Shoe Carnival (SCVL) shares surged 10.54% in pre-market trading following the release of its second-quarter fiscal 2025 results, which exceeded analyst expectations despite challenging market conditions. The footwear retailer demonstrated resilience in the face of economic headwinds, particularly affecting its low-income consumer base.

The company reported earnings per share of $0.70, significantly outperforming the consensus estimate of $0.58. While net sales declined 7.91% year-over-year to $306.4 million, missing the $313.1 million forecast, the results were better than feared given the current retail environment. Notably, Shoe Carnival's gross profit margin expanded by 270 basis points to 38.8%, driven by disciplined pricing strategies and a favorable product mix shift.

Investors were particularly encouraged by Shoe Carnival's strategic focus on its premium footwear brand, Shoe Station, which saw 1.6% sales growth and has delivered 8% comparable sales growth year-to-date. This performance contrasts with the 10% sales decline in the company's namesake Shoe Carnival brand, which caters to more price-sensitive consumers. Additionally, the company reported positive comparable sales and margin expansion during the crucial August back-to-school season, signaling potential momentum heading into the second half of the fiscal year. While Shoe Carnival adjusted its full-year sales guidance downward, it raised the lower end of its earnings per share forecast, demonstrating confidence in its ability to manage profitability despite top-line pressures.