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Shoe Carnival’s Q2 Gross sales Slide 6 %

Shoe Carnival Inc. reported second-quarter earnings that had been under year-ago ranges however nicely forward of the pre-pandemic 2019 quarter. Gross sales had been down 6 % yr over yr. The off-price shoe chain reiterated its EPS steering for the yr.

Second Quarter Highlights In comparison with 2019

  • Internet gross sales grew 16.4 % with each retailer banners contributing.
  • Based mostly on outcomes by means of the second quarter, Shoe Station banner gross sales are actually anticipated to exceed beforehand introduced full yr expectations of $100 million by greater than 10 %.
  • Gross revenue margin elevated 560 foundation factors.
  • Working revenue margin elevated 660 foundation factors and at 12.4 % was the sixth consecutive quarter in double-digits.
  • Second quarter EPS of $1.04 (up 160 %) and year-to-date EPS of $1.99 (up 131 %) is on monitor to ship beforehand introduced full yr steering within the vary of $3.95 to $4.15.

“The Shoe Carnival crew delivered distinctive profitability in a difficult financial atmosphere,” stated Mark Worden, President and Chief Govt Officer. “The almost $2.00 of EPS earned in the course of the first half of 2022 is bigger than any full yr earnings in our 44 years of operation aside from final yr’s stimulus boosted outcomes.”

“We’re proud to ship our sixth consecutive quarter of double-digit working revenue margin and gross revenue margin that expanded almost 600 foundation factors versus pre-pandemic ranges on each a quarterly and year-to-date foundation. Contribution from the Shoe Station banner has exceeded preliminary expectations and we anticipate to understand further synergies and to develop retailer depend throughout each banners. We’re optimistic about our long-term development trajectory and delivering our profitability targets for 2022,” concluded Worden.

Shoe Station Replace

Shoe Station working outcomes thus far have exceeded administration’s preliminary expectations. Beforehand introduced expectations had been $100 million of annual web gross sales and a ten % working revenue margin. The corporate now anticipates the top-line gross sales goal shall be exceeded by greater than 10 % and bottom-line contribution shall be in step with the corporate’s total anticipated working revenue margin of 11.4 % to 11.6 %. The corporate anticipates additional provide chain and omnichannel synergies shall be achieved by fiscal yr finish, with advantages realized in fiscal 2023.

Again-to-College Replace

August merchandise gross sales by means of the start of the fourth week of August embrace the very best three-day gross sales achieved throughout any three days within the firm’s historical past. August-to-date merchandise gross sales have elevated within the mid-teens in comparison with 2019 and have decreased mid-single digits in comparison with 2021. Gross revenue margin for August is anticipated to extend over 650 foundation factors in comparison with 2019. The August back-to-school purchasing interval drives over half of the corporate’s third quarter profitability.

Fiscal 2022 Earnings Outlook

In comparison with 2019, EPS development has accelerated by means of the primary half of 2022, growing 107 % within the first quarter and 160 % within the second quarter. These outcomes, mixed with the strong begin to the third quarter, present the muse for the corporate’s gross sales and earnings outlook for fiscal 2022.

  • EPS is reaffirmed to be within the vary of $3.95 to $4.15, in comparison with a pre-pandemic annual excessive of $1.46 in 2019.
  • Internet gross sales are anticipated to be between $1.29 billion and $1.34 billion, up 24 % to 29 % in comparison with 2019.
  • Gross revenue margin is anticipated to be in a variety of 36.6 % to 36.7 %, in comparison with 30.1 % in 2019.
  • Working revenue margin is anticipated to be in a variety of 11.4 % to 11.6 %, in comparison with 5.2 % in 2019.

Merchandise Stock

The corporate ended second quarter 2022 with stock of $385.5 million, a rise of $48.6 million in comparison with second quarter 2019. Roughly 59 % of the rise is stock for the Shoe Station shops acquired final yr or opened this yr. The 14.4 % improve in stock is supportive of the 20.6 % improve in web gross sales year-to-date in comparison with 2019 and the expectation of will increase in gross sales for the rest of the yr. The variety of weeks of gross sales within the second quarter ending stock this yr is barely down in comparison with 2019.

Working Outcomes In comparison with 2019

Second quarter 2022 web gross sales of $312.3 million elevated $44.0 million, or 16.4 %, in comparison with the pre-pandemic second quarter 2019, pushed by contribution from Shoe Station shops and new buyer acquisition at Shoe Carnival shops of 28 %. Yr-to-date web gross sales have elevated $107.8 million, or 20.6 %, in comparison with 2019, with each retailer banners contributing almost equally to the year-to-date improve. Gross sales from the Shoe Station banner shops, acquired in December 2021, added web gross sales of $27.2 million for the quarter and $53.4 million year-to-date.

COVID-19-related manufacturing and provide chain disruptions considerably constrained the provision of athletic sneakers. Based mostly on weekly averages, athletic stock was down 25.7 % in the course of the 2022 second quarter in comparison with 2019. These decrease stock ranges contributed to decreased athletic gross sales within the quarter by 12.9 %. This lower was greater than offset by a 30.8 % improve in gross sales of non-athletic shoe classes, driving total comparable retailer gross sales up 8.0 %.

Second quarter 2022 gross revenue margin was 36.2 %, a 560 foundation level improve in comparison with second quarter 2019. Merchandise margin would have elevated over 800 foundation factors primarily on account of elevated buyer relationship administration capabilities, which have resulted in additional focused promotional pricing and better common promoting costs. Nonetheless, inflationary impacts on transportation and gasoline bills partially offset the rise in merchandise margin and likewise elevated the corporate’s distribution prices.

Working revenue for second quarter 2022 was $38.8 million and was 12.4 % of web gross sales, a 660 foundation level improve in comparison with second quarter 2019.

Second quarter 2022 web revenue was $28.9 million, or $1.04 per diluted share, a rise of 160 % in comparison with second quarter 2019.

Working Outcomes In comparison with 2021

Internet gross sales decreased $20.0 million, or 6.0 %, in comparison with second quarter 2021 with a comparable retailer decline of 13.8 % partially offset by gross sales from Shoe Station shops. The comparable retailer decline was primarily pushed by decrease athletic gross sales.

Gross revenue margin decreased 470 foundation factors in comparison with second quarter 2021, primarily on account of greater prices, together with greater freight and gasoline prices, and the de-leveraging impact of decrease gross sales on shopping for, distribution and occupancy prices.

In second quarter 2021, working revenue, web revenue and EPS had been $59.7 million, $44.2 million, and $1.54, respectively.

Retailer Updates

Retailer depend is on monitor to realize 400 shops by the tip of fiscal 2022. No retailer closures throughout fiscal 2022 are anticipated.

The corporate is at present modernizing its shops and plans to have over 50 % of shops modernized by the summer season of 2023 and the total program full by the tip of fiscal 2024.

Share Repurchase Program

As of July 30, 2022, the corporate had $29.5 million obtainable for future repurchases beneath its share repurchase program, and in the course of the second quarter no shares had been repurchased.

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