Shoe Carnival Inc. is the latest in a string of retail chains to report lower-than-expected earnings due to a prolonged winter, which tempered foot traffic in the fourth quarter.
The company reported an 81.3 percent drop in fourth-quarter adjusted net income to $600,000, or 3 cents a diluted share, below analysts’ expectations of 4 cents, and also lower than last year’s earnings of $3.2 million, or 13 cents.
Sales declined 2.6 percent to $200.3 million for the 13-week period ended Feb. 1, compared with last year’s fourth-quarter sales of $205.7 million. Adjusted for the extra week in the prior corresponding period, sales rose 3.8 percent, or an extra $12.7 million.
“After a high-single-digit comparable-store sales gain in October and November, which also included record sales for our Thanksgiving and Black Friday events, Mother Nature decided to give us the snowiest and coldest winter in more than a decade,” President and CEO Cliff Sifford said on a conference call last week. “With that, we experienced declining traffic throughout most of December and January in most of our geographies.
“Unfortunately, we experienced similar weather issues the first week of March, and currently our comparable-store sales are down 4 percent for the quarter,” he added on the call.
For the full year, net earnings were $26.9 million, or $1.32 a diluted share, down from the prior year’s result of $29.3 million, or $1.43. Sales for the same period increased 3.5 percent to $884.8 million.
Despite the tough sales environment, Clifford said the retail chain is equipped with a strong assortment of family footwear ahead of the Easter selling season.
“We entered this year [with] very clean [inventories] on fall and winter seasonal product, which allowed us to produce merchandise margins that are significantly higher than the same time period last year. We believe once spring weather patterns begin and we get closer to Easter, we will see a more positive trend,” Clifford said, noting that sandals and fabric and canvas casual shoes were hot items over the past weekend.
For the first quarter of fiscal 2014, Shoe Carnival expects to post diluted EPS of between 45 cents and 52 cents on sales in the range of $232 million to $241 million. The company provided guidance for flat to three percent lower comparable-store sales for the period.
The company plans to open between 30 and 35 stores in fiscal 2014.
This month alone, it will debut seven stores in eight cities across the U.S. To celebrate the expansion, Shoe Carnival is set to host opening events at all new locations, on Saturday, March 29.
“We are excited to open new Shoe Carnival store locations in these markets. Shoe Carnival is known for our one-of-a-kind shopping experience, unbelievable product assortment and unique atmosphere, which creates a customer-focused way to shop for shoes,” said Todd Beurman, SVP of marketing.
Shoe Carnival’s shares closed 1.8 percent lower on Thursday, at $24.94.