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Shoe Carnival CEO Mark Worden Expects Dress & Non-Athletic Shoes to Continue to Outperform This Fall

Shoe Carnival shares jumped nearly 20% at the opening bell on Thursday as the footwear retailer topped Wall Street profit estimates and reported strong back-to-school sales versus 2019 comps. At press time, the stock was still up 11%.

In an interview with FN, CEO Mark Worden noted that today’s market gains were led by the company reporting the highest three-day sales period in the company’s history, during back-to-school this month.

In its earnings release, the company said that August to-date merchandise sales have increased in the mid-teens compared to 2019 and have decreased mid-single digits compared to 2021. The August back-to-school shopping period drives over half of the company’s third quarter profitability, the company added.

What’s more, Worden told FN that the company hit nearly 30 million loyal customers this quarter, which is up just shy of 30% from 2019. “Plus, earnings per share in the first half of the year of nearly $2 is greater than any full-year earnings in our 44-year history, except for last year’s stimulus boosted results,” Worden added.

“This comes back to the loyalty our customers have to Shoe Carnival, and our new Shoe Station brand is playing out in the strongest profitability that we’ve seen in a very, very long time,” the CEO said.

In the second quarter of 2022, the Evansville, Ind.-based retailer reported net sales of $312 million, which is up 16.4% over 2019, but down 6% compared to 2021. Net income in Q2 was $28.9 million, or $1.04 per diluted share. This is down from $44.2 million in the same period last year.

Sales of athletic styles took an expected hit in the quarter, Worden noted, with the company attributing this to an inability to deliver new styles in the category to meet demand due to supply chain challenges. Athletic inventories ended the quarter down high teens versus 2019.

But Shoe Carnival’s chief merchandising officer, Carl Scibetta, said on its earnings call on Thursday that the company believes athletic inventories will be replenished as it moves through the third quarter.

As for non-athletic shoes, the company is outperforming its expectations. Women’s non-athletic was up in the high 20s versus 2019. Sales were driven by dress, up over 50%, and sandals, up in the mid-teens. Men’s non-athletic sales were up in the mid-20s versus 2019. Men’s dress and casual were both up over 20% with men’s boots up over 30%. And children’s non-athletic sales were up in the high 50s. Increases in this segment were driven by children’s casuals, up over 90% and infants, up in the high 70s.

“While consumers resoundingly return to a more normal life outside of the home, we are finding those dress-up opportunities will continue to be strong the rest of the year,” Worden told FN. “We expect an outstanding non-athletic season as we get into boots shortly, and then into holiday. Plus, there was so much purchasing of athletics during the pandemic that we do find our customers have their closets full of a wonderful assortment. So we see that category pulling back at this point in time and non-athletic surging.”

As for Shoe Station, which the company purchased in December for $67 million, Worden told FN that the banner “continues to outperform expectations on all fronts.” Sales at Shoe Station were $54 million during the first half of 2022, and the company now expects sales to exceed its previously announced full-year expectations of $100 million by approximately 10%.

This growth only reinforces the company’s plans to expand the Shoe Station store portfolio. At the time of purchase, there were 21 Shoe Station stores. By 2023, there will be 30 or more total stores in the banner, Worden told FN, with the number surpassing 100 locations and beyond in the next five years.

“We have nearly completed the integration less than one year from acquisition,” the CEO said. “Shoe Station is proving to be a wild success, and it will continue to be a growth story over the many years ahead. The higher-income consumer is enjoying our broad assortment from the best brands, and it is far exceeding expectations. So we’ll be growing that as fast as real estate can happen all throughout the southern U.S.”

Looking ahead, the company expects net sales for full fiscal 2022 to be between $1.29 billion and $1.34 billion, up 24% to 29% compared to 2019.

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