Shoe Carnival Gives the Competition Something to Scuff About

Commonly advertised as a “stock to watch for” over recent weeks, Shoe Carnival SCVL proved its worth today as it reported decent 4Q earnings, great full year results and projected an outstanding outlook for 1Q12. As a result, the stock peaked at a seven month high today, up $3.28. 4Q sales, while in-line, were not terribly impressive due to excess boot inventory, (likely thanks to the premature sun shiny weather and non-existent snow). However, Shoe Carnival's sales team helped to move many units and the company ended up reporting impressive earnings for the 2011 fiscal year. “Although our sales and earnings for the fourth quarter, and consequently, the 2011 fiscal year, did not meet our original expectations, we still recorded the second-best annual earnings in the Company's history,” Mark Lemond, Shoe Carnvial President and CEO said on the March 21 conference call. “In short, I am pleased with our earnings performance in 2011 and the way our management team executed our overall strategy, especially in the face of continued economic headwinds and certain tough product comparisons.” Pleased he should be, as sales grew 3.2% to $762.5 million, up from the year prior's $739.2. The good news did not stop there, as it was highlighted on the conference call that 2012 will provide many growth opportunities for the retailer with the help of consumer tax refunds, warm weather and store expansion plans. Sterne Agee took notice to the exciting hoopla surrounding Shoe Carnival today, subsequently raising estimates, rating (Neutral to Buy) and price target ($26 to $34) in accordance with what management projected for 2012. In a research report published earlier today, Sterne Agee said, “SCVL is benefiting from the very strong athletic cycle which is driving higher ASPs through innovation. Also, SCVL management is seeing modest improvement in the economy, and believes that their customer has more money to spend. Besides the ongoing square footage growth in the 7.5% area, an improving ecommerce platform, and having the toning business rock its way into history, it is clear to us that SCVL is taking share from some larger family footwear players. Given the history of strong execution, an improving economy and the current trends, we expect that SCVL will continue to gain share.” Shoe Carnival is not the only company benefitting from the weather and athletic footwear harmony. Foot Locker FL recently revised its five year plan to include ambitious store openings, doubled earnings and increased productivity of assets. It seems the shoe industry is on a steadily positive streak at the moment, with many thanks being given to Mother Nature. DSW DSW is also slated to open more stores, which revenues are expected to benefit from in 4Q12. It seems the recession and rising gas prices have yet to damper the footwear industry this year, and with weather becoming increasingly more pleasant, not much will be able to halt its steady pace. Shoe Carnival is currently up +18.02% YTD, trading at $30.46. Foot Locker is currently up +29.45%, trading at $30.88. DSW is currently up +25.7% YTD, trading at $55.43.