Shoe Carnival(US:SCVL)2023-03-22 15:17Financial Data and Key Metrics Changes - The company reported net sales in Q4 of $290.8 million, an increase of $50.9 million or 21.2% compared to Q4 2019, driven by sales from the Shoe Station banner and a comparable store sales increase of 12.6% from the Shoe Carnival banner [27] - Gross profit margins increased by 700 basis points for the year and 920 basis points for Q4 compared to three years prior, with Q4 gross profit margin at 38.3%, the highest in the company's history [3][96] - Operating profit margins for the full year reached 11.6%, up from 5.2% three years ago, and have been sustained over 11% for the last two years [4][78] Business Line Data and Key Metrics Changes - Non-athletic sales saw a significant shift, with comparable sales in non-athletic categories up in the low 20s compared to 2019, while athletic footwear sales were up in the mid-singles [13] - Women's non-athletic sales were up in the high singles versus 2019, with casuals driving sales up in the mid-40s [13] - Men's non-athletic sales were up in the high 20s versus 2019, with men's casuals increasing over 60% [71] Market Data and Key Metrics Changes - The company grew its customer base to over 32 million, with loyalty membership surging over 34% from three years ago [10] - The company experienced a decline in sales for non-athletic categories compared to 2021, attributed to lower boot sales, while athletic sales were down in the low 20s [13] - Inventory at the end of Q4 was $390.4 million, up $130.9 million compared to Q4 2019, with a significant portion attributed to Shoe Station acquisitions [28] Company Strategy and Development Direction - The company plans to surpass 400 stores this year and aims to exceed 500 stores by 2028 through organic growth and targeted acquisitions [5] - The company is focused on a modernization program, with over 40% of the fleet complete, and plans to complete over 60% by the end of fiscal 2023 [25] - The company aims to become a multibillion-dollar retailer with top-tier profitability by 2028, leveraging both organic expansion and acquisitions [30][73] Management's Comments on Operating Environment and Future Outlook - Management noted a slow start to the spring season due to cooler weather and delayed consumer demand, but anticipates sales acceleration later in the spring and summer [76] - The company is mindful of the inflationary environment and economic uncertainty, adjusting capital investments conservatively for the first half of 2023 [66] - Management expressed confidence in the ability to execute growth strategies despite current economic challenges, expecting earnings per share to exceed $4 for 2023 [70] Other Important Information - The company reported zero debt at the end of 2022, marking the 18th consecutive year without debt [66] - The CFO, Kerry Jackson, is retiring after 35 years of service, with Erik Gast set to take over [12] Q&A Session Summary Question: What is the sales trend for Q1? - Management indicated that Q1 sales are expected to be down mid-singles, with a decline in EPS compared to the previous year [32][80] Question: What was the gross margin in Q4? - The gross margin in Q4 was reported as the strongest in three years, with a 250 basis point increase in merchandise margin [52][96] Question: How is the company managing inventory? - Management stated that inventory levels are in line, with no need for deep discounts to liquidate goods, and they are working closely with vendors to maintain freshness [50][65]