In the first three months of the year, Shoe Carnival's sales amounted to 281.2 million euros, down by 11.4% as compared to the same period of last year. The company believes that this was the result of lower traffic, “driven by persistent inflation and a nearly 9% reduction in federal tax refunds compared to first quarter 2022. Unfavourable weather also impacted net sales, with spring seasonal products down approximately 23% compared to the first quarter of 2022”.

Nevertheless, the company is hoping to “fuel sales acceleration once the broader economic conditions improve”, said Mark Worden, President and Chief Executive Officer, especially as the summer and back-to-school season approaches.

Meanwhile, the footwear retailer recorded a first quarter gross margin contraction of 50 basis points from the first quarter of 2022 to 35.0%. Its merchandise margin also decreased, by 30 basis points respectively, as compared to the same period last year, reflecting an increase in promotional activity.

In the first three months of fiscal 2023, the company's net income totalled 16.5 million US dollars, or 0.60 US dollars per diluted share, on a comparable basis to a 26.9 million US dollars net income, or 0.95 US dollars per diluted share, registered in a similar period of fiscal 2022.

Full Year Outlook

As the first quarter results came in below expectations, Shoe Carnival has decided to lower its guidance for fiscal 2023. It now expects full year net sales between 1.23 billion US dollars to 1.25 billion US dollars, a gross profit margin from 36% to 37% and earnings per diluted share in the range of 3.60 US dollars to 3.85 US dollars.