Stock Story -
Footwear retailer Shoe Carnival (NYSE:CCL) (NASDAQ:SCVL) announced better-than-expected results in Q1 CY2024, with revenue up 6.8% year on year to $300.4 million. It made a non-GAAP profit of $0.64 per share, improving from its profit of $0.60 per share in the same quarter last year.
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Shoe Carnival (SCVL) Q1 CY2024 Highlights:
- Revenue: $300.4 million vs analyst estimates of $294.5 million (2% beat)
- EPS (non-GAAP): $0.64 vs analyst estimates of $0.60 (7.3% beat)
- 2024 EPS (non-GAAP) guidance: $2.65 at the midpoint vs analyst estimates of $2.64 (7.3% beat)
- Gross Margin (GAAP): 35.6%, up from 35% in the same quarter last year
- Free Cash Flow of $6.87 million is up from -$12.95 million in the same quarter last year
- Same-Store Sales were down 3.4% year on year (beat vs. expectations of down 4.0% year on year)
- Store Locations: 430 at quarter end, increasing by 33 over the last 12 months
- Market Capitalization: $934.2 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 3.1% over the last five years was weak , but to its credit, it opened new stores and expanded its reach.
This quarter, Shoe Carnival reported solid year-on-year revenue growth of 6.8%, and its $300.4 million in revenue outperformed Wall Street's estimates by 2%.
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% 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 3.4% year on year. This decrease was an improvement from the 11.9% year-on-year decline it posted 12 months ago. It's always great to see a business improve its prospects.
Key Takeaways from Shoe Carnival's Q1 Results It was good to see Shoe Carnival beat analysts' revenue expectations this quarter on better same-store sales. We were also glad its EPS outperformed Wall Street's estimates. Full year EPS guidance was in line with expectations. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. Investors were likely expecting more, however, and the stock is down 1% after reporting, trading at $34.05 per share.
