Shoe Carnival reported sales for the fourth quarter that fell short of expectations from analysts.
Net sales in Q4 were $290.8 million, down 7.2% compared with 2021 and short of expectations from analysts surveyed by Yahoo. Net income was $21.6 million and EPS on a GAAP basis was 79 cents, largely in line with analysts’ expectations. In Q3, Shoe Carnival warned that it expected inflation to impact consumer purchases throughout the holiday season in Q4.
For the full year, net sales were $1.26 billion, slightly short of the low end of the prior guidance. EPS was $3.96, which marked 550% growth compared with 2019 and a record for the company.
President and CEO Mark Worden said the 2022 results were overall in line with the company’s strategic plan and guidance.
“Our growth strategies to increase scale, modernize our customer experience, leverage customer data and carry the hottest branded merchandise are working,” he said. “As we move forward, we expect this profit level to continue on our track to becoming a multibillion-dollar retailer by 2028.”
On the merchandise side, Shoe Carnival ended the year with $390.4 million in inventory, an increase of $130.9 million compared to 2019. 40% of this inventory was from Shoe Station, which was acquired by the chain last year. The company expects inventory levels to reduce by about $40 million by the end of 2023, largely driven by the back-to-school season.
In Q4, demand shifted from athletic categories to nonathletic categories. Shoe Carnival expects non-athletic sales to outperform in the first half of 2023, though athletic is expected to grow in the back half the year, bolstered by back-to-school.
Looking ahead to 2023, uncertainty in the economic environment and colder weather has contributed to a slower start to the year and weaker consumer demand, said Shoe Carnival chief merchandising officer Carl Scibetta.
Given the slowdown, Shoe Carnival provided a cautious outlook for fiscal year 2023 and expects net sales to land between $1.26 billion and $1.32 billion, which would be between flat and up 4.5% compared with 2023. EPS is expected to be between $3.96 and $4.20, or between flat and up 6%.
The company is currently in the process of remodeling its Shoe Carnival and Shoe Station shoes. More than 40% of the company’s 397 stores have been remodeled and 60% are expected to be finished by the end of 2023. Shoe Carnival also expects to operate more than 400 stores in Q3 of 2023 and plans to surpass 500 stores by 2028.