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Shoe Carnival, Inc. (NASDAQ: SCVL) reported its third-quarter fiscal 2024 results, highlighting a performance that aligned closely with the company’s expectations. The company achieved a GAAP EPS of $0.70 and an adjusted EPS of $0.71, meeting its anticipated earnings per share benchmarks.
Despite challenges, including two significant hurricanes and an unusually warm October that affected winter boot sales, Shoe Carnival managed to report a net income of $19.2 million. This marked a slight decrease from the $21.9 million reported in the same quarter of 2023, reflecting the impact of calendar shifts and adverse weather conditions.
Net sales for the quarter were $306.9 million, down from $319.9 million in the previous year. This decline was primarily attributed to a retail calendar shift that moved approximately $20 million in net sales out of the third quarter. However, excluding this shift, net sales saw a modest increase of 2.2% compared to the prior year. The company’s gross profit margin stood at 36.0%, a slight dip from the previous year’s 36.8%, affected by higher buying, distribution, and occupancy costs.
Shoe Carnival’s strong performance during the Back-to-School season was a key driver of sales, alongside the integration of the February 2024 acquisition of Rogan Shoes, Incorporated. The acquisition contributed $22.3 million to the quarter’s net sales, with the company ahead of schedule in capturing synergies from the acquisition. The company also made strides in its store rebanner growth strategy, with early results from rebannered stores surpassing expectations.
Shoe Carnival Reports Mixed Results in Third Quarter FY’2024
When comparing the current quarter’s performance against expectations, Shoe Carnival’s results present a mixed picture. The company had set an EPS expectation of $0.7133, and the actual adjusted EPS of $0.71 was closely aligned, demonstrating a strong adherence to forecasted earnings. However, the company fell short on revenue expectations, reporting $306.9 million against an anticipated $322.87 million. This shortfall was largely due to external factors like the retail calendar shift and weather disruptions.
Despite these challenges, Shoe Carnival’s performance in certain areas was commendable. The company’s ability to maintain a gross profit margin above 35% for the 15th consecutive quarter is noteworthy, although it did experience an 80 basis point decline compared to the previous year. The company’s SG&A expenses as a percentage of net sales showed a slight improvement, reflecting effective cost management despite lower sales volumes.
The acquisition of Rogan Shoes played a significant role in offsetting some of the sales decline. The integration of Rogan’s operations has been ahead of schedule, contributing positively to the company’s overall performance. The accelerated synergy capture from this acquisition is expected to continue benefiting the company in future quarters.
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Shoe Carnival Reiterates Full Year Fiscal 2024 Guidance
Looking ahead, Shoe Carnival reiterated its full-year fiscal 2024 EPS guidance, with expectations ranging from $2.55 to $2.70 for GAAP EPS and $2.60 to $2.75 for adjusted EPS. The company adjusted its net sales guidance to a range of $1.20 billion to $1.23 billion, representing growth of 2% to 4.5% compared to fiscal 2023. This update reflects the impact of the retail calendar shift and the loss of a week compared to the previous fiscal year.
Shoe Carnival expects its gross profit margin to remain stable, approximately even with fiscal 2023 levels. SG&A expenses are projected to be about 30 basis points higher than in fiscal 2023, a slight improvement from previous guidance. The company also anticipates an income tax rate between 25.6% and 26%, slightly lower than earlier estimates.
The company plans to continue its store rebanner growth strategy, with 25 additional Shoe Carnival stores set to be rebannered to Shoe Station stores in the first half of fiscal 2025. This strategy has shown promising results, with rebannered stores experiencing over a 10% increase in net sales and profitability.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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