Shoe Carnival, Inc. reduced its outlook for the year after reporting first-quarter results at the low end of expectations due to unfavorable weather and consumer pressure from inflation and lower federal tax refunds.

Earnings in the first quarter ended April 29 were down 38.7 percent as revenues declined 11.4 percent.

EPS of 60 cents was below Wall Street’s consensus estimate of 75 cents. Revenue of $281.2 million missed Wall Street’s consensus estimate of $288.2 million.


  • Customer count accelerated to a record high 32.7 million loyalty members, up 12 percent versus the prior year;
  • Customer conversion climbed to the highest level in seven consecutive quarters;
  • Net sales declined 11.4 percent on lower traffic;
  • Gross profit margin exceeded 35 percent for the 9th consecutive quarter; and
  • Annual guidance is updated, reflective of first-quarter results and consumer trends.

Unfavorable weather and persistent consumer pressure from inflation and lower federal tax refunds negatively impacted first-quarter 2023 traffic. Top-line sales and bottom-line earnings in the first quarter of 2023 were at the lower end of company expectations, but still ranked near the top of any first quarter in company history. Today, the company is providing updated annual guidance, reflective of first-quarter results and consumer trends.

“Despite the slower-than-expected start to 2023, our customer base grew at the fastest pace of the last three years, climbing to a record high of 32.7 million members at quarter end. With the continued strategic growth of our CRM and digital platforms, we now reach a critical mass of American households, engaging with approximately one out of every eight adults ongoing, growth of nearly 65 percent from just five years ago. I am most pleased our in-store shopping experience is continuing to drive high conversion, and we once again captured market share growth within this challenging economic backdrop,” said Mark Worden, president and chief executive officer.

“As we move into summer and our most important back-to-school season, we are positioned well for continued market share growth, inventory improvement, and rapid cash generation. Our industry-leading merchant team and strategic partners have delivered a compelling product assortment, and our athletic inventory position is sharply improved versus the prior year position. With these customer, instore experience and inventory improvements, we are ready to fuel sales acceleration once the broader economic conditions improve,” concluded Worden.

Operating Results
First quarter 2023 net sales of $281.2 million ranked in the top three of any first quarter in company history but were down 11.4 percent compared to the first quarter of 2022. The lower net sales compared to 2022 resulted primarily from reduced traffic. The company believes the lower traffic was primarily driven by persistent inflation and a nearly 9 percent reduction in federal tax refunds compared to the first quarter of 2022. Unfavorable weather also impacted net sales, with spring seasonal product down approximately 23 percent compared to the first quarter of 2022.

First quarter 2023 gross profit margin of 35.0 percent was down 50 basis points from the prior year and continued to be over 500 basis points higher versus pre-pandemic 2019. Merchandise margin decreased by 30 basis points compared to the first quarter of 2022, reflecting an increase in promotional intensity. Buying, distribution and occupancy (“BDO”) costs were lower in the quarter compared to the first quarter of 2022; however, on lower sales, BDO decreased gross profit margin by 20 basis points. The BDO costs were lower in the first quarter of 2023 as freight and distribution costs declined versus 2022 through active management, contract renegotiation and normalization.

SG&A expenses were controlled to be nearly flat in the first quarter of 2023 compared to the first quarter of 2022, with higher depreciation and healthcare costs offset by reduced selling costs.

First quarter 2023 net income was $16.5 million, or 60 cents per diluted share (EPS), compared to first quarter 2022 of $26.9 million, or 95 cents per diluted share. The EPS earned in first quarter 2023 was 30.4 percent higher than the pre-pandemic first quarter 2019.

Merchandise Inventory
As the athletic supply chain disruption experienced last year has eased, a significantly improved athletic merchandise assortment is expected to be available for back-to-school shopping this year. Both aged inventory and seasonal carryover inventories are in line, and there is no current expectation of deep discounting to liquidate merchandise.

Significant progress was made in first quarter 2023 to reduce inventory. First quarter 2023 ending inventory was approximately $45 million higher than the prior year, compared to $105 million higher than the prior year just three months ago. After back-to-school shopping, the company expects inventory to be lower than last year and to be approximately $40 million lower by year-end 2023 compared to year-end 2022.

Capital Management
The 2022 fiscal year end marked the 18th consecutive year the company ended a year with no debt, and through the first quarter 2023, the company has also funded its operations without debt. At the end of first quarter 2023, the company had $40+ million of cash, cash equivalents and marketable securities and approximately $100 million in borrowing capacity. With the expectation of strong back-to-school shopping and conversion of current inventory into cash, cash flow from operations is expected to more than fully fund remodels and store growth planned in the back half of fiscal 2023.

Fiscal 2023 Updated Earnings Guidance
Given first quarter lower end results and consumer trends, the company has lowered its guidance for the full year and now expects EPS, net sales and gross profit margin within the following ranges for 2023, which includes 53 weeks:

  • EPS: $3.60 to $3.85, against $3.96 a year ago. Previous guidance called for EPS in the range of $3.96 to $4.20;
  • Net sales: $1.23 billion to $1.25 billion compared with $1.26 billion. Previous guidance called for revenue in the range of $1.26 to $1.32 billion; and
  • Gross profit margin: 36 to 37 percent against 37.1 percent in 2022. Previous guidance called for a gross margin of 37 percent.

Store Count, Modernization and Planned Store Growth
The company ended its first quarter 2023 with 397 total stores, 372 Shoe Carnival stores and 25 Shoe Station stores. During first quarter 2023, the company opened one Shoe Station store and the Shoe Station e-commerce site,, went live. The company is on track to operate over 400 stores in the third quarter of 2023.

The company is modernizing its Shoe Carnival fleet through a multi-year, remodel program. Over 40 percent is complete and by the end of fiscal 2023, the company will be on track to complete approximately 60 percent of the stores.

The company has a strategic growth roadmap in place to surpass 500 stores and be a multi-billion dollar retailer in 2028, inclusive of organic and acquired growth.

Share Repurchase Program
As of April 29, 2023, the company had $50 million available for future repurchases under its share repurchase program, and during the first quarter of 2023, the company did not repurchase any shares.

Photo courtesy Shoe Carnival