Shoe Carnival Down to Strong Sell - Analyst Blog

By Zacks Equity Research,

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Zacks Investment Research downgraded Shoe Carnival Inc. ( SCVL ) to a Zacks Rank #5 (Strong Sell) on Jan 15 after this footwear and accessories retailer trimmed its guidance for the fourth quarter of fiscal 2013 (ending Feb 1, 2014) on Jan 9.

Why the Downgrade?

The company has recently cut its revenue and earnings guidance for fourth quarter fiscal 2013. The slash in revenue guidance came in the wake of double-digit decline in traffic in the first three weeks of December due to a weak holiday season.

During the third quarter conference call on Dec 2, the company posted positive comparable store sales growth of 0.7%. In fact, the company delivered comparable sales growth of 5.4% and 7.8% in the month of October and November, respectively, owing to favorable weather along and strong Thanksgiving promotional offers. The company was confident of solid sales in the remainder of the holiday season. However, lower traffic during the holiday season along with a volatile retail sales environment hurt initial fourth quarter sales and resulted in lower-than-expected comps, which led to a cut in earnings guidance.

For fourth quarter fiscal 2013, the company now anticipates revenues between $203.0-$205.0 million and comparable store sales decline of up to 1.0%, lower than its prior expectation of $215.0-$219.0 million with comps gain of 4.0-6.0%.

Earnings per share for the fourth quarter of fiscal 2013 are expected to be in the range of 3-6 cents, significantly lower than its pervious expectation of 18-22 cents. The Zacks Consensus Estimate, for fourth quarter 2013 revenues and earnings per share is pegged at $204.0 million and 4 cents, respectively. For fiscal 2013, revenues are expected to be $888.0 million while earnings per share are expected to be $1.46.

This retailer has witnessed sharp downward estimate revisions after lowering its guidance for the fourth quarter. The Zacks Consensus Estimate for the fourth quarter decreased 80.9% and that for fiscal 2013 went down 11.2% over the last 7 days.

Other Stock to Consider

Not all stocks are performing as poorly as Shoe Carnival. Finish Line Inc ( FINL ) and The Men's Wearhouse Inc. ( MW ) are better-ranked retailers for apparels and shoes with a Zacks Rank #2 (Buy). Another stock in the retail sector Conn's Inc ( CONN ), sporting a Zacks Rank #1 (Strong Buy), is also worth considering.

CONNS INC (CONN): Free Stock Analysis Report

FINISH LINE-CLA (FINL): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

SHOE CARNIVAL (SCVL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: CONN , FINL , MW , SCVL

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