Why Shoe Carnival Shares Are Slipping Today

Shoe Carnival Inc SCVL shares are trading lower by around 6% after the company reported Q3 FY23 results.

Sales declined 6.4% Y/Y to $319.91 million, missing the consensus of $328.26 million.

Comparable store sales declined 7.4% Y/Y, owing to softening trends after Labor Day. 

Shoe Station net sales increased low-double digits Y/Y, and Children's category sales grew low-single digits during Back-to-School in Q3. 

Total e-commerce sales increased around 10% Y/Y, reflecting digital marketing and CRM investments.

The company registered a gross profit of $117.70 million, lower than $130.85 million a year ago. The gross profit margin stood at 36.8% in Q3.

The footwear retailer's EPS of $0.80 missed the analyst consensus of $1.01.

"After Labor Day, Shoe Carnival banner results softened and were below our expectations, as persistently hot and dry weather led to soft seasonal sales and a sluggish start to the boot season," said Mark Worden, President and Chief Executive Officer.

The inventory optimization improvement plan continued progressing ahead of target, ending inventory decreasing 6% Y/Y at the end of Q3 FY23.

In September 2023, SCVL's Board of Directors approved a dividend increase of 20%. The company repurchased shares worth around $5.4 million. As of October 28, 2023, SCVL had approximately $44.6 million available for future repurchases under its $50 million share repurchase program.

As of Q3 FY23, SCVL had around $71 million of cash, cash equivalents, and marketable securities and about $100 million in borrowing capacity.

FY23 Guidance:  Shoe Carnival reduced its FY23 net sales outlook to $1.16 billion-$1.18 billion (from $1.19 billion-$1.21 billion) vs. consensus of $1.19 billion. 

Shoe Carnival cuts 2023 EPS guidance to $2.65-$2.75 from $3.10-$3.25 (consensus: $3.03).

For Q4 2023, the company expects comparable net sales decline of 9%-12%, net sales of approximately $265 million-$285 million (estimate $288.15 million), and EPS of $0.54-$0.64 (consensus $0.72).

Price Action: SCVL shares are down 6.54% at $22.59 on the last check Thursday.