Shoe Carnival Gains As E-Commerce Sales Fuel 3Q Profit Beat; Analyst Raises PT

Shares of Shoe Carnival gained 3.4% in Thursday’s pre-market trading after the footwear retailer’s 3Q earnings of $1.03 per share topped analysts’ estimates of $0.70 and gained 9.6% year-over-year, reflecting robust e-commerce sales and higher gross margins. The company’s gross margin increased 110 basis points to 32% in 3Q.

Meanwhile, Shoe Carnival’s (SCVL) 3Q revenues remained flat at $274.6 million and missed the Street’s estimates of $275.6 million. Its comparable-store sales grew 0.9% versus the prior year’s comparable sales of 3.5%. The company’s e-commerce sales, however, spiked 150% year-over-year.

Shoe Carnival’s CEO Cliff Sifford said “We achieved same store sales growth and delivered the most profitable quarter in Shoe Carnival’s history, despite the extended back-to-school season.” He added that “Our disciplined focus on financial flexibility and the strength of our business model continue to fuel our market leading performance notwithstanding the ongoing disruption caused by the global pandemic. We are excited about our market share gains in the quarter and believe our enduring competitive advantages position us for future growth.” (See SCVL stock analysis on TipRanks)

Following the 3Q results, Pivotal Research analyst Mitch Kummetz raised the stock’s price target to $48 (34.2% upside potential) from $45 and maintained a Buy rating. The analyst said that “this year, demand was so strong for athletic shoes that SCVL steered away from some of these planned promotions.”

Further, Kummetz remains bullish on the company’s 4Q margins and said that “For 4Q, we see continued strength in athletic, and while we can’t predict how SCVL will manage this demand, it seems likely that the company’s athletic business will be more profitable than a year ago. Regarding non-athletic, boots are a big part of the 4Q mix, and we believe that 4Qtd demand has been weak for boots on warm weather.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 3 Buys and 1 Hold. The average price target stands at $42.50 and implies upside potential of about 18.8% to current levels. Shares were down by 0.8% year-to-date.