Shoe Carnival (NASDAQ:SCVL) Reports Sales Below Analyst Estimates In Q2 Earnings

Footwear retailer Shoe Carnival (NASDAQ:SCVL) missed analysts’ expectations in Q2 CY2024, with revenue up 12.9% year on year to $332.7 million. The company’s full-year revenue guidance of $1.24 billion at the midpoint also came in 1.4% below analysts’ estimates. It made a GAAP profit of $0.82 per share, improving from its profit of $0.71 per share in the same quarter last year.

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“Customer engagement continued to exceed our expectations and sales momentum accelerated rapidly during our most important shopping event of the year, the Back-to-School season. We achieved a net sales record this quarter, surpassing all previous second quarter sales in our company’s history. Gross profit margin expanded versus prior year, we gained significant market share, and we delivered earnings above our guidance in the quarter,” said Mark Worden, President and Chief Executive Officer.

Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ:SCVL) is a retailer that sells footwear from mainstream brands for the entire family.

Footwear Retailer

Footwear sales–like their apparel counterparts–are driven by seasons, trends, and innovation more so than absolute need and similarly face the bigger-picture secular trend of e-commerce penetration. Footwear plays a part in societal belonging, personal expression, and occasion, and retailers selling shoes recognize this. Therefore, they aim to balance selection, competitive prices, and the latest trends to attract consumers. Unlike their apparel counterparts, footwear retailers most sell popular third-party brands (as opposed to their own exclusive brands), which could mean less exclusivity of product but more nimbleness to pivot to what’s hot.

Sales Growth

Shoe Carnival is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.

As you can see below, the company’s annualized revenue growth rate of 3.7% over the last five years was sluggish , but to its credit, it opened new stores and expanded its reach.

This quarter, Shoe Carnival’s revenue grew 12.9% year on year to $332.7 million, falling short of Wall Street’s estimates.

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Same-Store Sales

Same-store sales growth is an important metric that tracks demand for a retailer’s established brick-and-mortar stores and e-commerce platform.

Shoe Carnival’s demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 7.6% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.

In the latest quarter, Shoe Carnival’s same-store sales fell 2.1% year on year. This decrease was an improvement from the 6.5% year-on-year decline it posted 12 months ago. It’s always great to see a business improve its prospects.

Key Takeaways from Shoe Carnival’s Q2 Results

We struggled to find many strong positives in these results. Same-store sales came in below expectations, leading to a revenue miss. Its full-year revenue guidance was underwhelming as well. Overall, this was a mediocre quarter. The stock remained flat at $37.55 immediately following the results.

So should you invest in Shoe Carnival right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.