Shoe Carnival's Q3 Report: Profit Beats Expectations Despite Sales Decline

Shoe Carnival's Impressive Q3 Earnings Performance

Shoe Carnival, Inc. (NASDAQ: SCVL) has recently announced its third-quarter performance, showcasing an adjusted earnings per share (EPS) of 71 cents. This figure has comfortably exceeded the street view projection of 67 cents, marking a significant win for the company.

Sales Figures and Retail Challenges

While the adjusted EPS figures impress, quarterly sales totaled $306.89 million, which fell short of the analyst consensus estimate of $316.95 million. The decline in sales can be attributed to the impact of the retail calendar shift, which resulted in around $20 million in net sales being pushed out of the third quarter compared to the previous year.

An Insight Into Sales Trends

Despite the overall sales dip, excluding the effects of the retail calendar shift, net sales actually rose by 2.2% compared to the same period last year. Mark Worden, the President and Chief Executive Officer, commented, "Our flexible digital-first marketing campaign and a well-chosen brand assortment really drove demand during this peak shopping period, aligning profitability with our expectations for Q3." This indicates that the company's strategic efforts are paying off despite external pressures.

Impact of Weather on Sales

During this quarter, comparable store net sales experienced a drop of 4.1%. This decline was influenced by two hurricanes that disrupted operations, as well as unusually warm weather that delayed the sales of winter boots, further impacting the sales results.

Gross Profit and Market Expansion

Shoe Carnival reported a gross profit margin of 36.0%, which represents the company's 15th consecutive quarter exceeding the 35% mark. However, this figure is 80 basis points lower than that of the previous year. Looking ahead, Shoe Carnival anticipates that the acquisition of Rogan's will result in net sales exceeding $80 million during fiscal 2024, with $22.3 million contributed in the third quarter alone and a total of $63.9 million year-to-date.

Company Operations and Financial Health

As of the latest update, the company operates 431 stores, which include 361 Shoe Carnival locations, 42 Shoe Station stores, and 28 Rogan's stores. Notably, a new Shoe Station store opened during the third quarter in Tennessee, marking the brand's entry into a new market. Financially, Shoe Carnival maintains a robust position with approximately $91.1 million in cash, cash equivalents, and marketable securities, highlighting its strong financial footing.

Revised Sales Outlook

Regarding future expectations, Shoe Carnival has adjusted its fiscal year 2024 net sales outlook to between $1.20 billion and $1.23 billion, a slight decrease from the earlier forecast of $1.23 billion to $1.25 billion. However, the company has retained its adjusted EPS guidance, projecting earnings of between $2.60 and $2.75, with an estimated average of $2.63.

Market Reactions

In response to these announcements, SCVL shares have seen a premarket increase of 1.25%, reaching $33.89. This uptick reflects investor confidence in the company's long-term strategies and outlook despite the current quarter's challenges.

Frequently Asked Questions

What were Shoe Carnival's adjusted earnings per share for Q3?

Shoe Carnival reported adjusted earnings per share of 71 cents for the third quarter.

How did third-quarter sales compare to expectations?

The quarterly sales were $306.89 million, missing the analyst consensus estimate of $316.95 million.

What factors influenced the sales decline this quarter?

The sales decline was influenced by a retail calendar shift, hurricanes, and warm weather affecting winter boot sales.

What is Shoe Carnival's outlook for fiscal year 2024?

Shoe Carnival revised its FY24 net sales outlook to $1.20 billion to $1.23 billion, while maintaining its adjusted EPS guidance of $2.60 to $2.75.

How many stores does Shoe Carnival operate currently?

As of now, Shoe Carnival operates 431 stores across different brands, including Shoe Carnival and Shoe Station.

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