Things have been quite ugly for Shoe Carnival (NASDAQ: SCVL ) over the last several months now. Back in July of last year, I decided to reaffirm the company as a ‘buy’ candidate. From the previousCrude Value Insights offers you an investing service and community focused on oil and natural gas. We focus on cash flow and the companies that generate it, leading to value and growth prospects with real potential.Subscribers get to use a 50+ stock model account, in-depth cash flow analyses of E&P firms, and live ...

Financial Data and Key Metrics Changes - The company's first quarter profits outperformed expectations by approximately 10% despite a year-over-year decrease in net income to $9.3 million or $0.34 per diluted share, down from $17.3 million or $0.63 per diluted share in Q1 of fiscal 2024 [29][30][35] - Net sales totaled $277.7 million, a decline of 7.5% compared to $300.4 million last year, with comparable store sales down 8.1% [35][36] - The company ended the quarter with $93 million in cash, up over 30% compared to the end of Q1 last year, maintaining a debt-free position [33][35] Business Line Data and Key Metrics Changes - Shoe Station achieved sales growth of 4.9% and was comp positive in the quarter, contrasting with Shoe Carnival's total sales decline of 10% [30][36] - Rogan's net sales remained consistent at over $19 million for both this year and last year, aligning with synergy and integration plans [36] - The rebanner initiative is expected to result in a $0.65 drag on EPS this year, with future benefits anticipated as the performance of rebannered stores improves [43][72] Market Data and Key Metrics Changes - The family footwear industry experienced a decline, with Shoe Carnival's performance reflecting broader industry challenges, particularly among lower-income consumers [9][36] - Shoe Station's performance in various markets, including rural and diverse demographics, indicates a strong growth opportunity, with sales growth exceeding 20% in some locations [14][17][19] Company Strategy and Development Direction - The company is focused on expanding Shoe Station to represent over 80% of its store fleet by March 2027, up from a previous target of 51% [18][50] - The rebanner initiative is seen as the best use of capital, with a two to three year payback period expected [31][44] - The company plans to maintain elevated inventory levels to navigate marketplace uncertainties and ensure product availability [21][34] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the back-to-school season, citing a compelling assortment and stable product costs [4][9] - The company does not anticipate a return to profitable sales growth in the near term but expects a moderating sales decline trend in the latter half of the year [9][45] - Management emphasized the importance of consumer sentiment as a key factor influencing future performance [84] Other Important Information - The company is committed to pursuing mergers and acquisitions to achieve its long-term vision of being the leading footwear retailer for families [25][26] - The corporate headquarters has been designated in Fort Mill, South Carolina, to enhance collaboration with vendor partners and improve operational efficiencies [27][28] Q&A Session Summary Question: What is driving the decision to expand Shoe Station stores more quickly? - Management noted that there is significant white space nationally for Shoe Station, where the competitive set is not fully meeting the needs of higher-end customers [58][60] Question: How is the performance of dress shoes in Shoe Station? - Management confirmed that the dress assortment offered is a competitive advantage, with strong performance in both men's and women's categories [61][62] Question: What is the expected impact of rebannerings on next year's earnings? - Management indicated that while there will be a drag on EPS due to accelerated costs, the performance of rebannered stores is expected to improve, potentially offsetting some of the negative impact [72][73] Question: How are trends in March and April compared to February? - Management stated that February was challenging, but March and April showed improvement, particularly for Shoe Station, although overall consumer sentiment remains a concern [88][89]

