Shoe Carnival cut its full-year guidance on Wednesday after reporting lower-than-expected earnings in the first quarter of 2023.
The Evansville, Ind.-based footwear retailer reported net sales in Q1 declined 11.4 percent to $281.2 million, compared to $317.5 million the same time last year. First quarter net income was $16.5 million, or $0.60 per diluted share, compared to $26.9 million, or $0.95 per diluted share the year prior.
According to Shoe Carnival, the declines were mainly due to reduced traffic, which was primarily driven by persistent inflation and a nearly 9 percent reduction in federal tax refunds compared to first quarter 2022. Unfavorable weather also impacted net sales, with spring seasonal product down approximately 23 percent compared to first quarter 2022, Shoe Carnival noted.
With these declines and market trends in mind, the company lowered its guidance for the full year. Shoe Carnival now expects net sales for the full year between $1.23 billion to $1.25 billion, with earnings per share between $3.60 to $3.85. This is down from previous guidance, which indicated an expected net sales range of $1.26 billion to $1.32 billion and earnings per share between $3.96 to $4.20 for the year.
Mark Worden, president and CEO of Shoe Carnival, said in a statement that despite the slower than expected start to 2023, the company’s 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. “I am most pleased our instore shopping experience is continuing to drive high conversion, and we once again captured market share growth within this challenging economic backdrop,” Worden said.
The CEO added that as we move into summer and the important back-to-school season, Shoe Carnival is “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,” Worden said. “With these customer, in-store experience and inventory improvements, we are ready to fuel sales acceleration once the broader economic conditions improve.”