The American shoe retailer posted results for the quarter ended Oct. 31 that came short of Wall Street's expectations, with sales inching up by just 1.8 percent over the year-ago quarter to $274.5 million, while comparable-store sales decreased by 0.4 percent. The main reason for the lower turnover was a drop of more than 10 percent in sales of boots due to the unseasonably warm weather conditions in the country, which could not be offset by higher sales of booties, sandals and athletic footwear.
Customers continued to shop for shoes in the first two weeks of September, after the start of the back-to-school season, leading to a 2.9 percent increase on a same-store basis for that period, but they continued to decline afterwards. Looking at the months of September and October combined, the management said that sales of sandals went up by more than 20 percent and athletic sales rose by low single-digit on a comparable store basis, but that was not enough to compensate for the lower sales of boots, which continued in early November.
Although revenues were lower than anticipated, this was the ninth consecutive quarterly sales increase for the American shoe retail chain. The gross margin lost 0.2 percentage points to 29.0 percent, while the operating margin remained flat at 5.6 percent. Net earnings increased to $9.7 million from $9.5 million in the year-ago period.
The company also released results for the nine months ended Oct. 29, 2016. Sales increased by 2.2 percent over the year-ago period to $766.9 million, while comparable store sales gained 0.9 percent. The gross margin lost 0.3 percentage points to 29.3 percent and net profit edged down by 0.8 percent to $24.4 million.
Shoe Carnival said it remains focused on the execution of its multichannel strategic initiatives to fuel future growth and sales and profitability. However, in contrast with Caleres and DSW, it revised down its annual sales expectations, and now forecasts sales to be in the range of $1,002 billion to $1,006 billion, down from a previously predicted range of $1,016 million to $1,020 million. Comparable store sales are expected to rise by between 0.5 to 0.9 percent, but net earnings should still end up higher than in 2015.
The company expects to open approximately 19 stores this year, including seven small-market stores, and to close approximately nine locations.