Financial Data and Key Metrics Changes - The company's first quarter net income was $9.3 million or $0.34 per diluted share, which exceeded analyst consensus despite being lower than the $17.3 million or $0.63 per diluted share reported in Q1 of fiscal 2024 [30] - First quarter net sales totaled $277.7 million, a decline of 7.5% compared to $300.4 million last year, with comparable store sales down 8.1% [35][36] - The company ended the quarter with $93 million in cash, up over 30% or $23.5 million compared to the end of Q1 last year, maintaining a debt-free position [33] Business Line Data and Key Metrics Changes - Shoe Station achieved sales growth of 4.9% and was comp positive in the quarter, contrasting with Shoe Carnival's total sales decline of 10% [36] - Rogan's achieved results in line with synergy and integration plans, with net sales above $19 million both this year and last year [36] - The rebanner initiative is expected to yield a two to three year payback period, with early results showing double-digit sales growth and improved product margins [32][44] Market Data and Key Metrics Changes - The family footwear industry experienced a decline, with Shoe Carnival's performance reflecting industry-wide challenges [36] - Athletic footwear, which accounted for 46% of revenue, showed mid-single digit declines, while Shoe Station's athletic business grew in the low teens [37] - Children's footwear represented 18% of business and experienced a low teens decline, but Shoe Station's kids business declined only low singles, outperforming the company average [39] Company Strategy and Development Direction - The company aims to transform Shoe Station into a national footwear and accessories market leader, planning to have over 80% of its store fleet as Shoe Station by March 2027 [19][50] - The rebanner initiative is seen as the best use of capital, with a focus on expanding into new markets and capturing higher income households [10][50] - The company is committed to pursuing M&A opportunities to achieve its long-term vision of being the leading footwear retailer for families [26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the back-to-school season, citing a compelling assortment and stable product costs [4][5] - The company does not anticipate a return to profitable sales growth in the near term but expects a moderating sales decline trend in the latter half of the year [8][46] - Management emphasized the importance of consumer sentiment as a key factor influencing future performance, particularly in light of current economic conditions [83] Other Important Information - The company has made a deliberate decision to maintain elevated inventory levels to navigate marketplace uncertainties, ensuring stores are fully stocked for key shopping seasons [22][23] - The company is strategically buying goods at lower cost bases where appropriate, positioning itself well for potential margin gains [24] - The annual meeting of shareholders is scheduled for June 25, 2025, with related materials available on the investor website [48] Q&A Session Summary Question: What is driving the decision to expand Shoe Station stores more quickly? - Management noted that there is significant white space nationally for higher-end customers that competitors are not fulfilling, leading to the decision to accelerate the expansion of Shoe Station [57][59] Question: How are the initial results from rebannered stores expected to perform going forward? - Management indicated that early results are encouraging, with double-digit growth in sales and higher average unit retail prices, suggesting sustained performance [66][68] Question: What is the expected impact of the rebanner initiative on next year's earnings? - Management acknowledged that the rebanner initiative will have a drag on next year's earnings, but they anticipate significant revenue growth from these stores [70][72] Question: How does the company view the current tariff situation and its impact on pricing? - Management expressed cautious optimism, stating that they have not experienced any significant cost increases and are well-positioned to manage inventory and pricing [80][82] Question: How did sales trends in the first quarter compare across different months? - Management reported that February was challenging, but March and April showed improvement, particularly for Shoe Station, although overall consumer sentiment remains a concern [88]

Core Viewpoint - Shoe Carnival reported quarterly earnings of $0.34 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.64 per share a year ago, indicating a significant earnings surprise of 25.93% [1][2] Financial Performance - The company posted revenues of $277.72 million for the quarter ended April 2025, missing the Zacks Consensus Estimate by 1.52% and down from $300.36 million year-over-year [2] - Over the last four quarters, Shoe Carnival has surpassed consensus EPS estimates four times but has only topped revenue estimates once [2] Stock Performance - Shoe Carnival shares have declined approximately 44.3% since the beginning of the year, contrasting with the S&P 500's gain of 0.5% [3] - The current Zacks Rank for Shoe Carnival is 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $316.84 million, and for the current fiscal year, it is $1.60 on revenues of $1.16 billion [7] - The trend for earnings estimate revisions ahead of the earnings release was unfavorable, which may impact future stock movements [6] Industry Context - The Retail - Apparel and Shoes industry, to which Shoe Carnival belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting potential challenges for the stock's performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could be a useful metric for investors [5]

