cuts and Jobs Act permanent, including 100 % bonus depreciation, domestic research cost expensing and the business interest expense limitation.

Accounting Standards Codification Topic No.

740, "Income Taxes", requires that we recognize the effects of changes in tax rates and laws in the period in which the legislation is enacted.

Consequently, our Fiscal 2025 results reflect an increase in deferred tax expense, primarily due to the impact of the 100 % bonus depreciation and domestic research cost expensing provided for in the OBBB, partially offset by reductions in our current tax expense.

Enactment of the OBBB did not have a material impact on our financial statements, including our Fiscal 2025 effective tax rate.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40).

The guidance provides targeted improvements to the accounting for internal-use software.

The guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods.

Early adoption is permitted.

The amendments in the ASU can be applied on a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or a retrospective transition approach.

We are currently evaluating the impact of this guidance on our Consolidated Financial Statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

The guidance amends certain requirements related to interim reporting and associated disclosures.

The amendments are intended to enhance transparency and consistency of information provided in interim financial statements.

We are currently evaluating the provisions of this guidance and the timing of adoption.

Based on our preliminary assessment, we do not expect the adoption of this guidance, which is required for periods beginning after December 15, 2027, to have a material impact on our consolidated financial statements and related disclosures.

Note 3 – Acquisition of Rogan Shoes

On February 13, 2 024, we acquired all of the stock of Rogan Shoes, Incorporated, a privately-held 53-year-old work and family footwear company incorporated in Wisconsin, for a purchase price of $ 44.8 million, net of $ 2.2 million of cash acquired, which was paid with cash on hand .

This included $ 378,000 of purchase accounting adjustments which

were paid in November 2024.

On February 13, 2 024, we acquired all of the stock of Rogan’s, a privately-held 53-year-old work and family footwear company incorporated in Wisconsin, for a purchase price of $ 44.8 million, net of $ 2.2 million of cash acquired, which was paid with cash on hand .

This included $ 378,000 of purchase accounting adjustments which were paid in fourth quarter 2024.

Additional consideration of up to $ 5.0 million may be paid by the Company subject to the achievement of three-year growth targets.

At the time of the acquisition, Rogan’s operated 28 store locations in Wisconsin, Minnesota and Illinois.

The Rogan’s acquisition advanced our strategy to be the nation’s leading family footwear retailer.

It immediately positioned us as the market leader in Wisconsin, and it established a store base in Minnesota, creating additional expansion opportunities.

The Rogan’s acquisition immediately positioned us as the market leader in Wisconsin, and it established a store base in Minnesota, creating additional expansion opportunities.

Rogan’s results were included in our consolidated financial statements since the acquisition date.

Net Sales from our Rogan’s operations were $ 80.3 million in Fiscal 2024 .

Net Sales from our Rogan’s operations were $ 75.6 million in Fiscal 2025 and $ 80.3 million in Fiscal 2024 .

Acquisition-related costs of $ 570,000 and $ 806,000 were expensed as incurred and were included in SG&A in Fiscal 2024 and Fiscal 2023, respectively.

Supplemental pro forma results of operations reflecting the acquisition are not presented as the impact on our consolidated financial results was not material.

No acquisition-related costs were included in SG&A in Fiscal 2025.

The following table summarizes the purchase price and the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed.

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Our fair value estimate related to the identified intangible asset of Rogan’s trade name was determined using the Relief from Royalty method, and the significant assumptions used for the valuation include the royalty rate, estimated projected revenues, long-term growth rate and the discount rate.

Our fair value estimates related to Rogan’s customer relationships were determined using the Multi-Period Excess Earnings method, and the significant assumptions used for the valuation include projected cash flows, the discount rate and customer attrition rate.

Our fair value estimates related to Rogan’s customer relationships were determined using the Multi-Period Excess Earnings method, and the

significant assumptions used for the valuation include projected cash flows, the discount rate and customer attrition rate.

Our fair value estimate of the contingent consideration for the Rogan’s acquisition was determined using a Monte Carlo simulation and other methods that account for the probabilities of various outcomes and was recorded in Other long-term liabilities.

Significant assumptions used for the valuation include the discount rate, projected cash flows and calculated volatility.

