US' Shoe Carnival's net sales down by 5.7% in Q2 FY23

31 Aug '23

2 min read

Pic: Shadowspeeder / Shutterstock

Insights

Shoe Carnival's Q2 FY23 net sales were $294.6 million, down 5.7 per cent y-o-y.
The decline was due to soft traffic in lower-income households and urban markets, partially offset by a 5.4 per cent increase in e-commerce net sales and growth from new Shoe Station stores.
The gross profit margin was 35.8 per cent in the second quarter, down 40 basis points.

Net sales of Shoe Carnival stood at $294.6 million, marking a decline of 5.7 per cent in the second quarter (Q2) of fiscal 2023 (FY23) compared to Q2 2022. Comparable store sales were also down by 6.5 per cent. Despite improvements in overall conditions since the beginning of 2023, weak traffic persisted in lower-income households and urban markets. This was partially offset by a 5.4 per cent growth in e-commerce net sales and contributions from the newly acquired Shoe Station stores.

In contrast, net sales of athletic merchandise remained flat in Q2 2023 when compared to Q2 2022, despite the reduced store traffic. This stability is attributed to an improved assortment of brand names.

Gross profit margin stood at 35.8 per cent, down by 40 basis points. Merchandise margin decreased by 20 basis points. Buying, distribution, and occupancy (BDO) costs were lower this quarter compared to the prior year, owing to reduced freight and distribution costs. However, these savings were partially offset by investments in store modernisation and increased rent associated with operating more stores. Due to the lower net sales, BDO eroded the gross profit margin by 20 basis points, according to the company's press release.

Mark Worden, president and chief executive officer, commented, "Our Q2 results show the positive momentum of our strategy amid challenging economic conditions. Compared to Q1 2023, we've seen improvements in net sales, earnings per share, and market share, while also ramping up our investment in branding and in-store experiences. In August, we opened our 400th store and have now modernised more than half of our existing stores."

Worden added, "While we've seen some alleviation in inflationary pressures, many of our urban customers are still facing economic challenges. As a result, we're adopting a measured approach for the remainder of the year. With a strong balance sheet and effective strategy, we're well-positioned for growth as the economy recovers and continue to explore both organic and acquisition-based opportunities."

Market conditions in the early part of Q3 2023 show modest improvements over Q2 2023. Sales and profits in August were among the highest in the company's 45-year history, and product margins are nearing record levels. The back-to-school shopping period in August accounts for half of the company’s Q3 gross profit. Given the performance so far, the company remains on course to meet its full-year gross profit margin guidance of 36 to 37 per cent.

Fibre2Fashion News Desk (RR)

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