Shoe Carnival Beats on Both Lines - Analyst Blog
November 21 2012 - 4:00AM
Zacks
Shoe Carnival Inc.
(SCVL) recently posted third quarter 2012 earnings of 60 cents per
share, up 15.4% year over year. Earnings per share were also ahead
of the Zacks Consensus Estimate of 58 cents.
Net sales grew 13.4% year over year
to $244.4 million during the quarter, aided by comparable store
sales (comps) growth of 6.2%. The increase in traffic (up
low-single digit) and transaction (up mid-single digit) resulted in
the strong comps growth. Net sales beat the Zacks Consensus
Estimate of $242.0 million.
During the quarter, gross margin
increased 110 basis points (bps) to 31.3%. Higher merchandise
margin as well as a fall in buying, distribution and occupancy
costs led to the hike in gross margin. Selling, general and
administrative (SG&A) expenses, as a percentage of sales,
increased 50 bps year over year to 22.9%. Increased number of
stores operated as well as higher incentive compensation led to
higher SG&A expenses.
Financial
Position
At the end of the quarter, the
company had cash and cash equivalents of $67.1 million and
shareholders’ equity of $312.6 million.
Outlook
For fourth quarter 2012, the
company anticipates revenue growth between $215.0—$220.0 million
and earnings per share in the range of 19–23 cents. Comparable
store sales are expected to increase in the range of 2.0–4.0%.
For fiscal 2012, Shoe Carnival
expects net sales in the range of $864—$869 million. Comparable
store sales are expected to increase in the range of 4.8–5.3%.
Earnings per diluted share are expected in the range of $1.47 to
$1.51.
For fiscal 2012, Shoe Carnival
remains on track to open approximately 31 new stores and close 7.
Among the scheduled openings, the company has already opened 13
stores in the first quarter, 11 in the second and 6 in the third
quarter. As a result, the fourth quarter will now witness only one
opening.
Year to date, the company closed 3
stores in the first quarter and 2 stores in the second quarter. The
third quarter did not witness any unit shutdown but the company
intends to close the remaining two in the final quarter. Shoe
Carnival plans to finish the year with 352 stores. Management also
plans to open as many as 30–35 new stores in 2013.
Our Take
Shoe Carnival, a leading retailer
of value-priced footwear and accessories, posted
better-than-expected performance in the reported quarter.
Furthermore, the company has outperformed the Zacks Consensus
Estimates in the trailing four quarters with an average surprise of
12.72%.
Solid sales momentum combined with
margins improvement reflect its strong performance. The company’s
e-commerce drive and new loyalty programs are also contributing
considerably. Management also remains optimistic about the
company’s expansion plan, which will likely broaden its market
reach.
Shoe Carnival currently carries a
Zacks #1 Rank, which translates into a short-term Strong Buy
rating. We are maintaining our long-term Outperform recommendation
on the stock. One of its close peers, Cache Inc.
(CACH) recently reported loss of 39 cents per share beating the
Zacks consensus estimate of 40 cents of loss. Its net sales
declined 5.9% to $45.8 million.
CACHE INC (CACH): Free Stock Analysis Report
SHOE CARNIVAL (SCVL): Free Stock Analysis Report
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