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Shoe Carnival (SCVL) Q3 Earnings Miss Estimates, Decline Y/Y
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Shoe Carnival, Inc. (SCVL - Free Report) posted third-quarter fiscal 2023 results, wherein both the top and bottom lines fell short of their respective Zacks Consensus Estimate. The figures also declined year over year.
SCVL announced a prosperous Back-to-School season, characterized by significant growth in the children's business, double-digit expansion within the Shoe Station banner, and sustained market share gains in the family footwear channel. Nevertheless, the company faced a performance downturn post-Labor Day, falling short of expectations due to consistently hot and dry weather impacting seasonal sales and a slow commencement of the boot season.
Despite these transient challenges, Shoe Carnival remains well-positioned with robust financial strength. This positions the company favorably for the pursuit of further growth initiatives and opportunities for mergers and acquisitions (M&A) in fiscal 2024.
Shoe Carnival, Inc. Price, Consensus and EPS Surprise
The Zacks Rank #4 (Sell) company reported earnings per share of 80 cents, which missed the Zacks Consensus Estimate of 97 cents. The figure was also down from $1.18 registered in the year-ago quarter.
Net sales amounted to $319.9 million, down 6.4% year over year. Also, the top line missed the Zacks Consensus Estimate of $322 million. Comparable store sales declined 7.4% year over year, primarily due to softening trends post-Labor Day.
On a positive note, the Shoe Station banner reported a low double-digit increase in net sales, driven by new stores and the launch of the Shoe Station e-commerce site in early 2023. The company's total e-commerce sales grew nearly 10% year over year in third-quarter fiscal 2023, showcasing success in digital marketing and CRM investments.
Gross profit increased 10% year over year to $117.7 million. We note that the gross margin contracted 150 basis points (bps) to 36.8% from the prior-year period’s level. This decline can be primarily attributed to unseasonable fall weather.
Selling, general and administrative expenses increased 2.9% year over year to $89.8 million. As a percentage of net sales, selling, general and administrative expenses deleveraged 260 bps year over year to 28.1% in the fiscal third quarter, primarily driven by augmented advertising investment.
Image Source: Zacks Investment Research
Store Update
As of Oct 28, 2023, the company reached a milestone with the opening of its 401st store, consisting of 373 Shoe Carnival and 28 Shoe Station stores.
Continuing its commitment to modernization, SCVL is engaged in a multi-year remodel program. As of Oct 28, the modernization of 55% of the fleet had been completed, with expectations to approach two-thirds completion by the summer of fiscal 2024.
Looking ahead, Shoe Carnival has set ambitious goals, aiming to surpass 500 stores and become a multi-billion-dollar retailer by fiscal 2028. This strategic vision includes plans for organic growth and strategic M&A activities.
Other Financials
At the end of the third quarter, SCVL had $71 million in cash, cash equivalents and marketable securities, along with a borrowing capacity of $100 million. Net cash provided by operating activities at the end of the fiscal third quarter was $69.4 million.
The board of directors approved a 20% dividend increase in September 2023. The dividend, paid on Oct 17, 2023, marked a 166% increase from the third-quarter fiscal 2020 level. The company has paid 46 consecutive quarterly dividends.
Shoe Carnival bought back 230,696 shares during the quarter at an average price of $23.60 per share, totaling $5.4 million. As of Oct 28, 2023, $44.6 million remained available for future repurchases under the $50 million share repurchase program, contingent on appropriateness.
Fiscal 2023 Outlook
Management revised its fiscal 2023 guidance, taking into account that the softer-than-expected start to fall seasonal categories persisted into November. Furthermore, there is uncertainty surrounding customer holiday shopping, and broader macroeconomic conditions remain volatile.
Shoe Carnival expects net sales in the range of $1.16-$1.18 billion versus the earlier mentioned band of $1.19-$1.21 billion. The company delivered net sales of $1.26 billion in fiscal 2022. It predicts earnings per share (EPS) in the $2.65-$2.75 range compared with the earlier estimated band of $3.10-$3.25. SCVL reported EPS of $3.96 in fiscal 2022.
Comparable store sales are likely to decline 8.5-9.5%. The gross margin is anticipated to be 36%, while SG&A is projected to be in the band of $323-$327 million. Operating income is expected to be in the $92-$96 million range for fiscal 2023.
In the past six months, shares of SCVL have lost 6.1% against the industry's growth of 12.1%.
3 Promising Stocks
A few better-ranked stocks in the same space are American Eagle Outfitters Inc. (AEO - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 37.1% and 2.4%, respectively, from the previous year’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy). ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for the company’s current fiscal-year earnings and sales indicates growth of 20.8% and 11.2%, respectively, from the previous year’s reported figures. DECK has a trailing four-quarter average earnings surprise of 26.3%.
