Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shoe Carnival Inc (SCVL, Financial) achieved a third-quarter adjusted EPS of $0.71, in line with expectations.
- Year-to-date adjusted EPS increased by 3.8% compared to the prior year.
- Gross profit margin exceeded 35% for the 15th consecutive quarter.
- The integration of Rogan Shoes was accelerated, capturing significant profit synergies six months ahead of schedule.
- The digital-first marketing strategy led to increased customer engagement and profit efficiencies.
Negative Points
- Sales were significantly impacted by hurricanes Helene and Milton, affecting about half of the stores.
- Persistently warm weather delayed the winter boot season, leading to a 35% decline in boot sales in October.
- Third-quarter net sales were down 4.1% compared to the prior year, partly due to a retail calendar shift.
- Comparable store sales declined by 4.1% in the third quarter.
- The company revised its full-year sales guidance downward due to lower-than-expected sales performance in the third quarter.
Q & A Highlights
Q: Can you quantify the sales impact from the hurricanes, and have you seen any replacement buying in affected markets?
A: Mark Worden, President and CEO, explained that about half of the sales loss was due to warm weather affecting boot sales, with the other half primarily from hurricane disruptions. They have not yet seen replacement buying but remain optimistic that colder weather and holiday shopping will drive sales recovery.
Q: What are your expectations for boot sales in the fourth quarter, and is there any pent-up demand?
A: Carl Scibetta, Chief Merchandising Officer, noted that while there might be some pent-up demand, they do not expect to recover lost sales from Q3. They are managing boot inventory down in Q4 and do not anticipate boots turning positive in the quarter.
Q: How is the rebannering strategy performing, especially outside of Alabama?
A: Mark Worden stated that the rebannering strategy is showing strong results, with sales and profit increases over 10% in known markets. As they expand into new markets like Tennessee, they expect results to align with their success criteria of 3% to 5% sales and profit growth.
Q: What is the current status of Rogan's sales guidance, and how are inventory levels being managed?
A: Mark Worden confirmed that Rogan's is expected to deliver over $80 million in sales, consistent with previous guidance. Patrick Edwards, CFO, mentioned that inventory levels are slightly higher due to the rebannering strategy, but they are managing receipts carefully to align with demand.
Q: What are the key components of the SG&A savings, and will these continue into the fourth quarter?
A: Patrick Edwards highlighted that SG&A savings are primarily from Rogan's synergies and optimized advertising spend through their digital-first marketing strategy. These components will continue to be leveraged in the fourth quarter to manage expenses effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
