Shoe Carnival cut its full-year guidance on Tuesday after reporting Q2 earnings, but remained upbeat about the strong back-to-school season.
The Evansville, Ind.-based retailer reported that net sales in Q2 declined 5.7 percent to $294.6 million, with comparable-store sales down 6.5 percent. Second-quarter net income was $19.4 million, or 71 cents per diluted share, compared to $28.9 million, or $1.04 per diluted share the year prior. These results fell short of expectations of analysts surveyed by Yahoo, who were looking for EPS of 84 cents and revenues of $286.4 million.
Shares of Shoe Carnival were down about nine percent before markets opened on Tuesday before rebounding during the trading day.
Shoe Carnival said Q2 sales and earnings improved from Q1 due to investments in branding, advertising and in-store experience, though traffic was still challenged among consumers from lower income households and urban markets. Mark Worden, president and CEO of Shoe Carnival, said in a statement that the Q2 improvement in net sales came despite a “challenging economic backdrop.”
“We saw improving conditions related to the impact of inflation, but some of our urban customers remain challenged in the current economic environment,” Worden said. “As such, we are taking a measured approach to the balance of the year.”
He added that the company is in a position to evaluate potential growth opportunities moving forward, including acquisitions.
Shoe Carnival also provided an inter-quarter update and said that market conditions improved more dramatically in the start of the third quarter, with August sales and profits hitting among the highest rates of any month in the company’s 45-year history. The bump was driven by the back-to-school season, which typically accounts for half of Shoe Carnival’s Q3 gross profit.
Still, Shoe Carnival lowered its guidance for the full year and now expects net sales for the full year between $1.19 billion to $1.21 billion, with earnings per share between $3.10 to $3.25. This is down from previous guidance, which indicated an expected net sales range of $1.23 billion to $1.25 billion and earnings per share between $3.60 to $3.85 for the year.
Shoe Carnival opened its 400th store in August and said it has completed half its store modernizations. The company said it is on track to complete about 65 percent of store renovations during the summer of 2024 and expects to be a multi-billion dollar retailer in 2028.