After posting its best ever fiscal fourth quarter, Shoe Carnival booked record quarterly net sales of $328.5 million in the first quarter ended May 1, a 122.7 percent increase from a year earlier, despite substantially all of its stores being closed for about half of the quarter due to the Covid-19 pandemic. Comparable store sales were up by 125.8 percent year-over-year thanks to all-time high store conversion rates.
“Our customer’s focus was on product and not promotion. This allowed us to eliminate low-margin promotions for the entire first quarter, which led to a 1,000-basis point increase in merchandise margin,” noted Cliff Sifford, Shoe Carnival’s vice chairman and CEO.
E-commerce sales grew by 11.8 percent compared with the previous year and by 191.3 percent from two years ago.
Shoe Carnival also posted a record gross profit margin of 39.6 percent, an 18.3 percentage point increase from 21.3 percent the previous year. Selling, general and administrative expenses rose by $17.8 million to $72.6 million, but decreased to 22.1 percent of sales from 37.1 percent as the top line rose faster than costs.
The bottom line swung to record net income of $43.2 million and diluted net income per share of $3.02, from a loss of $16.2 million, or $1.16 per diluted share, in the previous year.
The Shoe Perks customer loyalty program membership grew by more than 10 percent compared to the prior year bringing total membership to over 27 million. The program helps generate more than 70 percent of total sales.
The U.S. footwear retailer had cash and cash equivalents of $174.6 million with no outstanding debt as of May 1.
The retailer did not open any new stores in the quarter and six stores were closed. It expects to open one store and close two stores during the remainder of fiscal 2021 compared to a total of four store openings and 13 store closings the previous year.
Shoe Carnival is currently in the process of modernizing its stores and plans to upgrade approximately 100 stores by May 2022, with the goal of refurbishing two-thirds of its store fleet in the next three to five years. As of April, the company had 383 stores in 35 U.S. states and Puerto Rico.
The company currently has more than 100 Nike shops in its stores and it plans to double the number through to 2023.
The company anticipates diluted net income per share in the range of $1.00-$1.20 and net sales of $268-$278 million for the fiscal second quarter. Because of the “continued uncertainty in the business environment, including consumer spending behaviors, ongoing supply chain disruptions, and the timing of in-person learning in the fall,” Shoe Carnival did not provide a guidance for the second half of its fiscal year.