Shoe Carnival Posts Record Q2 Results & Raises Guidance; Shares Down 6.4%

Shoe Carnival, Inc. (SCVL) reported robust Q2 results, topping both earnings and revenue estimates driven by the positive impact of the company’s strategic initiatives and leading to growth in new customer acquisitions.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

Despite the Q2 beat and increased FY2021 outlook, shares of the leading footwear retailer were down 6.4% on Wednesday to close at $37.75. (See Shoe Carnival stock charts on TipRanks)

Markedly, adjusted earnings of $1.54 per share more than quadrupled year-over-year and beat analysts’ expectations of $1.37 per share. The company reported earnings of $0.35 per share in the prior-year period.

Further, net sales jumped 10.5% year-over-year to $332.2 million and exceeded consensus estimates of $292.56 million. The increase in revenues reflected a surge in overall demand for the company’s products, driven by a rebound in the economy and the easing of COVID-19-induced restrictions.

On top of this, gross margin improved 13.4 percentage points to 40.9%, driven by reduced promotional expenditures.

In June, the company announced a two-for-one stock split, increasing the total number of shares outstanding from 14.1 million shares to 28.2 million shares.

Shoe Carnival Raises Fiscal 2021 Outlook

Given the robust Q2 results and positive business trends, management raised its financial guidance for FY2021 well above analyst expectations.

The company now forecasts adjusted earnings in the range of $4.35 to $4.50 per share, while the consensus estimate is pegged at $3.11 per share. Net sales are forecast to be in the range of $1.21 – $1.23 billion, versus the consensus estimate of $1.17 billion.

For Q3, adjusted earnings are expected to range between $1.10 and $1.15 per share, while the consensus estimate is pegged at $0.62 per share. Net sales are projected to be in the range of $307 – $315 million versus analysts’ expectations of $292.9 million.

Cliff Sifford, Shoe Carnival’s Vice Chairman and outgoing CEO commented, “Our business fundamentals are the strongest they have ever been, which gives us the confidence to lean forward and aggressively plan for continued growth through the remainder of the year.”

Following the upbeat Q2 results, Pivotal Research analyst Mitch Kummetz increased the price target on Shoe Carnival from $46 to $52 (35.3% upside potential) and reiterated a Buy rating.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 2 Buys. The average Shoe Carnival price target of $47 implies 24.5% upside potential to current levels.