U.S. Markets closed

Shoe Carnival Down to Strong Sell

Zacks Equity Research

Zacks Investment Research downgraded Shoe Carnival Inc. (SCVL) to a Zacks Rank #5 (Strong Sell) on Jun 14. Shoe Carnival witnessed sharp downward estimate revisions after reporting weak first-quarter fiscal 2014 results and conservative second quarter guidance on May 22, 2014.

Why the Downgrade?

Shoe Carnival’s sales and earnings missed the Zacks Consensus Estimate in the first quarter fiscal 2014. Moreover, earnings of 45 cents declined 4.3% from the prior-year quarter and were at the lower end of the company’s expectation range of 45 cents – 52 cents due to soft sales.

Though revenues managed to increase 1.5% year over year on the back of continued focus on store growth, comparable store sales declined 1.7% from the prior-year quarter due to severe weather. The company’s gross margin remained flat at 29.5% in the quarter due to higher utility and health care costs.

Conservative Guidance

The company has also provided a conservative second quarter fiscal 2014 guidance due to the ongoing economic uncertainty. For the second quarter of fiscal 2014, the company anticipates revenues between $223.0 and $228.0 million. Comparable store sales are expected in the range of flat to a decline of up to 3.0%, lower than the prior year comp sales gain of 2.6%. Earnings per share for the second quarter of fiscal 2014 are expected to be in the range of 12-16 cents, significantly lower than 29 cents reported in the year-ago quarter.

The Zacks Consensus Estimate for the second quarter decreased 42.3% and that for fiscal 2014 went down 11.3% over the last 30 days.

Other Stock to Consider

Not all stocks are performing as poorly as Shoe Carnival. Some better-ranked retailers for apparels and shoes include Citi Trends, Inc (CTRN), Finish Line Inc (FINL) and Mens Wearhouse Inc (MW). While Citi Trends sports a Zacks Rank #1 (Strong Buy), Finish Line and Mens Wearhouse hold a Zacks Rank #2 (Buy).

Read the Full Research Report on CTRN
Read the Full Research Report on SCVL
Read the Full Research Report on MW
Read the Full Research Report on FINL

Zacks Investment Research