It will be remeasured on a recurring basis at fair value.

As of February 1, 2025, the fair value of the contingent consideration liability was $ 395,000 , with the resulting $ 3.2 million adjustment recorded as a reduction in SG&A in Fiscal 2024.

This contingent consideration is remeasured on a recurring basis at fair value, with any adjustments to the payment due to Rogan’s former owners reflected within SG&A.

The fair value of the contingent consideration liability was $ 451,000 and $ 395,000 as of January 31, 2026 and February 1, 2025, respectively.

In Fiscal 2025 and Fiscal 2024, adjustments to the contingent consideration included in SG&A were benefits of $ 25,000 and $ 3.2 million, respectively.

Identifiable intangible assets include Rogan’s trade name and customer relationships.

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therefore, Goodwill and Rogan’s trade name will be charged to expense only if impaired.

Impairment reviews have been, and will be, conducted at least annually and involve a comparison of fair value to the carrying amount.

If fair value is less than the carrying amount, an impairment loss would be recognized in SG&A.

Customer relationships are subject to amortization and will be amortized over a period of 20 years.

The amortization of the customer relationships was $ 45,000 in both Fiscal 2025 and Fiscal 2024.

Goodwill and the acquisition-related Intangible Assets are not deductible for tax purposes.

Note 4 – Fair Value of Financial Instruments

The following table presents financial instruments that are measured at fair value on a recurring basis at February 1, 2025 and February 3, 2024:

The following table presents financial instruments that are measured at fair value on a recurring basis at January 31, 2026 and February 1, 2025:

Fair Value Measurements

(In thousands)

As of February 1, 2025:

As of January 31, 2026:

Cash equivalents – money market mutual funds

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The fair values of Cash and Cash Equivalents, Accounts Receivable, Accounts Payable, Accrued Expenses and Other Current Liabilities approximate their carrying values because of their short-term nature.

The fair value of the Shoe Station and Rogan’s brands were estimated using a relief-from-royalty method.

The fair value of the Shoe Station and Rogan’s trade names were estimated when tested for impairment using a relief-from-royalty method.

The estimates and assumptions used in the determination of the fair value of each brand included their respective projected revenue growth, long-term growth rate, the royalty rate and discount rate.

No impairments were recognized.

Note 5 – Revenue

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We recognize the related revenue when control has been transferred to the customer (i.e., when the product is picked up by the customer or shipped to the customer).

Unearned revenue related to Shoes 2U was not material to our consolidated financial statements at February 1, 2025 or February 3, 2024.

Unearned revenue related to Shoes 2U was not material to our consolidated financial statements at January 31, 2026 or February 1, 2025.

Returns and Refunds

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The estimated cost of Merchandise Inventory is recorded as a reduction to Cost of Sales and an increase in Merchandise Inventories.

At January 31, 2026, approximately $ 1.1 million of refund liabilities and $ 545,000 of right of return assets associated with estimated product returns were recorded in Accrued and Other Liabilities and Merchandise Inventories, respectively.

At February 1, 2025 , approximately $ 1.1 million of refund liabilities and $ 726,000 of right of return assets associated with estimated product returns were recorded in Accrued and Other Liabilities and Merchandise Inventories, respectively.

At February 3, 2024 , approximately $ 962,000 of refund liabilities and $ 618,000 of right of return assets associated with estimated product returns were recorded in Accrued and Other Liabilities and Merchandise Inventories, respectively.

Contract Liabilities

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We do not record breakage revenue when escheat liability to relevant jurisdictions exists.

At February 1, 2025 and February 3, 2024, $ 2.3 million and $ 2.4 million of contract liabilities associated with unredeemed gift cards were recorded in Accrued and Other Liabilities, respectively.

At January 31, 2026 and February 1, 2025, $ 2.0 million and $ 2.3 million o f contract liabilities associated with unredeemed gift cards were recorded in Accrued and Other Liabilities, respectively.

We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions within two year s.

Breakage revenue associated with our gift cards recognized in Net Sales was $ 457,000 in Fiscal 2025.

Breakage revenue associated with our gift cards recognized in Net Sales was $ 845,000 in Fiscal 2024, primarily related to Rogan’s as well as increasing breakage rates.

