Shoe Carnival(US:SCVL)2022-03-16 15:56Financial Data and Key Metrics Changes - Shoe Carnival achieved record fourth quarter net sales of $313.4 million, an increase of $59.5 million or 23.4% compared to Q4 2020 [38] - Comparable store sales increased by 17.7% in Q4 2021 compared to the prior year, with brick-and-mortar sales up 22.1% [38] - Gross profit margin for Q4 2021 was 37.3%, up more than 650 basis points from Q4 2020 [39] - Earnings per diluted share for Q4 2021 increased to a record $0.72, up $0.46 from the previous year [43] - For fiscal 2022, earnings per share are expected to be in the range of $3.80 to $4.10, compared to $1.46 in fiscal 2019 [18] Business Line Data and Key Metrics Changes - Non-athletic sales grew over 20% in Q4, while athletic sales continued to grow in the low teens percentage points [27] - The company reported a balanced merchandise portfolio of 50% non-athletic and 50% athletic, positioning it well for growth [27] - Ecommerce sales grew 146% to over $160 million compared to fiscal 2019, with ecommerce margins 880 basis points higher than Q4 2020 [29] Market Data and Key Metrics Changes - The company experienced strong holiday sales despite the omicron variant, with record in-person shopping levels [10] - Comp sales in Q4 were up 25.3% compared to 2019, indicating a strong recovery and growth trajectory [28] - Inventory levels were up 19.2% on a per-store basis compared to the prior year, reflecting a strong position for spring selling [44] Company Strategy and Development Direction - The company aims to increase operating margins from historical levels of 4% to 5% to a long-term goal of exceeding 10% [12] - Shoe Carnival plans to complete its store modernization program by the end of fiscal 2024, with over 100 stores being remodeled in 2022 [15][31] - The company is moving into a growth mode, planning to add over 10 stores in 2022 and over 20 stores annually starting in 2023 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth momentum despite macroeconomic challenges, forecasting sales growth of 4% to 7% for fiscal 2022 [11] - The company is well-positioned to capture market share due to strong vendor relationships and effective inventory management [26] - Management acknowledged potential challenges from inflation and supply chain issues but remains optimistic about navigating these hurdles [26][56] Other Important Information - The company successfully integrated Shoe Station six months ahead of schedule and plans to leverage its CRM capabilities for growth [16] - A 29% increase in the quarterly cash dividend was approved, reflecting strong cash flow and commitment to shareholder returns [45] Q&A Session Summary Question: Can you quantify the momentum through the first six weeks of Q1? - Management reported continued strength in store traffic and high single-digit growth compared to the prior year [54] Question: Why is there expected higher growth in the second half compared to the first half? - The anticipated growth is primarily due to the lapping of government stimulus funds, which impacted sales in the first half [56] Question: What structural changes have led to the new sustainable double-digit operating margin? - Key drivers include investments in advanced analytics and CRM capabilities, elimination of unprofitable promotions, and increased employee investment [58][60] Question: What are the sales increases by month in Q4? - November and December saw over 20% comp growth, while January experienced a mid-single-digit decline, outperforming expectations [68] Question: How do you foresee vendor access impacting your business this year? - Strong vendor relationships have allowed the company to maintain inventory levels and meet customer demand despite supply chain challenges [25] Question: What is the composition of new store openings between Shoe Station and Shoe Carnival? - The majority of new stores in 2022 will be Shoe Station, with plans for significant growth in both banners in the coming years [77] Question: What are the opportunities to add stronger brands between Shoe Carnival and Shoe Station? - There are distinct differences in consumer bases, but synergies in purchasing power will be leveraged where appropriate [94]