Shoe Carnival Inc.
) recently posted first quarter 2012 earnings of 54 cents per share
beating the Zacks Consensus Estimate of 51 cents and improving from
the year-earlier earnings of 50 cents per share.
Net sales rose 12.2% year over year to $222.6 million during the
quarter aided by comparable store sales (comps) growth of 7.3%. The
increase in traffic (up 5.4%) resulted in the strong comps growth.
Comps were on the high end of the company's guided range.
During the quarter, gross margin decreased 30 basis points (bps)
to 30.8%. Lower merchandise margin as well as a fall in buying,
distribution and occupancy costs hurt the margin to some extent.
Selling, general and administrative (SG&A) expenses increased
11.0% year over year to $50.6 million. As a percentage of net
sales, SG&A expenses contracted 30 bps to 22.7%, due to higher
comparable sales leverage.
At the end of the quarter, the company had cash and cash
equivalents of $92.3 million and shareholders' equity of $297.2
For second quarter 2012, the company anticipates revenue growth
between $179 million and $182 million and earnings per share in the
range of 8 cents to 11 cents (the guidance includes a pre-opening
expense of 4 cents a share). Comparable store sales are expected to
increase in the range of 1.0-3.0%.
For fiscal 2012, Shoe Carnival remains on track to open
approximately 30 new stores and close 6. Among the scheduled
openings, the company has already rolled out 13 stores in the first
quarter. The second and third quarters will get 11 and 6 openings,
respectively. This leaves the final quarter with no opening.
The company closed 3 stores in the reported quarter and intends
to shut down another 2 in the upcoming quarter and remaining one in
the final quarter. The company plans to finish the year with 336
Shoe Carnival, a leading retailer of value-priced footwear and
accessories, performed better than expected. The company's sales
growth is also on a good trajectory. Shoe Carnival offers a
competitive pricing to attract consumer in this value-sensitive
Management remains optimistic about its expansion plan which
includes the first two openings in Puerto Rico slated for the
upcoming quarter alongside domestic openings. While the solid
expansion plan will widen the company's market reach longer term,
it will face threats of higher pre-opening expenses in the second
quarter which will likely hurt its earnings.
Shoe Carnival, which competes with
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are maintaining our long-term Neutral
recommendation on the stock.
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SHOE CARNIVAL (SCVL): Free Stock Analysis
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