Breakage revenue associated with our gift cards recognized in Net Sales was not material in Fiscal 2023 or Fiscal 2022.

Breakage revenue associated with our gift cards recognized in Net Sales was not material in Fiscal 2023.

Our Shoe Perks rewards program allows customers to accrue points and provides customers with the opportunity to earn rewards.

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Loyalty awards recognized in Net Sales were $ 4.1 million, $ 3.5 million and $ 6.1 million during fiscal years 2025, 2024 and 2023, respectively.

At February 1, 2025 and February 3, 2024 , approximately $ 564,000 and $ 481,000 of contract liabilities associated with loyalty rewards were recorded in Accrued and Other Liabilities, respectively.

At January 31, 2026 and February 1, 2025, approximately $ 627,000 and $ 564,000 of contract liabilities associated with loyalty rewards were recorded in Accrued and Other Liabilities, respectively.

We expect the revenu e associated with these liabilities to be recognized in proportion to the pattern of customer redemptions in less than one year.

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has a single operating and reportable segment that sells footwear and related merchandise for the family across our retail banners and sales channels.

With respect to our omnichannel strategy, our e-commerce sales channel is integrated with our Shoe Carnival, Shoe Station and Rogan’s physical store locations across 36 states and Puerto Rico and is fundamentally inseparable in how we serve our target customers.

Our chief operating decision maker (“CODM”) is our President and Chief Executive Officer .

The CODM assesses performance and decides how to allocate resources based on Net Income that also is reported on the income statement as our consolidated Net Income.

The CODM uses Net Income to evaluate performance in deciding whether to reinvest

profits, facilitate acquisitions or return funds to shareholders through dividends or share repurchases.

Net Income is used to monitor budget versus actual results and in competitive analysis by benchmarking to our peers and competitors.

The benchmarking analysis and the monitoring of budgeted versus actual results are used in assessing our performance and in establishing management’s compensation.

We have concluded that, on the basis of the principles in ASC 280, the expenses below require disclosure under the significant expense principle.

The CODM does not review assets in evaluating results.

With respect to our omnichannel strategy, our e-commerce sales channel is integrated with our physical store locations across 35 states and Puerto Rico and is fundamentally inseparable in how we serve our target customers.

Our chief operating decision maker (“CODM”) during Fiscal 2025 was our president and chief executive officer .

The CODM assessed performance and decided how to allocate resources based on Net Income that also is reported on the

income statement as our consolidated Net Income.

The CODM used Net Income to evaluate performance in deciding whether to reinvest profits, facilitate acquisitions or return funds to shareholders through dividends or share repurchases.

Net Income was used to monitor budget versus actual results and in competitive analysis by benchmarking to our peers and competitors.

The benchmarking analysis and the monitoring of budgeted versus actual results were used in assessing our performance and in establishing management’s compensation.

We have concluded that, on the basis of the principles in FASB ASU 2023-07, Segment Reporting (Topic 280), the expenses below require disclosure under the significant expense principle .

The CODM did not review assets in evaluating results.

Therefore, such information is not provided.

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Total depreciation expense associated with Property and Equipment was $ 31.4 million in Fiscal 2025 , $ 28.3 million in Fiscal 2024 and $ 25.8 million in Fiscal 2023.

As of February 1, 2025 and February 3, 2024 , there was $ 11.4 million and $ 15.5 million, respectively, of construction work in process included in Property and Equipment, primarily related to store rebanners/remodels and new store construction activity.

As of January 31, 2026 and February 1, 2025, there was $ 12.1 million and $ 11.4 million, respectively, of construction work in process included in Property and Equipment, primarily related to store rebanners/remodels and new store construction activity.

No impairment charges on long-lived assets held and used were recorded in Fiscal 2025, Fiscal 2024 or Fiscal 2023 .

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These platforms are cloud computing arrangements that are software-as-a-service (“SaaS”) contracts.

Net capitalized costs related to cloud computing arrangements as of February 1, 2025 and February 3, 2024 were $ 14.4 million and $ 15.9 million, respectively.

Net capitalized costs related to cloud computing arrangements as of January 31, 2026 and February 1, 2025 were $ 12.5 million and $ 14.4 million, respectively.

