Shoe Carnival Inc. is reporting better-than-expected sales with all but one of its stores back in business amid the coronavirus pandemic.
The Evansville, Ind.-based retailer announced yesterday that it has reopened nearly its entire brick-and-mortar fleet of 390 units across the United States and Puerto Rico. During the quarter to date, it has seen “stronger-than-anticipated” sales, with comps up 28.1% compared to the prior year period.
While brick-and-mortar sales improved 4%, online sales surged almost 470%. The company forecasts gross margin headwinds for the fiscal second quarter due to increased shipping charges associated with higher e-commerce activity.
“The first half of fiscal 2020 ushered in an unprecedented operating landscape for our business,” vice chairman and CEO Cliff Sifford said in a statement. “While there are still many unknowns, we are encouraged by these more than positive sales trends and remain committed to meeting our customers’ footwear needs and positioning Shoe Carnival as a leader in the family footwear segment.”
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The shoe chain began the gradual reopening of its locations since late April. Unlike many retailers, it opted against furloughing its employees; instead, its top executives took salary cuts and the company boosted its credit line by $50 million.
This move, according to Susquehanna Financial Group analyst Sam Poser, helped provide Shoe Carnival a “first-opener advantage”: At the time stores were closed, employees were trained on new safety measures and protocols. Now that state and local governments have loosened restrictions on nonessential retail, the retailer has “opened faster and more effectively” than its rivals, who have struggled with “appropriately staffing their stores” and “taken longer to ramp up store operations.”
“The result is that Shoe Carnival continues to capture the lion’s share of pent-up consumer demand at brick-and-mortar locations,” said Poser, who raised his price target on the company from $31 to $40 today. “The quarter-to-date results reflect how well Shoe Carnival management and merchants controlled everything that could be controlled far better than the competition throughout the COVID-19 crisis.”
Shoe Carnival expects not to release a fiscal-year outlook but said it would provide more financial details on its second-quarter conference call in August. In its first-quarter earnings report last month, the company logged a net loss of $16.2 million, or a loss of $1.16 per diluted share, while revenues declined nearly 42% to $147.5 million. Wall Street had anticipated a loss of 47 cents and sales of $164.6 million for the period ended May 2.