Shoe Carnival reported its second-quarter financial results after trading closed on Wednesday, revealing another quarter of slow growth and shrinking margins.
In a Nutshell: The footwear retailer’s shares fell again on Wednesday after market close, down nearly 3 percent to $25.20 after its Q2 earnings disappointed investors once again. Over the last 12 months, Shoe Carnival lost roughly 30 percent of its stock value following the afternoon drop.
However, president and CEO, Cliff Sifford, said that the retailer was beginning to see a back-to-school fueled turnaround in August and reiterated that it would be keeping to its projections—even raising expectations in some cases—as its strategic initiatives play out, namely the results of investments it has made in its customer relationship management (CRM) and loyalty services.
Sales: Revenue for the second quarter totaled $268.2 million at Shoe Carnival, below the average analyst expectation of $269.96 million and a 0.1 percent decrease on sales in the comparable period last year.
Same-store sales were a bright spot for the retailer, up 1.4 percent, year-over-year. This result could be a sign of progress for the business, as Q2 same-store sales significantly outpaced the first quarter. For the sixth month period ending this quarter, same-store sales were up by 0.6 percent.
Gross margins made for more bad news for Shoe Carnival, however, falling by 0.6 percent to 30.6 percent.
The company said it would be lowering its full-year sales projections after the quarter, though it maintained its outlook of a low single-digit increase in same-store sales. For FY19, the retailer now expects to earn from $1.028 billion to $1.033 billion, compared to the previous range of $1.035 to $1.043 billion.
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Earnings: Net income for Shoe Carnival was $11.8 million in the second quarter, leading to EPS of 80 cents and beating analyst projections of 78 cents.
Shoe Carnival has been able to consistently match expectations for earnings in recent quarters, even as sales have struggled, and expects to continue that streak into the rest of the fiscal year. Based on its first-half performance, the footwear retailer said it would maintain the high-end of its FY19 earnings projections at $2.83 and raising the low end from $2.73 to $2.77.
CEO’s Take: Sifford explained that he was happy to have matched the company’s projections for the second quarter and praised his team’s readiness for the back-to-school season.
“We are pleased our financial results for the second quarter were in line with our expectations and we believe we remain well-positioned to achieve our annual outlook,” Sifford said. “Shoe Carnival’s robust assortment of family footwear for back-to-school is resonating with new and existing customers resulting in an acceleration of our August sales. Our team continues to focus on the execution of our strategic initiatives in the second half of fiscal 2019 as we build upon our strong foundation for sustainable long term growth and shareholder value creation.”