Shoe Carnival is getting better product from both Nike, its largest vendor representing 24% of sales, and Skechers, its second largest representing 12% of sales, as both put a bigger emphasis on the family footwear channel. Also, both Crocs and DC were added to the mix in the recent back-to-school season.
“We are offering is a value proposition to our consumers, but when they come in to see us, they are seeing styles that they didn't recognize that Shoe Carnival had — styles that may have been sold only to malls several years ago.,” said Shoe Carnival CFO and Treasurer Kerry Jackson, speaking last week at the Telsey Advisors Consumer Conference. “But because the consumer is focusing on the strip centers, so are the vendors and putting better product in it. So it's a self-reinforcing. They come looking for value and when they come in there, they see better styles than they had expected.”
He said the Crocs presentation represented a select amount of SKUs but “on the response of our customers, we think we can build that business.” While noting that the skate category overall is on “a little bit on the downside,” the arrival of DC represented a “big enhancement” to its back-to-school offerings.
In the toning category, New Balance product was added during BTS to join its Skechers and Avia offerings. In Q2, toning represented 5% of sales, up from 2% in Q3 last year.
Jackson said the retailer expects toning will peak at around 6% of sales during spring and fall but slide back to around 5% in summer and winter. Mimicking trends in athletics and specifically the walking category, the toning category is expected to lose sales to sandals in summer and boots in winter.
In other categories, flats and lined footwear are selling well in junior casuals. Shoe Carnival ordered boots in expectations of a gain in the mid- to high-single-digit range this and that follows hefty gains last year. Last year, women's fashion boots jumped 35%, men's boots grew 30%, kids' were up 10%. In men's, items seeing strong demand include a $120 Ralph Lauren boot, an $85 Nike boot, and boots from Skechers, Columbia and Doc Marten. In athletics, Nike's Flywire and Air Max product were cited as key items.
About half of Shoe Carnival's sales come from athletics, about 46% from non-athletics and about 4% accessories. Women make up about 44% of sales; men, about 35%; and kids, about 17%. Shoe Carnival's average shoe price out the door is $31, less than the mid-$40 at DSW, although well above Payless, which has an average ticket of $12 to $13. Shoe Carnival carried 26,000 pairs of shoes in an average store last year versus about 22,000 pairs for its nearest competitor, DSW.
Regarding expansion, the company has 313 stores currently and sees the potential for 700 domestically. Most of the growth will come in upper Northeast and in California where it has few stores but it also sees the potential for 100 stores in existing markets.
For 2011, it expects to open 20 stores and close six. For 2010, Shoe Carnival hopes to further accelerate expansion. While the recession has reduced shopping center development, more aggressive expansion plans announced from anchor players like Kohl's, Target, TJX and Ross are expected to revive building. Shoe Carnival has also opened in some B malls with access to an inside-outside entrance and found those to “to be very productive,” according to Jackson.