Total amortization expense related to these arrangements was $ 2.8 million during Fiscal 2025, $ 2.7 million during Fiscal 2024 and $ 3.0 million during Fiscal 2023.

As of February 1, 2025 , $ 3.2 million of net capitalized costs related to cloud computing arrangements were classified in Other Current Assets and $ 11.2 million were classified as Other Noncurrent Assets in our Consolidated Balance Sheets.

As of January 31, 2026 , $ 3.0 million of net capitalized costs related to cloud computing arrangements were classified in Other Current Assets and $ 9.5 million were classified as Other Noncurrent Assets in our Consolidated Balance Sheets.

As of February 1, 2025 , $ 3.2 million of net capitalized costs related to cloud computin g arrangements were classified in Other Current Assets and $ 11.2 million were classified as Other Noncurrent Assets in our Consolidated Balance Sheets.

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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.

No borrowings were outstanding under the Credit Agreement as of February 1, 2025 or February 3, 2024 , and we did no t borrow under the Credit Agreement during Fiscal 2024 or Fiscal 2023.

As of February 1, 2025 , there were $ 1.0 million in letters of credit outstanding and $ 99.0 million available to us for borrowing under the Credit Agreement.

No borrowings were outstanding under the Credit Agreement as of January 31, 2026 or February 1, 2025 , and we did no t borrow under the Credit Agreement during Fiscal 2025 or Fiscal 2024.

As of January 31, 2026, there were $ 1.0 million in letters of credit outstanding and $ 99.0 million available t o us for borrowing under the Credit Agreement.

Note 11 – Leases

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Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties or any sublease arrangements with any related party or third party as of February 1, 2025.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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operating lease liabilities

ROU assets obtained in exchange for operating lease liabilities 1

ROU assets obtained in exchange for operating lease

liabilities (1)

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Weighted-average remaining lease term for operating leases

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(1) Includes ROU assets added as part of the Rogan's acquisition described in Note 3 – “Acquisition of Rogan Shoes”

The following table reconciles the undiscounted cash flows for each of the next five years and the total of the remaining years to our operating lease liabilities as of February 1, 2025:

The following table reconciles the undiscounted cash flows for each of the next five years and the total of the remaining years to our operating lease liabilities as of January 31, 2026:

(In thousands)

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Total current

State and Puerto Rico

Total deferred

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Reconciliation between the statutory federal income tax rate and the effective income tax rate is as follows:

Federal statutory tax rate

State and local income taxes, net of federal tax

Excess tax benefit on stock-based compensation

Federal statutory income tax rate

State and local, net of federal benefit (1)

Effect of cross-border tax laws (2)

Nontaxable or nondeductible items

Other adjustments

Changes in valuation allowance (2)

Effective income tax rate

(1) State taxes comprised the majority (greater than 50%) of the tax effect in the category as follows:

Illinois, Wisconsin, Texas, Indiana, Florida, Alabama and Tennessee

Illinois, Wisconsin, Indiana, Florida and Alabama

Illinois, Indiana, Florida, Alabama, Texas and Georgia

(2) Our Puerto Rico operations, net of related tax credits, are presented in the rate reconciliation as “Effect of cross-border tax laws.” Changes in our valuation allowance represents tax credits generated by our Puerto Rico operations that are not expected to be utilized.

Deferred Income Taxes are the result of temporary differences in the recognition of revenue and expense for tax and financial reporting purposes.

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Accrued compensation

Inventory reserve

Total deferred tax assets

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Lease ROU assets

Property and equipment

Total deferred tax liabilities

Net deferred tax liability

We have tax credit carryforwards associated with our Puerto Rico operations totaling $ 3.6 million at February 1, 2025 and $ 3.3 million at February 3, 2024.

These credits expire at various times over the next nine years .

We have taken

a full valuation allowance against these credits given they are not expected to be utilized due to the current differential between U.S.

We have tax credit carryforwards associated with our Puerto Rico operations totaling $ 3.9 million at January 31, 2026 and $ 3.6 million at February 1, 2025.

These credits expire at various times over the next nine y ears .

We have taken a full valuation allowance against these credits given they are not expected to be utilized due to the current differential between U.S.

and Puerto Rico tax rates.

As of February 1, 2025 and February 3, 2024 , there were no unrecognized tax liabilities or related accrued penalties or interest.

