Shoe Carnival, Inc. reported net sales in the first quarter were $300.4 million, a 6.8 percent increase compared to first quarter 2023. The company said that total net sales performance exceeded expectations, with sales from the February 2024 acquisition of Rogan Shoes, Inc. in line with forecasts and continued growth in Shoe Station and e-commerce, combined with strengthening trends in Shoe Carnival.

Comparable store sales for the thirteen-week period ended May 4, 2024, declined 3.4 percent compared to the thirteen-week period ended May 6, 2023. In the quarter, comparable store sales trends significantly improved as the quarter progressed and demonstrated growth versus the prior year late in the quarter.

“We are encouraged by the strong results delivered this quarter, with net sales growth above our expectation, gross profit margin expansion versus the prior year and earnings at the high end of our expectation,” said Mark Worden, president and CEO of Shoe Carnival, Inc. “We gained significant market share, with accelerating sales momentum across our business as the quarter progressed, including double-digit growth in sandals that continued in the quarter after the Easter holiday period.”

First quarter 2024 reportedly marked the 13th consecutive quarter, with the company’s gross profit margin exceeding 35 percent of net sales. Gross profit margin increased to 35.6 percent of net sales in first quarter 2024 on higher merchandise margins and leverage in buying, distribution and occupancy on the higher sales.

First quarter 2024 SG&A reportedly increased on higher selling expenses related to Rogan’s and increased marketing investments which drove strong sales performance in the quarter. As a percent of net sales, SG&A expenses were 28.1 percent in the first quarter as compared to 27.6 percent in first quarter 2023.

First quarter 2024 operating income totaled $22.5 million and increased 7.5 percent versus the prior year, driven by higher net sales and gross profit margin expansion. Operating income in the quarter included $0.5 million in expenses related to the Rogan’s acquisition, of which $0.2 million was in cost of sales and $0.3 million was in SG&A.

First quarter 2024 net income was $17.3 million, or 63 cents per diluted share, compared to first quarter 2023 net income of $16.5 million, or 60 cents per diluted share.

EPS growth in first quarter 2024 compared to the prior year was primarily driven by the net sales performance and higher gross profit margin. On an adjusted basis, excluding the $0.5 million of expenses in the quarter related to the acquisition of Rogan’s, first quarter Adjusted EPS was 64 cents.

Merchandise Inventory
First quarter 2024 inventory totaled $411.6 million at quarter-end, an increase of approximately $22.1 million versus first quarter 2023. The increase reflects the impacts of Rogan’s inventory of approximately $40 million, acquired in February 2024, partially offset by continued inventory efficiencies as part of the company’s ongoing inventory optimization improvement plan.

In Fiscal 2024, the second year of the company’s inventory optimization improvement plan, the company continues to expect further inventory efficiencies. Consistent with previous guidance, Fiscal 2024 year-end inventory dollars are expected to be lower by approximately $20 million, or 5 percent, versus Fiscal 2023 year-end, excluding the impacts of the Rogan’s acquisition.

Store Count, Planned Store Growth and Modernization
Store count is at a record high of 430 stores, growing by 30 stores since the beginning of the year.

As of May 4, 2024, the company reported that it had grown to an all-time high of 430 stores, with 371 Shoe Carnival stores, 31 Shoe Station stores, and the 28 Rogan’s locations it acquired in February 2024.

The company reportedly has a strategic growth roadmap to surpass 500 stores in 2028, including organic growth and strategic M&A activity.

The company said it continued modernizing its fleet during the first quarter of 2024. As of May 4, 2024, over 60 percent of the Shoe Carnival store modernization was complete, and the company will continue to modernize additional stores in Fiscal 2024. The company continues to expect total capital expenditures to be in the range of $25 million to $35 million in Fiscal 2024 as the store modernization program nears completion.

Share Repurchase Program
As of May 23, 2024, the company has $50 million available for future repurchases under its share repurchase program. During the first quarter 2024, the company did not repurchase any shares.

Capital Management
The 2023 fiscal year-end marked the 19th consecutive year the company ended a year with no debt, and through first quarter 2024, the company continued funding its operations and growth investments from operating cash flow and without debt.

At the end of first quarter 2024, the company had approximately $69.5 million of cash, cash equivalents, marketable securities, and approximately $100 million in borrowing capacity.

Fiscal 2024 Outlook
Based on first quarter 2024 results, the company reiterated its entire Fiscal 2024 outlook, including net sales growth in a range of 4 percent to 6 percent versus Fiscal 2023 and Fiscal 2024 GAAP EPS in a range of $2.50 to $2.70 and Adjusted EPS in a range of $2.55 to $2.75.

Image courtesy Shoe Carnival