Shoe Carnival Profit Slips on Calendar Shift

Shoe Carnival Profit Slips on Calendar
A Shoe Carnival store location.
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The Evansville, Ind.-based retail chain reported an 11 percent decline in third-quarter revenue after a calendar rejig resulted in its back-to-school sales moving into the second quarter.

But the onset of cooler fall weather and robust Thanksgiving sales are expected to boost the fourth quarter, the company said.

Shoe Carnival Inc.’s net earnings for the third quarter were $10.9 million, or 54 cents a diluted share, compared with $12.2 million, or 60 cents, in the year-ago period. Analysts polled by Yahoo Finance had expected earnings per share of 53 cents.

The company reported a 3.5 percent drop in net sales to $235.8 million, compared with $244.4 million in the prior corresponding period, missing analysts’ consensus forecast for $239.49 million.

Comparable-store sales for the 13-week period ended Nov. 2 rose 0.7 percent from the same period last year. As a result of fiscal 2012 consisting of 53 weeks, the company shifted its back-to-school sales to the second quarter, negatively impacting third-quarter revenue by about $21.2 million.

In a conference call with investors and analysts, Shoe Carnival CEO Cliff Sifford said warm weather throughout the retailer’s geographic footprint, coupled with the partial U.S. government shutdown, negatively impacted sales in September.

“With the combination of the end of government shutdown and the arrival of fall weather in October, our sales rebounded. This continued through November, with boots leading the way,” Sifford said. The CEO noted that attractive prices and the adjustment of store hours over the Black Friday holiday period helped drive demand for the company’s boot offerings.

Sifford said October’s mid-single-digit comp-sales gain, together with August’s strong performance, more than offset the negative sales trend for September. “Higher merchandise margins, coupled with lower expenses than were originally projected, resulted in earnings at the high end of our expectations,” he added.

Shoe Carnival is forecasting EPS of between 18 cents and 22 cents for the fourth quarter, on net sales of between $215 million and $219 million.

“We believe we are well positioned to continue our positive sales trend throughout the remainder of the holiday season, which would result in improved year-over-year results,” said Sifford, pointing out that favorable weather patterns and the company’s strong Thanksgiving promotional offering led to a 7.8 percent comps increase in November.

The company also opened eight new stores during the third quarter. Sifford said he intends to aggressively expand into new markets in 2014, but declined to specify which regions are on his radar.

Shares in the company were slightly higher, at $28.50, in after-hours trading.