Footwear retailer Shoe Carnival (NASDAQ:SCVL) reported results in line with analysts' expectations in Q4 CY2023, with revenue down 3.6% year on year to $280.2 million. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $1.23 billion at the midpoint. It made a non-GAAP profit of $0.59 per share, down from its profit of $0.79 per share in the same quarter last year.
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Shoe Carnival (NYSE:CCL) (SCVL) Q4 CY2023 Highlights:
- Revenue: $280.2 million vs analyst estimates of $280.3 million (small miss)
- EPS (non-GAAP): $0.59 vs analyst expectations of $0.59 (small miss)
- Management's EPS guidance for the upcoming financial year 2024 is $2.65 billion at the midpoint, below analyst expectations of $2.84 (6.7% miss)
- Gross Margin (GAAP): 35.6%, down from 38.3% in the same quarter last year
- Free Cash Flow of $40.73 million, up 128% from the same quarter last year
- Same-Store Sales were down 9.4% year on year (in line)
- Store Locations: 429 at quarter end, increasing by 32 over the last 12 months
- Market Capitalization: $894 million
Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ:SCVL) is a retailer that sells footwear from mainstream brands for the entire family.
Footwear RetailerFootwear sales–like their apparel counterparts–are driven by seasons, trends, and innovation more so than absolute need and similarly face the bigger-picture secular trend of e-commerce penetration. Footwear plays a part in societal belonging, personal expression, and occasion, and retailers selling shoes recognize this. Therefore, they aim to balance selection, competitive prices, and the latest trends to attract consumers. Unlike their apparel counterparts, footwear retailers most sell popular third-party brands (as opposed to their own exclusive brands), which could mean less exclusivity of product but more nimbleness to pivot to what’s hot.
Sales GrowthShoe Carnival is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.
As you can see below, the company's annualized revenue growth rate of 3.2% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new stores and expanded its reach.
This quarter, Shoe Carnival missed Wall Street's estimates and reported a rather uninspiring 3.6% year-on-year revenue decline, generating $280.2 million in revenue. Looking ahead, Wall Street expects sales to grow 4.3% over the next 12 months, an acceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.
Shoe Carnival's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 9.9% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.
In the latest quarter, Shoe Carnival's same-store sales fell 9.4% year on year. This performance was more or less in line with the same quarter last year.
Key Takeaways from Shoe Carnival's Q4 Results We struggled to find many strong positives in these results. The key negative was that its full-year earnings forecast missed analysts' expectations by a meaningful amount. The stock is flat after reporting and currently trades at $32.95 per share.