Financial Performance - First quarter 2025 net sales declined 7.5% to $277.7 million compared to $300.4 million in the first quarter of 2024[6] - First quarter 2025 net income was $9.3 million, or $0.34 per diluted share, down from $17.3 million, or $0.63 per diluted share in the first quarter of 2024[9] - Operating income fell to $11.965 million, a decrease of 46.8% from $22.507 million year-over-year[29] - Net income decreased to $9.343 million, down 46.0% from $17.286 million in the same quarter last year, resulting in a diluted net income per share of $0.34[29] - Gross profit declined to $95.777 million, representing a gross margin of 34.5%, compared to $106.800 million and a gross margin of 35.5% in the prior year[29] Sales and Revenue Outlook - The company expects net sales for Fiscal 2025 to range from $1.15 billion to $1.23 billion, representing a decline of 4% to an increase of 2% compared to Fiscal 2024[19] - Shoe Station banner net sales grew 4.9% while the family footwear industry experienced a decline[4] - Net sales decreased to $277.715 million for the thirteen weeks ended May 3, 2025, down 7.5% from $300.365 million for the same period last year[29] Expenses and Margins - The gross profit margin for the first quarter 2025 was 34.5%, down from 35.6% in the first quarter of 2024[7] - SG&A expenses as a percentage of net sales increased to 30.2% in the first quarter 2025 from 28.1% in the first quarter of 2024[8] Cash and Assets - The company had over 30% additional cash on hand compared to the first quarter of 2024, with no debt[5] - Cash and cash equivalents at the end of the period were $78.476 million, a decrease from $108.680 million at the beginning of the period[33] - Total assets grew to $1,140.158 million, compared to $1,124.133 million in the previous quarter[31] - Total liabilities increased to $486.577 million, up from $475.137 million in the previous quarter[31] - Cash flows from operating activities resulted in a net cash outflow of $9.637 million, compared to a net inflow of $17.059 million in the same period last year[33] Capital Expenditures and Store Strategy - Capital expenditures in the first quarter 2025 totaled $13.3 million, reflecting the rebanner of 24 stores and the opening of one new store[12] - The company plans for approximately 120 stores, or 28% of the store fleet, to operate as Shoe Station by the end of Fiscal 2025[16] - The rebanner strategy is projected to impact operating income by $20 to $25 million, resulting in an estimated $0.65 decline in Fiscal 2025 EPS[18] Dividends - Dividends declared per share increased to $0.150, up from $0.135 in the prior year[29]

Store Operations and Growth - As of Fiscal 2024 year end, Shoe Carnival operated 430 stores across 36 states and Puerto Rico, with comparable physical stores generating an average of $2.8 million in Net Sales[14]. - The company plans to rebanner 175 stores to the Shoe Station banner over the next 24 months, expecting to operate 218 Shoe Station stores, representing 51% of the current store fleet[24]. - The company opened four new stores in Fiscal 2024 while permanently closing two stores, reflecting a strategic focus on store performance[182]. - The company has identified a national expansion opportunity for Shoe Station, with a successful 10-store in-market test showing over 10% higher sales and profit contributions compared to Shoe Carnival stores[183]. Financial Performance - In Fiscal 2024, the company reported Net Sales of $1.2 billion, an increase of $27 million or 2.3% compared to Fiscal 2023, with a 5.7% increase from the Shoe Station banner and $80.3 million from Rogan's acquisition[185]. - Gross Profit for Fiscal 2024 was $428.8 million, reflecting a $7.4 million increase from Fiscal 2023, with a Gross Profit margin of 35.6%, down 20 basis points from the previous year[196]. - Operating Income for Fiscal 2024 totaled $91.2 million, a decrease of 2.5% compared to Fiscal 2023, primarily due to a 53rd week of sales in the prior year and declines during non-event periods[189]. - Fiscal 2024 Net Income was $73.8 million, or $2.68 per diluted