For the second quarter ended 29 July 2023, Shoe Carnival reported net sales of $294.6m, down 5.7% from $312.3m in comparison to the previous year.
While overall conditions improved from earlier in 2023, soft traffic results continued within lower-income households and urban markets. However, the retailer points out that net sales improved from the first quarter of 2023 as a result of investments in branding, advertising and in-store experience.
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The operating income decreased from $38.79m to $24.66m. While the net income fell to $19.44m as opposed to last year’s $28.91m.
Worden believes that second-quarter results demonstrated the momentum of Shoe Carnival’s strategy within the context of a challenging economic backdrop.
He says: “Market conditions continued to modestly improve in early third quarter 2023 versus second quarter 2023. August sales and profits were among the highest of any month in the Company’s 45-year history, with product margins approaching record highs.
“We saw improving conditions related to the impact of inflation in the second quarter, but some of our urban customers remain challenged in the current economic environment. Additionally, the investment in our CRM platform continues to drive customer membership growth, reaching 33.3 million members, an increase of 12% over prior year.”
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By GlobalDataAs part of the company’s investor call, Carl Scibetta, Shoe Carnival’s chief merchandising officer, shared that the company is committed to its profit transformation and targeted CRM strategies.
Scibetta continued: “We continue to focus on driving our strategic objectives, which include connecting with our consumers using our CRM program to maximise sales, continuing to reduce our inventory throughout the year and delivering strong product margin. We have many more untapped customers to reengage with going forward, making CRM a core driver of profitable customer engagement.”
H1 results in brief
Shoe Carnival shared H1 results for the 26 weeks ended 29 July 2023:
- Net sales decreased from $629.8m to $575.8m.
- Operating income was down from $74.17m to $45.6m.
- Net income fell from $55.81m to $35.97m
Sharing his guidance for the remainder year, Worden adds: “Given the strength of our balance sheet and our strategy, we are in a strong position to grow as the economy improves and continue to actively evaluate both organic and acquisition-related opportunities.”
Shoe Carnival further highlights that the August back-to-school shopping period accounts for half of the company’s third-quarter gross profit, and with the results achieved to date, it says the company remains on track to deliver its full-year gross profit margin guidance of 36 to 37%.
In addition to this, the retailer explains significant progress was made in the first half of 2023 to reduce total inventory and optimise inventory positions for an improved athletic assortment of nationally named brands.
Both aged inventory and seasonal carryover inventories are in line, and there is currently no expectation of deep discounting to liquidate merchandise.
The company is also currently modernising its Shoe Carnival fleet through a multi-year remodel program. Based on its strategic growth roadmap, Shoe Carnival is in place to surpass 500 stores and be a multi-billion dollar retailer in 2028, inclusive of organic and acquired growth.