As of January 31, 2026 and February 1, 2025 , there were no unrecognized tax liabilities or related accrued penalties or interest.

Income taxes paid, net of refunds received, disaggregated as follows:

(In thousands)

Total taxes paid, net of refunds received

During the years ended January 31, 2026, February 1, 2025, and February 3, 2024, no jurisdiction, other than Puerto Rico in Fiscal 2025 and Fiscal 2023, exceeded 5 % of the total cash income taxes paid.

Note 13 – Employee Benefit Plans

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Our Board of Directors-approved Shoe Carnival Puerto Rico Savings Plan (the “Puerto Rico Savings Plan”) is open to all employees working in Puerto Rico who have been employed for at least one year , are at least 21 years of age and who work at least 1,000 hours in a defined year.

This plan is similar to our Domestic Savings Plan, whereby an employee may contribute up to 20 % of his or her annual earnings, with a matching Company contribution up to the first 4 % at a rate of 50 %.

This plan is similar to our Domestic Savings Plan, whereby an

employee may contribute up to 20 % of his or her annual earnings, with a matching Company contribution up to the first 4 % at a rate of 50 %.

Contributions charged to expense associated with these plans were $ 1.1 million, $ 1.1 million and $ 1.0 million in fiscal years 2025, 2024 and 2023, respectively.

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These Marketable Securities are designed to mitigate volatility in our Consolidated Statements of Income associated with our non-qualified deferred compensation plan.

As of February 1, 2025, these Marketable Securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan.

As of January 31, 2026, these Marketable Securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan.

To the extent there is a variation in invested funds compared to the total non-qualified deferred compensation plan liability, such fund variance is managed through a stable value mutual fund.

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Employer contributions, net

Investment earnings (losses)

Investment earnings

Marketable Securities

Mark-to-market (gains) losses (1)

Mark-to-market gains (1)

Net deferred compensation expense

(1) Included in the mark-to-market gains in Fiscal 2024 and Fiscal 2023, we recognized unrealized gains of $ 1.0 million and $ 1.4 million related to equity securities still held at February 1, 2025 and February 3, 2024, respectively.

Included in the mark-to-market losses in Fiscal 2022, we recognized unrealized losses of $ 833,000 related to equity securities still held at January 28, 2023.

(1) Included in the mark-to-market gains in Fiscal 2025, Fiscal 2024 and Fiscal 2023, we recognized unrealized gains of $ 0.4 million, $ 1.0 million and $ 1.4 million related to equity securities still held at January 31, 2026, February 1, 2025 and February 3, 2024, respectively.

Note 14 – Stock-Based Compensation

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Stock-based compensation includes share-settled awards issued pursuant to our 2017 Equity Plan in the form of restricted stock units, performance stock units, and restricted and other stock awards.

Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our Employee Stock Purchase Plan and for cash-settled stock appreciation rights (SARs).

Additionally, we recognize

stock-based compensation expense for the discount on shares sold to employees through our Employee Stock Purchase Plan and for cash-settled stock appreciation rights (“SARs”).

For fiscal years 2025, 2024 and 2023, stock-based compensation expense was comprised of the following:

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Income tax benefit at statutory rates

Additional income tax benefit on vesting of share-settled awards

As of February 1, 2025 , there was approximately $ 9.5 million of unrecognized compensation expense remaining related to our share-settled equity awards.

Additional income tax (shortfall) benefit on vesting of share-settled awards

As of January 31, 2026 , there was approximately $ 8.4 million of unrecognized compensation expense remaining related to our share-settled equity awards.

The cost is expected to be recognized over a weighted average period of approximately 1.4 years.

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According to the terms of the 2017 Equity Plan, no further awards may be made from any previously approved equity plans.

As of February 1, 2025, there were approximately 1.7 million shares of our common stock available for issuance under the 2017 Equity Plan, assuming that all unmeasured but outstanding performance stock units vest at the maximum level of performance.

As of January 31, 2026, there were approximately 1.3 million shares of our common stock available for issuance under the 2017 Equity Plan, assuming that all unmeasured but outstanding performance stock units vest at the maximum level of performance.

Equity awards issued to employees are classified as either performance-based or service-based.