share, slightly up from $73.3 million in Fiscal 2023, aided by pandemic-related tax credits of $3 million[190]. - The company ended Fiscal 2024 with $123.1 million in Cash, Cash Equivalents, and Marketable Securities, maintaining no debt for the 20th consecutive year[191]. Customer Engagement and Loyalty - In Fiscal 2024, Shoe Perks membership grew to 36.8 million members, a 7% increase compared to Fiscal 2023[38]. - Purchases from Shoe Perks members accounted for approximately 73% of comparable stores Net Sales in Fiscal 2024[39]. - Shoe Perks customer loyalty program members accounted for approximately 73% of comparable stores' Net Sales in Fiscal 2024[102]. Supply Chain and Inventory Management - Over 90% of merchandise was received into the Evansville distribution center during Fiscal 2024, with integration of inbound shipments for Rogan's locations effective February 2025[44]. - The company relies on a primary distribution center in Evansville, Indiana, which is critical for fulfilling merchandise to physical stores and e-commerce orders[112]. - Merchandise Inventories increased to $385.6 million at the end of Fiscal 2024, up $39.2 million from Fiscal 2023, primarily due to inventory from Rogan's acquisition[192]. Capital Expenditures and Investments - Total capital expenditures in Fiscal 2024 were $33.2 million, lower than prior years as the store modernization program was completed[31]. - Capital expenditures for Fiscal 2025 are projected to be between $45 million and $60 million, with a focus on rebannered stores and technology upgrades[211]. Market and Competitive Landscape - The company faces significant competition in the retail footwear industry, with larger competitors potentially impacting market share[91]. - Consumer spending levels are critical to business success, with various economic factors influencing consumer confidence and demand[93]. - The company relies heavily on imported goods, primarily from China, making it vulnerable to supply chain disruptions and cost increases[95]. Risk Management and Compliance - The company is exposed to risks related to cybersecurity breaches, which could compromise customer data and negatively affect reputation and financial results[127]. - Compliance with data protection regulations is critical, as failure to protect customer information could lead to litigation and damage to reputation[126]. - The company has developed a risk-based framework for cybersecurity, considering it a top risk within its enterprise risk management protocol[144]. Employee and Workforce Management - The company employs approximately 5,500 individuals, with about 3,000 part-time employees, and has a workforce that is 63% female[72][61]. - The company has maintained a strong employee retention rate, with 68% of district managers employed for over 20 years and an average tenure of 14 years for general managers[63]. - The company faces human capital risks, including the need to attract and retain qualified personnel in a rising wage environment[131]. Strategic Initiatives - The company plans to continue its rebanner strategy, converting Shoe Carnival stores to Shoe Station stores, which is a significant part of its growth strategy[90]. - The proprietary inventory management and advanced point-of-sale systems provide real-time sales and cost of sales data, enhancing operational efficiency[50][51]. - The Ship-From-Store program allows online orders to be fulfilled from store inventory, minimizing out-of-stocks and expanding online assortment[53].

Group 1 - Shoe Carnival, Inc. (NASDAQ: SCVL) is currently facing a decline in popularity, with warnings that its share price may continue to fall, a trend that has been ongoing since last fall [1] - The company's Q4 and fiscal-2024 earnings results were described as modestly upbeat, yet they did not significantly improve investor sentiment [1]

Financial Data and Key Metrics Changes - Net sales for fiscal 2024 were $1,200,000,000, reflecting a growth of 2.3% compared to the previous year, despite the industry contracting in mid-single digits [7][30] - Adjusted net income grew to $75,000,000 or $2.72 per share, compared to $74,000,000 or $2.70 per share in fiscal 2023 [10][35] - Gross profit margin for the fourth quarter was 34.9% on a GAAP basis and 35% on an adjusted basis, compared to 35.6% in the previous year [31][34] Business Line Data and Key Metrics Changes - The Shoe Station growth banner achieved an industry-leading growth of 5.7%, successfully entering new markets and capturing new customers [7][10] - Rogan's acquisition contributed approximately $16,500,000 in net sales for the fourth quarter and over $80,000,000 for the year, exceeding initial operating income targets