Shoe Carnival(SCVL) - 2024 Q4 - Earnings Call Transcript

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]