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Shoe Carnival (SCVL) Q3 Earnings Miss Estimates, Decline Y/Y
Shoe Carnival, Inc. (SCVL - Free Report) posted third-quarter fiscal 2023 results, wherein both the top and bottom lines fell short of their respective Zacks Consensus Estimate. The figures also declined year over year.
SCVL announced a prosperous Back-to-School season, characterized by significant growth in the children's business, double-digit expansion within the Shoe Station banner, and sustained market share gains in the family footwear channel. Nevertheless, the company faced a performance downturn post-Labor Day, falling short of expectations due to consistently hot and dry weather impacting seasonal sales and a slow commencement of the boot season.
Despite these transient challenges, Shoe Carnival remains well-positioned with robust financial strength. This positions the company favorably for the pursuit of further growth initiatives and opportunities for mergers and acquisitions (M&A) in fiscal 2024.
Shoe Carnival, Inc. Price, Consensus and EPS Surprise
Shoe Carnival, Inc. price-consensus-eps-surprise-chart | Shoe Carnival, Inc. Quote
Q3 in Detail
The Zacks Rank #4 (Sell) company reported earnings per share of 80 cents, which missed the Zacks Consensus Estimate of 97 cents. The figure was also down from $1.18 registered in the year-ago quarter.
Net sales amounted to $319.9 million, down 6.4% year over year. Also, the top line missed the Zacks Consensus Estimate of $322 million. Comparable store sales declined 7.4% year over year, primarily due to softening trends post-Labor Day.
On a positive note, the Shoe Station banner reported a low double-digit increase in net sales, driven by new stores and the launch of the Shoe Station e-commerce site in early 2023. The company's total e-commerce sales grew nearly 10% year over year in third-quarter fiscal 2023, showcasing success in digital marketing and CRM investments.
Gross profit increased 10% year over year to $117.7 million. We note that the gross margin contracted 150 basis points (bps) to 36.8% from the prior-year period’s level. This decline can be primarily attributed to unseasonable fall weather.
Selling, general and administrative expenses increased 2.9% year over year to $89.8 million. As a percentage of net sales, selling, general and administrative expenses deleveraged 260 bps year over year to 28.1% in the fiscal third quarter, primarily driven by augmented advertising investment.
Image Source: Zacks Investment Research
Store Update
As of Oct 28, 2023, the company reached a milestone with the opening of its 401st store, consisting of 373 Shoe Carnival and 28 Shoe Station stores.
Continuing its commitment to modernization, SCVL is engaged in a multi-year remodel program. As of Oct 28, the modernization of 55% of the fleet had been completed, with expectations to approach two-thirds completion by the summer of fiscal 2024.
Looking ahead, Shoe Carnival has set ambitious goals, aiming to surpass 500 stores and become a multi-billion-dollar retailer by fiscal 2028. This strategic vision includes plans for organic growth and strategic M&A activities.
Other Financials
At the end of the third quarter, SCVL had $71 million in cash, cash equivalents and marketable securities, along with a borrowing capacity of $100 million. Net cash provided by operating activities at the end of the fiscal third quarter was $69.4 million.
The board of directors approved a 20% dividend increase in September 2023. The dividend, paid on Oct 17, 2023, marked a 166% increase from the third-quarter fiscal 2020 level. The company has paid 46 consecutive quarterly dividends.
Shoe Carnival bought back 230,696 shares during the quarter at an average price of $23.60 per share, totaling $5.4 million. As of Oct 28, 2023, $44.6 million remained available for future repurchases under the $50 million share repurchase program, contingent on appropriateness.
Fiscal 2023 Outlook
Management revised its fiscal 2023 guidance, taking into account that the softer-than-expected start to fall seasonal categories persisted into November. Furthermore, there is uncertainty surrounding customer holiday shopping, and broader macroeconomic conditions remain volatile.
Shoe Carnival expects net sales in the range of $1.16-$1.18 billion versus the earlier mentioned band of $1.19-$1.21 billion. The company delivered net sales of $1.26 billion in fiscal 2022. It predicts earnings per share (EPS) in the $2.65-$2.75 range compared with the earlier estimated band of $3.10-$3.25. SCVL reported EPS of $3.96 in fiscal 2022.
Comparable store sales are likely to decline 8.5-9.5%. The gross margin is anticipated to be 36%, while SG&A is projected to be in the band of $323-$327 million. Operating income is expected to be in the $92-$96 million range for fiscal 2023.
In the past six months, shares of SCVL have lost 6.1% against the industry's growth of 12.1%.
3 Promising Stocks
A few better-ranked stocks in the same space are American Eagle Outfitters Inc. (AEO - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 37.1% and 2.4%, respectively, from the previous year’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy). ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for the company’s current fiscal-year earnings and sales indicates growth of 20.8% and 11.2%, respectively, from the previous year’s reported figures. DECK has a trailing four-quarter average earnings surprise of 26.3%.