by over 20% [33][34] Market Data and Key Metrics Changes - The company gained market share in 2024, entering new geographies and expanding its customer base [5][6] - The lower-income customer segment at the Carnival banner continued to pull back on spending during non-event periods, reflecting broader industry trends [9][19] Company Strategy and Development Direction - The company announced a strategic plan to scale up Shoe Station from a regional retailer to a national footwear leader, with 51% of the store fleet expected to operate under the Shoe Station banner within 24 months [10][18] - The first phase of the plan includes rebranding 50 to 75 stores, with a focus on markets where Shoe Station is already known [14][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as inflationary pressures and customer spending pullbacks, particularly among lower-income households [4][19] - Despite market volatility expected in 2025, the company is well-positioned with a strong balance sheet to advance its strategies and invest for long-term profit growth [19][45] Other Important Information - The company ended fiscal 2024 with zero debt for the twentieth consecutive year and increased its cash balance to approximately $123,000,000 [37][38] - A dividend increase of 11% was announced, marking the 52nd consecutive dividend payment [38] Q&A Session Summary Question: Can you provide details on the rebranding strategy? - The initial 10-store test was conducted in existing markets, showing over 10% sales growth compared to Shoe Carnival [48][50] - The plan includes rebranding stores in both existing and new markets, with a focus on demographics that align with the Shoe Station brand [51][52] Question: What are the expectations regarding tariffs and pricing? - Vendors are currently negotiating costs, with some price increases expected but not across the board [54][56] - The guidance assumes modest price increases, with no significant impacts from tariffs yet observed [58] Question: What is the outlook for gross margins and sales? - The company expects gross profit margins to remain above 35% for the upcoming year, despite some deleverage due to anticipated sales declines [60][61] - For Q1, sales trends are expected to mirror those of Q4, with additional headwinds from the rebranding strategy [62][64]

Financial Data and Key Metrics Changes - For fiscal 2024, net sales reached $1.203 billion, reflecting a growth of 2.3% compared to the previous year, despite the industry contracting in mid-singles [10][48] - Adjusted net income grew to $75 million or $2.72 per diluted share, compared to $74 million or $2.70 in fiscal 2023 [14][57] - Gross profit margin for Q4 was 34.9% on a GAAP basis and 35% on an adjusted basis, down from 35.6% in Q4 2023 [49][50] Business Line Data and Key Metrics Changes - The Shoe Station growth banner achieved an industry-leading sales growth of 5.7%, contributing significantly to overall sales growth [11][57] - Rogan's Shoes, acquired during the year, generated approximately $16.5 million in net sales for Q4 and over $80 million for the year, exceeding initial operating income targets by over 20% [53][57] - Sales in the Carnival banner declined during non-event periods, with comparable sales down 3.9% for the year [48][57] Market Data and Key Metrics Changes - The company gained market share in 2024, entering new geographies and expanding its customer base [7][8] - The footwear industry faced challenges due to inflationary pressures affecting lower-income households, leading to reduced spending during non-key shopping periods [6][30] Company Strategy and Development Direction - The company announced a strategic plan to scale Shoe Station from a regional retailer to a national footwear leader, with plans to rebanner 50 to 75 stores in fiscal 2025 [15][20] - The rebannering strategy is expected to result in 51% of the store fleet operating under the Shoe Station banner within 24 months, significantly increasing profitability [22][24] - The company remains committed to pursuing mergers and acquisitions to achieve its long-term vision of being the leading footwear retailer for families [25][26] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued pressure on sales from lower-income households in non-event periods, with expectations of mid- to high-single declines in the Carnival banner [30][71] - Despite market volatility, the company is well-positioned with a strong balance sheet to invest in growth strategies during the downturn [30][71] - The first quarter of 2025 is expected to reflect similar trends to Q4 2024, with no improvement in comparable store sales anticipated [70][93] Other Important Information - The company ended fiscal 2024 