Shoe Carnival(US:SCVL)2022-11-16 16:43Financial Data and Key Metrics Changes - Earnings per share (EPS) for the first nine months of fiscal 2022 reached $3.17, more than double any full year of earnings in the company's 44-year history except for one [5] - Q3 EPS was $1.18, exceeding consensus expectations, with operating profit margins at 12.8%, the highest of the year [6][7] - Q3 net sales were $341.7 million, a 24.4% increase compared to Q3 2019, marking the second highest quarterly sales in the company's history [34] - Gross profit margin for Q3 was 38.3%, a 740 basis point increase compared to Q3 2019 [35] - Net income for Q3 was $32.7 million, representing a 151% increase compared to Q3 2019 [37] Business Line Data and Key Metrics Changes - Non-athletic sales were up 35.1% compared to 2019, while athletic sales stabilized with a 4.4% increase [11] - Sales in non-athletic categories were up in the mid-30s versus 2019, with children's non-athletic sales up in the high 60s [29] - The company experienced a 50/50 sales balance between athletic and non-athletic categories, shifting 700 basis points towards non-athletic compared to 2019 [23] Market Data and Key Metrics Changes - Customer count for loyalty membership surpassed 31.5 million, up approximately 35% compared to 2019 [10] - The company achieved a 21.9% increase in overall sales for the first nine months of fiscal 2022 compared to 2019 [10] Company Strategy and Development Direction - The company is modernizing its store fleet, with 41% of stores modernized as of Q3 2022, aiming for over 50% by summer 2023 [14] - Shoe Station banner is expected to exceed original sales expectations of $100 million, with sales surpassing $75 million during the first nine months of 2022 [15] - Plans to expand the store footprint to over 400 locations in 2023 and target 500-plus stores by 2026 to 2028 [21] Management's Comments on Operating Environment and Future Outlook - Management anticipates a historically high inflationary environment affecting customer disposable incomes and traffic in Q4 [13] - Despite challenges, the company is confident in achieving its EPS and strategic targets for the remainder of fiscal 2022 [41] Other Important Information - The company repurchased 451,638 shares at a total cost of $10 million during Q3 [39] - Inventory at the end of Q3 was $392.3 million, up $94.3 million compared to Q3 2019, with 40% of the increase attributed to Shoe Station [38] Q&A Session Summary Question: Can you provide the merchandise margin and BD&O leverage year-over-year? - Merchandise margin increased 760 basis points for the quarter, and BD&O was de-leveraged by 20 basis points [45] Question: Can you discuss inventory levels and optimum inventory turn? - The company is comfortable with current inventory levels and plans to achieve goals with the Shoe Station banner coming online [48] Question: How is the supply chain situation improving? - The company is seeing more consistent on-time deliveries across all categories, with improved inventory levels for Q4 [53] Question: What are the trends in athletic versus non-athletic sales? - Historically, non-athletic sales tend to increase in the fourth quarter, with a potential shift towards 60/40 non-athletic sales [57] Question: What is the expected launch date for the e-commerce platform? - The launch of ShoeStation.com is in the final testing phase, expected to launch just in time for the holiday season or early Q1 [84] Question: How are merchandise margins holding up against industry promotional activity? - The company is not seeing significant increases in promotional activity compared to competitors, maintaining strong margins [85]