What happened
Shares of Shoe Carnival (SCVL -1.95%) were sliding Wednesday after a strong first-quarter earnings report wasn't enough to buck the broader fears in the retail industry after big-box chains like Walmart and Target badly missed bottom-line estimates.
As of 10:14 a.m. ET, Shoe Carnival stock was down 13%.
Image source: Getty Images.
So what
Shoe Carnvial said revenue was down 3.3% from the quarter a year ago to $317.5 million, but up 25% from Q1 2019, the last comparable period before the pandemic started, which it believes is a more relevant comparison. That result beat estimates at $314.1 million.
Gross margin in the quarter came in at 35.5%, down from 39.6% in Q1 2021, a period that was boosted by stimulus payments, but up from Q1 2019 at 29.6%.
On the bottom line, the company reported earnings per share of $0.95, which was better than its own estimates at $0.86. Again, that was down from $1.51 in the quarter a year ago, but up from $0.46 in the comparable pre-pandemic quarter.
CEO Mark Worden said in the press release:
Our strategies to double our operating profit compared to the levels before the pandemic have worked. Our first quarter results demonstrate the structural profit transformation and increased scale our plans have achieved compared to pre-pandemic results. With gross profit margins in the mid-thirties, double-digit operating profit margin and store productivity above $300 per square foot, we are incredibly optimistic about our future growth and long-term profit potential.
Now what
The company held its top-line guidance for the year at 4% to 7% growth following 36% revenue growth last year, but raised its bottom-line forecast to between $3.95 and $4.15 from a previous range of $3.80 to $4.10. The consensus is $4.10.
Cost-cutting efforts appear to be paying off for the company, but investors seem to be skeptical that it can deliver target especially after macroeconomic warnings from retail giants like Target and Walmart.
Based on its full-year forecast, Shoe Carnival is trading at a price-to-earnings ratio of less than 7. If the company can hit that target, the retail stock should move higher.
