Shoe Carnival Reports Decline in Revenue for Q3 2023
Segments of revenue
- Revenue from Shoe Carnival stores declined by mid-single digits during the back-to-school season, with most merchandise categories experiencing a decline, partially offset by growth in children's athletics.
- September and October net sales were lower, resulting in a high-single digit decline in comparable net sales for the quarter. This decline was primarily due to softness in seasonal and fall merchandise sales, including boot sales.
- E-commerce sales, which accounted for approximately 10% of merchandise sales in Q3 2023, saw favorable growth following the launch of shoestation.com in February 2023 and increased sales through shoecarnival.com.
- Despite the decline in revenue, Shoe Carnival achieved its third-best Q3 in terms of EPS and net sales, only surpassed by the same quarter in fiscal years 2022 and 2021.
- The company's investments in customer relationship management (CRM) systems, store modernization, and e-commerce capabilities have continued to yield positive results. These investments have led to sustained higher gross profit margins, increased customer conversion, and growth in loyalty members compared to pre-CRM and pre-modernization results in 2019.
- The decline in revenue from Shoe Carnival stores, particularly in September and October, impacted the overall performance for the quarter.
- Increased promotions on seasonal and fall merchandise contributed to a decrease in merchandise margin, which affected the gross profit margin.
- Shoe Carnival maintained a gross profit margin exceeding 35% for the 11th consecutive quarter, despite a slight decrease compared to the same quarter in the previous year.
- The total number of loyalty customers grew nearly 8% compared to Q3 2022, and Shoe Station loyalty members experienced an 18% growth.
- Store conversion was over 400 basis points higher compared to pre-CRM and pre-modernization results in 2019.
Shoe Carnival faced challenges in Q3 2023, with a decline in revenue primarily driven by lower net sales in September and October. However, the company's investments in CRM systems, store modernization, and e-commerce capabilities have continued to yield positive results, including sustained higher gross profit margins and increased customer loyalty. Despite the decline in revenue, Shoe Carnival achieved its third-best Q3 performance in terms of EPS and net sales. The company's focus on customer relationships and modernization efforts positions it well for future growth opportunities.