Shoe Carnival posted a solid August, but is still playing it safe for the balance of the year, keeping inventories lean until they see a “more robust retail environment” for a sustained period of time.
An increase in traffic at the store level helped push same-store sales up 5.1% for August, aided by increased conversion rates and units per transaction. The analyst consensus estimate saw just a 1% gain in comps. Total net sales increased 17% to $70.1 million for the month. Gross margin also improved.
Sales of adult athletic and children's shoes, which were both up in the high-single digits, drove the increase in total comps. The Mens and Womens dress/casual categories were flat.
The company expects third quarter comp store sales to be “flat to up 2%”, with September same-store sales “flat to slightly up”. October sales are expected to decline in the “mid to high-single digits” due to comparisons to last year when comps had jumped 13.7% on cooler Midwest weather that drove early winter sales.
The company said it is pleased with the August results but cautious about the remainder of the year. The company is following its strategy from last year when it cut inventories back in light of the weaker economy.
Inventories at month-end this year were flat to last year on a per store basis and down 4% versus 2001.
>>> That lean inventory position enables SCVL to react to weather and keeps the door open for margin-building opportunities as well
Famous Footwear has been working diligently to get its operational house in order, work that was reflected in last quarters impressive 88% increase in operating profit. The missing piece appears to be fitting into place as the retailer saw better traffic fuel its first positive comp month since April.
Same-store sales for August increased 2.0% and total net sales rose 3.7% to $135.8 million for the month. The company said the gains were driven by a “strong performance in athletics, driven by fashion athletics” and a stronger Womens business driven by gains in dress footwear.
In a conference call last month (SEW 0334) to discuss Q2 results, Famous Footwear president Joe Wood said, “The performance of a K-Swiss, the performance of a Converse has been absolutely stunning”, adding that New Balance and Nike were also doing well. FF is now doing more make-up product with key vendors, with Wood intimating that some vendors now have dedicated design and sales staff for Famous.
>>> The pieces were laid out and we were looking for the traffic. Dont you love it when a plan comes together
