After a difficult first quarter, Shoe Carnival recorded a strong rebound in sales in the second fiscal quarter ended Aug. 1, led by e-commerce.
The American footwear retailer reported record revenues that were up by 12.1 percent year-on-year to $300.8 million, exceeding the previous record set in the third quarter of 2017 by 4.6 percent. Comparable store sales increased by 12.6 percent. E-commerce soared by 332 percent to represent more than 20 percent of turnover, but this was offset by weak brick-and-mortar sales due to store closures, as well as Covid-19 related delays in back-to-school shopping late in the quarter. Nearly all schools within the markets that Shoe Carnival operates in have delayed their start dates.
The group had to close all stores on March 19 because of the pandemic before re-opening the first ones in May. All stores have reopened since June. During the period, it opened two stores, while ten stores were closed. The company expects a total of four store openings and 13 store closings for the full year, compared to one store opening and six store closings last year. As of September 1, Shoe Carnival operates 382 stores in 35 states and Puerto Rico.
A highlight this quarter, the company reached 25 million Shoe Perks loyalty members for the first time.
Overall, the gross margin decreased by 3.1 percentage points to 27.5 percent, due to higher shipping costs associated with e-commerce sales and an increase in adult athletic sales, which typically carry lower margins than non-athletic product. Net income fell by 14.4 percent to $10.1 million.
Despite this sales surge, the group anticipates gross margin headwinds for the rest of the year due to the continuing pandemic and is not providing guidance for fiscal year 2020 due to the current uncertainty. It anticipates that the majority of the volume it typically sees in August will shift later into its third quarter, extending the back-to-school season through the end of October.