Why Shoe Carnival Shares Are Falling Today

Shoe Carnival, Inc. SCVL Q2 sales declined 5.7% year-on-year to $294.62 million, beating the consensus of $286.35 million.

The footwear retailer's EPS of $0.71 missed the analyst consensus of $0.84.

The company said that while overall conditions improved from earlier in 2023, soft traffic results continued within lower-income households and urban markets.

Compared to the prior-year quarter, softness in urban markets led to a comparable sales decrease of 6.5%.

Shoe Station net sales increased low-single digits in Q2, while growth accelerated in August to mid-teens during back-to-school, both versus the prior year.

The company registered a gross profit of $105.47 million, lower than $113.13 million a year ago. The gross profit margin of 35.8% was down 40 basis points Y/Y. Merchandise margin was down 20 basis points. 

In August 2023, the company opened its 400th store, now operating 373 Shoe Carnival stores and 27 Shoe Station stores. 

At the end of second quarter, the company had nearly $47 million of cash and equivalents and approximately $100 million in borrowing capacity.

"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," said Mark Worden, President and Chief Executive Officer.

FY23 Guidance:  Shoe Carnival reduced its 2023 net sales outlook from $1.23 billion-$1.25 billion to $1.19 billion-$1.21 billion (consensus: $1.19 billion).

Shoe Carnival cuts 2023 EPS guidance from $3.60-$3.85 to $3.10-$3.25 (consensus: $3.12).

In FY23, the company plans to add 6 to 10 new stores.

Shoe Carnival has a strategic growth roadmap to surpass 500 stores and be a multi-billion dollar retailer in 2028, including organic and acquired growth.

Price Action: SCVL shares are trading lower by 12.2% at $19.14 premarket on the last check Tuesday.