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None of the performance stock units granted in Fiscal 2023 were earned.

Any performance stock units granted in Fiscal 2024 that are earned based on our actual performance vest in full on March 31, 2027.

The performance stock units granted in Fiscal 2024 that were earned based on our actual performance vest in full on March 31, 2027.

The performance stock units granted in Fiscal 2025 that were earned based on our actual performance vest in full on March 31, 2028.

Other vesting scenarios have been used in prior years and for awards used to incentivize specific employee performance.

Our service-based restricted stock units and restricted stock awards vest under different scenarios based on the year they were granted, as determined and approved by our Board of Directors.

The restricted stock units granted in Fiscal 2024 vest one-half after two years and the remaining half after three years.

Restricted stock units granted in Fiscal

2023 and Fiscal 2022 vest one-third after two years and two-thirds after three years.

The restricted stock units granted in Fiscal 2025 and Fiscal 2024 vest one-half after two years and the remaining half after three years.

Restricted stock units granted in Fiscal 2023 vest one-third after two years and two-thirds after three years.

For our non-employee Board members and Vice Chairman, all restricted stock awards are issued to vest on January 2 nd of the year following the year of the grant.

Our Chairman of the Board receives an annual award in which the shares are fully vested upon grant.

Awards that contain both performance and service-based conditions require that the performance target be met during the required service period.

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Outstanding at February 1, 2025

Outstanding at January 31, 2026

The total fair value at grant date of restricted stock units and performance stock units that vested during Fiscal 2025, Fiscal 2024 and Fiscal 2023 was $ 7.5 million, $ 1.4 million and $ 4.8 million, respectively.

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Outstanding at February 1, 2025

The total fair value at grant date of restricted stock and other stock awards that vested during each of Fiscal 2024, Fiscal 2023 and Fiscal 2022 was $ 0.5 million .

Outstanding at January 31, 2026

The total fair value at grant date of restricted stock and other stock awards that vested during each of Fiscal 2025, Fiscal 2024 and Fiscal 2023 was $ 0.7 million , $ 0.5 million and $ 0.5 million, respectively.

The weighted-average grant date fair value of restricted stock and other stock awards granted during Fiscal 2024 and Fiscal 2023 was $ 36.84 and $ 21.90 , respectively.

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The SARs issued in Fiscal 2021 had a defined maximum gain of $ 5.00 over the exercise price of $ 30.94 .

The following table summarizes SARs activity:

Outstanding at February 3, 2024

Outstanding at February 1, 2025

The fair value of these liability awards were remeasured, using a trinomial lattice model, at each reporting period until the date of settlement.

Increases or decreases in stock-based compensation expense were recognized over the vesting period, or immediately for vested awards.

No additional SARs have been granted since Fiscal 2021.

Stock Purchase Plan

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Under the Stock Purchase Plan, 11,000 , 6,000 and 9,000 shares of common stock were purchased by plan participants and proceeds to us for the sale of those shares were approximately $ 172,000 , $ 169,000 and $ 183,000 for fiscal years 2025, 2024 and 2023, respectively.

At February 1, 2025 , there were approximately 94,000 shares of unissued common stock reserved for future purchase under the Stock Purchase Plan.

At January 31, 2026 , there were approximately 84,000 shares of unissued common stock reserved for future purchase under the Stock Purchase Plan.

Note 15 – Share Repurchase Program

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The 2026 Share Repurchase Program replaced a $ 50 million share repurchase program that was authorized in December 2024, became effective January 1, 2025 and expired in accordance with its terms on December 31, 2025 .

No shares were repurchased during Fiscal 2024.

Shares totaling 230,696 were repurchased during Fiscal 2023 at a cost of $ 5.4 million and shares totaling 1,134,524 were repurchased during Fiscal 2022 at a cost of $ 30.5 million.

No shares were repurchased during Fiscal 2025 or Fiscal 2024.

Shares totaling 230,696 were repurchased during Fiscal 2023 at a cost of $ 5.4 million.

See Note 10 – “Debt” for a discussion of our Credit Agreement and its restrictions regarding share repurchases.

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(“Skechers”) and Crocs, Inc.

