Analysts See More Positives Than Negatives In Shoe Carnival’s Q2

Consistent with its Q1 finish, Evansville, Ind.-based Shoe Carnival Inc. delivered another mixed quarter Tuesday, with sales that beat Wall Streets forecasts but profits that fell below expectations.

Still, analysts say there are more positives than negatives behind the retailer’s second-quarter numbers.

“While 2Q comp, up 0.5 percent, was affected by a late back-to-school and Labor Day, these shifts did meaningfully accelerate comp-to-date,” Susquehanna Financial analyst Christopher Svezia pointed out in a Sept. 2 note.

Svezia also added that while he was disappointed that Shoe Carnival did not raise its FY15 guidance — calling the reiterated guidance “conservative given a strong start to 3Q and favorable early reads in boots” — he sees upside potential for several reasons.

“Q4 has easy compares on the product margin and cost structure due to expenses related to port issues last year … boots were up double-digits in 2Q on top of a double-digit comparison, which gives us confidence for continued growth ahead,” Svezia said. “We see upside opportunity should weather at least cooperate again this year — important for boots.”

Sterne Agee CRT analyst Sam Poser also attributed the mixed results to the back-to-school shift — a recurring theme among footwear and apparel firms reporting earnings this quarter and an expectation that CEO Cliff Sifford had already warned investors about during the prior quarter’s conference call.

“In a tough retail environment, Shoe Carnival is executing well both on the top and bottom line,” Poser wrote in a Sept. 1 note, reiterating his “buy” rating on the stock. “The ongoing rollout of e-commerce and mobile commerce platforms as well as national advertising are resulting in an increase in Shoe Carnival’s loyalty program, which drives a disproportionate amount of sales, and increased traffic and conversions.”

Sifford also highlighted the company’s Shoe Perks loyalty program, as well as its online business during the firm’s conference call.

“We continue to be pleased with our strategic initiatives to drive growth across multiple channels,” Sifford said. “We added over 758 members to Shoe Perks. … Our Shoe Perks members spent on average of 28 percent more per transaction than non-members and accounted for over 53 percent of our second-quarter sales.”

The firm’s share price also continued to climb Wednesday — up 4.65 percent, to $26.80 at press time.

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