Shoe Carnival eyes, ‘tremendous untapped opportunity’
New market entries, a newly developed small format and ambitious omnichannel efforts have family footwear retailer Shoe Carnival on a trajectory to surpass $1 billion in annual sales.
Despite tepid sales growth for the second quarter ended August 1, partly caused by a shift in tax-free holiday sales, Shoe Carnival maintained a full year sales forecast which envisions sales in the range of $977 million to $991 million and same store sales of 1.5% to 3%. The company also affirmed its profit outlook which calls for earnings per share to increase from 12% to 17% to a range of $1.42 to $1.48.
Shoe Carnival President and CEO Cliff Sifford stuck to the company’s original guidance after producing strong profit growth on modest second quarter sales aided by entry into the Philadelphia market and more robust digital capabilities at its 400 stores.
Sales increased 2.6% to $227.8 million while same store sales declined 0.5%, but strong margins caused net income to surge 86.4% to $4.8 million, or 24 cents a share, from $2.6 million, or 13 cents a share.
“Our strong quarterly earnings were driven by a combination of higher merchandise margins and lower advertising expenses. Comparable store sales were in-line with our expectations as the solid start to the quarter was muted by an anticipated shift in tax-free holidays to the third quarter of this year from the second quarter of fiscal 2014,” Sifford said. “We believe our assortment of branded, family footwear, favorable inventory position, and our multi-channel initiatives positioned us well to capture the robust back-to-school sales with our August comparable store sales up high single digits.”
Shoe Carnival opened four new stores in Philadelphia during the quarter, bringing its total in the recently entered market to seven, and also announced plans for a new 5,000-sq.-ft. format less than half the size of its existing prototype. The small store offers Shoe Carnival tremendous untapped opportunity to expand into new and fill in existing markets, Sifford explained during a second quarter conference call.
“Our real estate team is currently working with landlords and we look forward to opening our first two small-market stores in the second half of 2015, with consistent expansion over the next several years,” Sifford said.
Regardless of store size, Shoe Carnival is connecting its physical presence with it digital offering thanks to an initiative launched in June called Shoes 2 U. The program accomplishes endless aisle objectives of connecting shoppers in stores with expanded online assortments.
“The feedback from our store associates has been very positive as it helps to increase store conversion by opening our full inventory selection to every store,” Sifford said.