with no debt for the 20th consecutive year and increased its cash balance to approximately $123 million [59][60] - A dividend increase of 11% to $0.15 per share was announced, marking 52 consecutive quarters of dividends [60][61] - Carl Scibetta, the Chief Merchandising Officer, is set to retire, with Tanya Gordon appointed as his successor [31][32] Q&A Session Summary Question: Can you elaborate on the rebannering strategy and its market impact? - The initial 10-store test was successful, and the upcoming 50 to 75 stores will primarily be in existing markets where Shoe Station is already known, with plans to expand into new markets later [76][78][81] Question: What are the expectations regarding pricing and tariffs? - Current vendor pricing is unsettled, with some mid-single-digit increases expected, but no significant across-the-board price hikes have been observed yet [84][86] Question: Can you provide details on the comp outlook and margin expectations? - The guidance for total sales and comparable sales is expected to be consistent, with gross profit margins anticipated to remain above 35% despite some deleverage [92][120]

Financial Performance - Net sales for the fourth quarter of Fiscal 2024 were $262.9 million, a decrease from $280.2 million in the fourth quarter of Fiscal 2023, with a comparable store sales decline of 6.3 percent[6][7]. - Fiscal 2024 net sales totaled $1.203 billion, an increase of $27.0 million, or 2.3 percent, compared to Fiscal 2023, driven by a 5.7 percent sales growth from Shoe Station and over $80 million from Rogan's acquisition[10][11]. - The company achieved a GAAP EPS of $2.68 and an adjusted EPS of $2.72 for Fiscal 2024, with net income growing to $73.8 million[6][11]. - The gross profit margin for Fiscal 2024 was 35.6 percent, marking the fourth consecutive year above 35 percent[11]. - The company expects net sales for Fiscal 2025 to range from $1.15 billion to $1.23 billion, with GAAP EPS guidance of $1.60 to $2.10[29]. - Reported net income for the weeks ended February 1, 2025, was $73,766 million, representing a 0.6% increase from $73,348 million for the weeks ended February 3, 2024[44]. - Adjusted net income increased to $74,950 million, up from $73,958 million, maintaining a stable adjusted net income margin of 6.2%[44]. Store Operations and Strategy - The company plans to rebanner 175 stores to the Shoe Station banner over the next 24 months, expecting to operate 218 Shoe Station stores, representing 51 percent of its current store fleet[4][21]. - The first-year investment for the rebanner strategy is forecasted to decrease Fiscal 2025 operating income by $20 to $25 million, resulting in an approximate $0.65 decline in EPS[23]. - Rogan's acquisition contributed over $80 million in net sales in Fiscal 2024, exceeding initial operating income targets by more than 20 percent[13]. Cash and Assets - The company ended Fiscal 2024 with approximately $123.1 million in cash and cash equivalents, marking the 20th consecutive year with no debt[17]. - Cash and cash equivalents increased to $108,680 thousand as of February 1, 2025, compared to $99,000 thousand as of February 3, 2024[38]. - Total assets increased to $1,124,133 thousand as of February 1, 2025, compared to $1,042,025 thousand as of February 3, 2024[38]. Expenses and Margins - Selling, general and administrative expenses rose to $337,642 million, accounting for 28.0% of net sales, up from 27.8% in the previous year[44]. - Adjusted operating income was $92,716 million, reflecting a margin of 7.7%, compared to 8.0% in the prior year[44]. - The amortization expense related to fair value adjustments was $994 million, impacting gross profit and operating income[44]. - Acquisition-related fees and expenses were recorded at $570 million, compared to $806 million in the previous year[44]. Dividends - The board approved an 11.1 percent increase in the quarterly dividend to 15.0 cents per share, marking the 11th consecutive year of dividend increases[15]. Inventory and Profitability - Merchandise inventories rose to $385,605 thousand as of February 1, 2025, up from $346,442 thousand in the previous year, indicating an 11.3% increase[38]. - Gross profit for the thirteen weeks ended February 1, 2025, was $91,669 thousand, representing a gross margin of 34.9%, down from 35.6% in the prior year[42]. - Operating income decreased to $14,037 thousand for the thirteen weeks ended February 1, 2025, compared to $19,969 thousand for the same period in 2024, reflecting a decline in operating margin from 7.1% to 5.3%[36][42]. - Adjusted net income for the thirteen weeks ended February 1, 2025, was $14,876 thousand, compared to $16,130 thousand for the same period in 2024[42].