Shoe Carnival upped its fourth quarter guidance on comp sales to 7-8% growth last week from 3-5% on the strength of the toning and wellness trend, resilient boot sales and the defection of consumers from the malls to strip centers, according to remarks made by President and CEO Mark Lemond at the ICR XChange.
The off-price family shoe retailer expects to report $169 million in sales for the quarter with a 5.5% higher average unit retail and a 4.3% rise in unit volume. Lemond said he expects sales per square foot to hit $203, up from $198 in 2008. That kind of growth will boost gross margins and drop right to the bottom line, he said.
Sales of boots and toning and wellness footwear continue to drive growth. Reebok EasyTones and Skechers Shape Ups are driving the toning and wellness business in a trend Lemond expects to continue into the third quarter. “Pardon the expression, but we think this toning category has a lot of legs to it,” he said.
An early shift to boots seen in September continued through year end with women, men and kids.
SCVL has also seen a big increase in Nike sales. “They are making much, much better product for the mid-tier channel and we are taking advantage of that in a pretty significant way,” he said.
The Puma brand has become “very, very, very” strong lately, Lemond said. SCVL expects vulcanized canvass and Gladiator sandals to do well in spring.
A shift in consumer traffic from the mall to strip centers with value retailers like Target, Kohl’s, J.J. Maxx, Marshalls, Ross and Old Navy, is creating both opportunities and challenges. On the one hand, SCVL already operates in many strip centers. On the other hand, developers have backed away from building new ones.
SCVL is adapting by working with developers and other retailers to redevelop vacant big box stores that can accommodate their 10,000 to 12,000-square foot format. The company will open 10 to 15 stores this year, but keep cap-ex spending below 2009 levels. This will allow it to continue building its cash reserves, which are now in the $40 million range, and position the company to accelerate growth in 2011 and beyond when commercial real estate prices are expected to hit bottom.
“The current economic situation presents us with an opportunity not only to renegotiate leases but to get out of leases for stores that are underperforming,” Lemond said. “We would like to open between 30 and 40 stores in 2011, given the real estate opportunities. So we do intend to accelerate that growth.”
