Shoe Carnival Hits Snag in Earnings Winning Streak With Lower Sales in Q3
Shoe Carnival’s winning streak hit a snag on Wednesday as the retailer reported lower earnings in the third quarter of 2022.
The Evansville, Ind.-based footwear and accessories company posted net sales in the period of $341.7 million, down 4.1% from $356.3 million in the same period last year. But compared to the third quarter of 2019, prior to the onset of the COVID-19 pandemic and related government stimulus, the company said sales increased by $67 million, or 24.4%.
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The company added that sales during last year’s third quarter were the highest in company history, with this quarter’s sales coming in at second-highest.
Still, the news sent Shoe Carnival’s stock slightly lower on Wednesday. At the time of press, shares for the company were down 1.02%.
On the Shoe Carnival’s quarterly earnings call on Wednesday, president and CEO Mark Worden blamed the challenging inflationary environment for this quarter’s results. “Throughout Q3, American households continued to face a challenging inflationary environment, putting pressure on their disposable incomes and on our traffic,” he told investors.
Inventory also played a factor in the quarter. Athletic styles are continuing to see delays, but are showing signs of stabilizing, Worden said on the call. He also noted that some children’s merchandise during the all-important back-to-school season in Q3 was late to hit stores.
In the quarter, sales were up in the mid-single digits for nonathletic styles and down in the low 20s for athletic models. Compared to 2019, however, Worden noted that nonathletic sales were up 35.1% versus 2019. He expects nonathletic sales to be around 60% of the company’s fourth quarter sales, with athletic styles making up the other 40%.
By department, women’s nonathletic was up in the mid-20s versus 2019. Sales were driven by dress, up in the mid-40s; sport, up in the mid-30s; and sandals, up in the high 20s. Men’s nonathletic sales were up in the high 30s versus 2019. This was driven by men’s casuals, up over 50%, which further reflects the consumers move from athletic to nonathletic footwear for the back-to-school time period. Men’s boots were up in the high 20s, and men’s dress was up in the mid-teens compared to 2019.
As for its store openings, Shoe Carnival said on Wednesday that it expects to open three Shoe Station stores in the fourth quarter, ending the fiscal year with 25 Shoe Station stores, 373 Shoe Carnival stores and 398 total stores. The company said it’s on track to operate over 400 stores during the first half of 2023 and has a strategic growth roadmap in place to surpass 500 stores in the following three-to-five-year horizon.
The company is also currently modernizing its Shoe Carnival stores with a comprehensive remodel program. To date, 41% of the fleet remodel has been completed and the company remains on track to complete over 50% of stores during 2023.
Looking ahead, the company expects net sales to be between $1.27 billion and $1.30 billion, up 23% to 25% compared to 2019.
“With that said, we expect our customers face a historically high inflationary environment throughout Q4 and throughout this holiday season, which will put pressure on their disposable incomes and likely on our traffic,” Worden added on the call. “As such, we anticipate the most likely outcome is to deliver sales on the lower side of our annual 2022 guidance and to deliver EPS on the mid- to lower side of our annual guidance.”
