Sparked by robust demand for boots and toning shoes, Shoe Carnivals fourth quarter sales climbed 8.8% to $170.8 million on the same 8.8% comp gain. With fewer promotions, earnings reached $2.6 million, or 20 cents a share, rebounding from a loss of $3.0 million, or 24 cents, a year ago. Wall Streets consensus estimate had been 40 cents a share.

 

On a conference call with analysts, Cliff Sifford, EVP and general merchandise manager, said comp store average unit retail increased 7.1%, traffic grew 5.6%, and merchandise margins improved by 280 basis points.  Gross margins improved 400 basis points to 28.7% of sales from 24.7% of sales in Q4 2008. Merchandise margins benefited from less promotional selling along with strong sales of boots and athletic footwear.

 

We recorded an increase in average unit retail in every department as our customers responded positively to our fourth quarter merchandise mix, said Sifford. A combination of the right boots and favorable weather patterns kept boots a hot category in all departments throughout the quarter.

 

In womens non-athletic, comps grew high-single digits, driven primarily from the boot category, as fur-lined, suede casuals and western boots all sold through at a much higher rate than the prior year. In men’s non-athletic, comps jumped double digits with strong double-digit gains in mens boots. A mid-single digit gain in the children’s business was driven by girls boots and fashion canvas in girls. Boys running, basketball, and fashion athletic also sold well.

 

In adult athletics, comps were up low-double digits for the quarter with women’s athletic up in the mid-teens and men’s athletic up in high-single digits. The largest increases in women’s athletic came from categories such as vulcanized canvas, performance running and trail running. In men’s athletic, vulcanized canvas, men’s basketball, retro basketball, cross training and trail running stood out. Sifford also described the results in toning as outstanding. Skechers toning footwear is in all doors and Reebok is being rolled out.

 

We believe that the toning category will continue to gain momentum in our stores as we continue to roll out additional stores and styles from the key brands, explained Sifford.  But Sifford also noted that comps would have been up mid-single digits with a mid-single digit gain in athletic even if toning was excluded.  He also said that although toning had a small impact on average unit retail, a new record high would have been set for the quarter and the year even without the category.
Shoe Carnivals overall inventories ended the year up 1.9% on a per door basis with aged inventory running well below last year.

 

Classifications working in early Spring in women’s non-athletic are flats, wedges, and vulcanized canvas. Vulcanized canvas is also seen as a continued strong category in mens and children. In athletic, in addition to toning, strong sales are expected from running, trail, men’s basketball as well as vulcanized canvas.

 

The early reads on several key trends for Spring have been strong, said Sifford. We havent had enough warm weather yet to ignite the sandal business, but we do believe that we will see that classification take off in the coming weeks.

 

For the first quarter, Shoe Carnival expects earnings to range between 54 to 58 cents a share, up from 33 cents a year ago. Sales are expected in the range of $181 to $183 million, with comps climbing 8 % to 9%.