(“Crocs”), collectively accounted for approximately 48 % of our Net Sales in Fiscal 2024 and 45 % of our Net Sales in Fiscal 2023.

Nike accounted for approximately 24 % of our Net Sales in Fiscal 2024, 20 % in Fiscal 2023 and 14 % in Fiscal 2022;

Skechers accounted for approximately 13 % of our Net Sales in Fiscal 2024, 14 % in Fiscal 2023 and 13 % in Fiscal 2022;

and Crocs accounted for approximately 11 % of our Net Sales in both Fiscal 2024 and Fiscal 2023.

(“Crocs”), collectively accounted for approximately 46 % of our Net Sales in Fiscal 2025, 48 % of our Net Sales in Fiscal 2024 and 45 % of our Net Sales in Fiscal 2023.

Nike accounted for approximately 24 % of our Net Sales in Fiscal 2025, 24 % of our Net Sales in Fiscal 2024 and 20 % of our Net Sales in Fiscal 2023;

Skechers accounted for approximately 13 % of our Net Sales in Fiscal 2025, 13 % of our Net Sales in Fiscal 2024 and 14 % of our Net Sales in Fiscal 2023;

and Crocs accounted for approximately 9 % of our Net Sales in Fiscal 2025 and 11 % of our Net Sales in both Fiscal 2024 and Fiscal 2023.

A loss of any of our key suppliers in certain product categories could have a material adverse effect on our business.

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Note 17 – Subsequent Events

On March 12, 2025, the Board of Directors approved the payment of a cash dividend to our shareholders in the first quarter of Fiscal 2025.

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

The declaration and payment of any future dividends are at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors.

On March 3, 2026, the Board of Directors (the “Board”) approved the payment of a cash dividend to our shareholders in the first quarter of Fiscal 2026.

The quarterly cash dividend of $ 0.170 p er share will be paid on April 20, 2026 to shareholders of record as of the close of business on April 6, 2026 .

The declaration and payment of any future dividends are at the discretion of the Board and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by the Board.

See Note 10 – “Debt” for a discussion of our Credit Agreement and its restrictions regarding dividend payments and acquisitions.

CEO Transition

On February 24, 2026, Mark J.

Worden departed from his position as President and Chief Executive Officer of the Company.

In connection with his departure, Mr.

Worden resigned as a member of the Board, effective immediately.

Worden’s departure was not due to any disagreement with the Company on any matter relating to its operations, policies or practices.

On February 24, 2026, the Board appointed Clifton E.

Sifford to serve as our Interim President and Chief Executive Officer.

Sifford will continue to serve as the Vice Chairman of the Board as well.

Sifford was also designated as our principal executive officer, effective as of February 24, 2026.

Pursuant to the terms of the Amended and Restated Employment and Noncompetition Agreement, dated as of November 1, 2024, between the Company and Mr.

Worden (the “Employment Agreement”), in connection with his departure, we are providing Mr.

Worden with the payments required to be made to him under the terms of the Employment Agreement upon a termination without cause, subject to Mr.

Worden complying with the covenants set forth in the Employment Agreement.

Worden also executed and delivered a release of claims against the Company pursuant to the terms of the Employment Agreement.

Payments to Mr.

Worden included 168,184 shares of our common stock issued to Mr.

Worden for the settlement of outstanding equity awards whose vesting accelerated upon his termination and will include a cash payment of $ 4.8 million.

These payments, net of accruals for incentive and stock-based compensation as of January 31, 2026, will have an estimated effect on Net Income per Diluted Share for Fiscal 2026 of approximately $ 0.20 to $ 0.22 .

Supreme Court Tariff Ruling

In February 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed by the United States executive branch under the International Emergency Economic Powers Act (“IEEPA”).

The United States executive branch subsequently instituted additional tariffs under other laws.

These actions have resulted in considerable uncertainty regarding the scope and duration of current and potential tariffs and the impact this uncertainty may have on us, including availability and timing of refunds of tariffs paid under IEEPA.

We continue to monitor and evaluate tariff policy and assess the potential impact on our business, financial condition, and results of operations.

At this time, we cannot reasonably estimate the total financial impact of these events;

however, these actions, and any additional tariffs imposed, may materially affect our future results of operations and cash flows.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 7. Management’s Discussion and Analysis