Shoe Carnival (SCVL) Q4 Earnings & Sales Surpass Estimates

Shoe Carnival (NYSE:CCL), Inc. (NASDAQ:SCVL) reported fourth-quarter fiscal 2018 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. The company retained its fiscal 2019 view.

Results gained from double-digit growth in digital sales and low-single digit rise in brick and mortar stores. Moreover, the company witnessed sales growth in most of the major product categories and across all regions.

The company’s shares have gained 19.5% in a year’s time against the industry’s decline of 15.4%.

Q4 in Details

Shoe Carnival reported adjusted earnings per share of 9 cents that surpassed the consensus mark of 6 cents, up 18.2% from 11 cents reported in the prior-year period. Net sales came in at $234.7 million that came ahead of the Zacks Consensus Estimate of $233 million but decreased 3.5% from the year-ago period.

Comparable store sales climbed 4.7% in the quarter, backed by strong performances in women’s non-athletic, men’s non-athletic, men’s seasonal boots, children shoes, children’s athletic, children’s non-athletic and children’s boots product categories.

The company posted gross profit of $66.7 million that decreased 5.1%, while gross margin contracted 50 basis points (bps) to 28.4%. This includes a benefit of $3.3 million related to insurance proceeds of hurricane-affected stores.

Operating income came in at $1.5 million compared with $0.2 million in the prior-year quarter. Meanwhile, operating margin expanded 650 bps to 0.6% in the quarter.

SG&A expenses came in at $65.2 million during the fiscal fourth quarter, declining 7% from the prior-year quarter. SG&A expenses as percentage of sales decreased 100 bps to 27.8% in the quarter under review.

Store Update

Shoe Carnival shuttered five stores during the quarter, while it opened three and closed 14 in fiscal 2018. Currently, it is operating 397 stores in 35 states. The company intends to close 7-10 stores and open none in 2019.

Other Financial Aspects

Shoe Carnival ended the quarter with cash and cash equivalents of $67 million and shareholders’ equity of $304.4 million. The company incurred capital expenditures of $7.4 million during fiscal 2018.

This Zacks Rank #3 (Hold) company bought back 197,000 shares worth $7 million in the reported quarter. Meanwhile, the company has repurchased about 1.5 million of shares worth $46 million in fiscal 2018. Recently, Shoe Carnival’s board approved a new share repurchase program worth $50 million, effective from Jan 1, 2019.

Shoe Carnival, Inc. Price, Consensus and EPS Surprise

Outlook

Management has reiterated its fiscal 2019 view, wherein it anticipates adjusted earnings to be $2.60-$2.70 per share. We note that the Zacks Consensus Estimate for earnings in fiscal 2019 stands at $2.42. Further, the company continues to expect net sales of $1.035-$1.043 billion, with comparable store sales growth in low-single digits.

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