Shoe Carnival, Inc. saw both footwear units and average selling price increase for the first quarterly reporting period in a long time on their way to posting the highest quarterly earnings ever recorded for the company. Comp store sales for the first quarter ended April 29 increased 4.1% on top of a 5.5% increase in Q1 last year. The combined March/April period was up almost 6% on a comp basis after a “difficult February comparison,” driven by strong non-athletic footwear sales in both mens and womens.
The womens non-athletic business, which includes the low-profile and other fashion athletic product under the casual classification, was up in high-single-digits for the quarter on a comp store basis. The sandal category, which posted a double-digit comp increase, and juniors footwear, which posted a high-double-digit gain, were the key drivers.
The womens non-athletic business grew 140 basis points to “very close to 27%” of the overall business, putting the retailer within striking distance of its goal of 28% to 30% of the total. The mens non-athletic business represented “just under 15%” of the total, while childrens contributed 16% of the total and adult athletic delivered 38.5% of revenues for the quarter.
The mens non-athletic business also experienced solid growth, comping up in mid-singles for the quarter. Sandals, young mens casual, and work boots all posted double-digit gains for Q1. Management said they were also “very pleased” with the sport fusion product in young mens and thongs in the mens sandal category.
The childrens business posted a mid-single-digit increase for the quarter, with non-athletic comping up in double-digits and athletic delivering a low-single-digit comp store gain. The non-athletic increase was driven primarily by the casual and sandals categories. They also saw strong results coming out of the running business in childrens, but continued to be disappointed in the boys basketball business.
The adult athletic business was “just under flat” for the quarter, with womens athletic posting a very-low-single-digit decline for the period and mens producing a flat comp quarter. In womens, Carnival saw double-digit increases in running, but classics, athletic mules, and womens skate product have all seen declines as the consumer migrates to the low-profile fashion athletic looks. In mens athletic, Carnival posted strong increases in skate and running, but basketball, fashion classics, and walking all posted declines for the period. Management sees the same migratory patterns in mens as the consumer shifts over to the euro-casual looks.
Cliff Sifford, the retailers SVP & GMM, said that they are now getting product from key athletic brands they had not been able to get in the past, particularly in performance running, which is helping drive up average selling prices at retail. Company President & CEO Mark Lemond said that both unit price and unit sales were up in low-single-digits for the period, which, coupled with a slight increase in traffic, produced the comp store sales gain for the quarter.
Inventories on a comp store basis were down about 2.2% at the end of the period.
SCVL expects that diluted EPS for the second quarter will range between 23 cents and 25 cents per share based on a 2% to 3% comp store sales gain for the period. Full year diluted EPS are still seen in the $1.65 to $1.75 per share range.
|Shoe Carnival, Inc.|
|First Quarter Results|
|(in $ millions)||2005||2004||Change|
|Gross Margin||30.5%||29.6%||+90 bps|
|SG&A %||23.5%||23.6%||-10 bps|