Release Date: May 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales grew 6.8% to $300.4 million, surpassing expectations.
- E-commerce sales continued to grow double digits, driven by the relaunch of ShoeCarnival.com.
- Gross profit margin expanded to 35.6%, marking the 13th consecutive quarter above 35%.
- The integration of Rogan's Shoes is progressing ahead of schedule, with expected synergies to be fully realized in fiscal 2025.
- Shoe Station net sales grew faster than planned, increasing in low double digits.
Negative Points
- Comparable store sales declined by 3.4% for Q1.
- SG&A expenses increased by $6.7 million versus Q1 2023, impacting profitability.
- The company faces uncertainty in customer buying behavior during non-event periods.
- The integration of Rogan's Shoes is still in early stages, with full benefits not expected until 2025.
- Higher income tax rate in the quarter (25.4% vs. 22.6% prior year) resulted in a headwind to EPS.
Q & A Highlights
Q: Can you clarify the impact of the calendar shift on Q2 sales?
A: Patrick Edwards, CFO: The calendar shift will add approximately $20 million to Q2 sales. This shift includes a $25 million gain from Q3 and a $5 million loss from Q1. Overall, Q2 sales are expected to increase by 12% due to this shift.
Q: What are the expected sales and EPS for Q2?
A: Patrick Edwards, CFO: We expect Q2 net sales to be about $330 million, up from $295 million last year, representing a 12% increase. EPS is projected to be around $0.80, compared to $0.71 in the previous year's Q2.
Q: Can you provide more details on the sales trends by month in Q1 and early Q2?
A: Mark Worden, CEO: February was slow, but sales picked up in March with low single-digit growth, accelerating to double digits around Easter. April continued this positive trend, and early May has shown encouraging results, particularly in sandal sales.
Q: How has the digital-first marketing campaign impacted sales?
A: Mark Worden, CEO: The digital-first marketing campaign has been very effective, driving significant sales growth across all banners and geographies. We saw immediate improvements in sales after launching the campaign, particularly in sandals.
Q: What are the key categories driving growth at Rogan's?
A: Mark Worden, CEO: Rogan's has shown strength in the work category, high-end performance running, and kids' footwear. The integration is progressing well, and we expect it to be fully integrated into Shoe Station operations by early 2025.
Q: How are you planning to minimize the impact of non-event periods on sales?
A: Mark Worden, CEO: We will continue to invest in our digital-first marketing campaign during non-event periods to maintain sales momentum. We are also preparing for a strong back-to-school season with increased marketing investments.
Q: What is the difference in average transaction value between Shoe Carnival, Shoe Station, and Rogan's?
A: Mark Worden, CEO: The average transaction value at Shoe Station is about 20% higher than at Shoe Carnival, and Rogan's is about 15% higher than Shoe Station.
Q: How are you leveraging customer analytics for growth?
A: Mark Worden, CEO: We are using advanced customer analytics to identify market opportunities and drive engagement. This includes evaluating data on community characteristics, purchasing trends, and product assortment to optimize our store locations and marketing strategies.
Q: What are the plans for integrating Rogan's into the Shoe Perks loyalty program?
A: Mark Worden, CEO: Rogan's will be fully integrated into the Shoe Perks loyalty program and Shoe Station operations by early 2025. This will include being part of the ShoeStation.com experience and leveraging our CRM capabilities.
Q: How are you managing inventory levels?
A: Carl Scibetta, Chief Merchandising Officer: We are optimizing inventory levels to maintain a fresh product assortment. Inventory at the end of Q1 was $411.6 million, up due to the Rogan's acquisition. Excluding Rogan's, inventory was down 6% in dollars and 9% in units compared to last year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
