SCVL - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to Shoe Carnival's Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. It is also being broadcasted via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. cause those actual projected could materially to factors from different in risk the results company's be These such statements.

revisions be any included as to date. any over today's any I'll SEC on these should begin. of may announce of cautioned not press remarks. the today's events statements considered publicly statements, of forward-looking contained undue and with on to are or the to to factors developments. discussed to conjunction obligation Forward-looking conference President opening reliance Worden, place the release. Mr. risk Investors factors disclaims in CEO statements and which risk in Worden, conference The or Mark filings turn company's now today's forward-looking the company reflect of you to or Mr. for the update call today's Shoe earnings press in release discussion speak only future Carnival

Mark Worden

call. XXXX welcome Good to and conference morning second Shoe quarter earnings Carnival's

Joining me Officer; Officer. Kerry Financial on Chief Chief are Carl Scibetta, and today's Merchandising call and Administrative Jackson,

a delivered communities counts. our announced X,XXX Carnival our faced Throughout press XX proud any environment, and fiscal inflationary our commitment shareholders. for except traffic XXXX. households year team our this that surpassed this per members share to accomplishment quarter, six morning's putting of and customers, nearly disposable on challenging incomes of release, I'm year their already and Shoe thankful pressure for the the years our on American the in earnings of in our of full months during operation, As so first for earnings

growth the strategic historical accelerated quarter. these increase as progressed. double profit plans an external to profitability in headwinds, XXXX has versus during back of half the company's experienced Despite continue Furthermore, margins also to operating work. the levels supply chain We disruption

during and apply partnership our consecutive merchant digits. XX.X% margins the customer This of delivered in the promotions. profit throughout operating XX.X% transformation delivered helped the brands stimulus strategic sustainability illustrate highly the We the and unlock sequential XXXX operating of assortments operating lapping company achieved, customers' freshest above year. from product profit further quarter in to that provide levels. growth the period. most operating we've in has margin worked more vendors marked was our profit profitable with Our X.X% achieved the clear double were Together, no QX, favorite Throughout impacted QX. the been organization has To encouraged quarters resulted with normalized operating XXXX in stimulus profit prior XX-year our into have in close the they QX quarters. The XXXX, for analytics benefits profit visibility margin sixth

versus up XXXX. fiscal XX over record, have XX% sales for the increasing we XX.X% up compared just XXXX between our to exceptional, QX, margins, XX.X% stimulus-benefit benchmark Overall nearly historical to the the of the been counts of half our back COVID-impacted the membership Customer As these Shoe new to underlying understand sales below a to growth climbed and up are during We company's XXXX. levels. providing expectations doubling end to XXXX setting XX.X% operating for grown XXXX. customer Non-athletic years and at achieve and guidance and sustained profit and Carnival XX% the growth for such, achieved is first loyalty sales today, has at X% margin million XXXX. believe operating versus way and best

fully genders team offset our net category top X% it sales global XX.X% grew and as in performance in non-athletic posted inventory athletic QX by of XXXX. Related driven sales styles our planned. supply to QX on chain not XXXX, of support July supply stores the shipments and Compared to across categories, to the key make and chain, into supply QX during June the by plan XX.X% through time retreated The XXXX, in net During chain our delays. company athletic did sales XXXX. declines solid

forecasted pull shortly. during our will we QX, led athletic back during Carl on athletic and steeper supply loaded our having up this to due overall and XXXX, sales category the While declines. to inventory to product down break delay Kerry customers position trends

began As this QX inventory began, quarter the below our as arrive, remain desired we but stores. levels delayed to athletic products replenish we

billion annual $X.XX our $X.XX billion. such, sales guidance As we to updating are to

during our top-line, sales months the environment engage is demonstrating disruption important range includes QX sustaining to the growth our below to in level XXXX, our growing facing and year, XXXX, the XXXX growth levels on date to ambitions XX% an to period inflationary versus would XX% now August. channel back-to-school XXXX represents versus XX% athletic up levels better ongoing. we most of between original reflects net supply. consumer with record and encouraged While the this XXXX of and by top-tier XX% build challenging After share to growth like growth of to sales, and now short-term update customer counts the are for XX% our I

we half versus down the drive and pace seeing QX are have inventory Based our are third days low we of any to profitability. is that strong shopping results for to hand, in the are guidance, on previously of include mid-single guidance achieved athletic in margin the XXXX XXXX at position, range $X.XX gross August into three-day operating Taking of of annual quarter-to-date, in be Shoe the to Combining August grow Carnival's in the sales EPS profit. sales our XXX through the is profitability achieved margins and deliver will including earnings deliver basis to and our for the With share targets ranging trends, discussed encouraging digits. sales year, versus lower with inflation our typically QX increased earnings in quarter profit side reiterating plus per mid the half third XXXX. current Sales during over points and profit account for operating most back-to-school XXth increased pacing likely margins, Profitability on and very the per track for anticipate our over QX back-to-school sales first SG&A guidance. of annual the for on on compared solid between month guidance to the sales start we the gross is best history. XX% We to and share quarter. $X.XX. period XXXX three $X.XX

to key now plans. on toward progress an on strategic Moving update our

sales previously were expectations announced were XXXX. banner of Shoe Operating half expectations profit million of the by during full exceed First, Station continues our approximately $XX for to XXXX. expectations to $XXX Shoe our communicated million at year XX% on now first expect Sales Station all fronts. outperform previously XX%. We

efforts the banner of Our preliminary are recently far of pacing our ahead time lines. integration acquired

We best have marketing. and practices operations realized gaining significant efficiencies merchandising, back office as well across and synergies as

raising are between for such, Shoe profit a to we As operating range XX% for Station our expectations XXXX. XX% and

identification road to efforts the the site expect chain store we build XX progress years. next exceed to and to horizon store fiscal stores in the new expansion the south, out throughout XXX map stores acquired XXXX to and grow continue during XX Finally, five the to

significant make to we fleet program. Second, on progress modernization continue our

the stores on the XXXX XXXX have of complete Our is modernized plan summer XX% fiscal of and over by track. program end by full to of the

Shoe modernized year rolling experience store of QX new and the Shoe In out Station Carnival Georgia. launching moderate in we now, to prototype are store in both and addition openings Alabama a this

with our customers. unprofitable Third, us to which a text at capabilities, we reach and our to have able one-on-one our advanced drive allow via These deep and promotions. customers attractive CRM, communication to tools e-mail profitable us platform analytics we're to without continue and improve and give digital marketing highly sales margins targeted

sharing end XXX year, such productivity not a an closures improvement completed we marks have the no we our exciting call. complete platform earnings profitable year years track quarter, in and We'll XXXX our are technologies, loyalty both is so This that undergone a planning integration rate shared enterprise. XX Station at CRM and operate will at we XXXX. encouraging improve we fans. Shoe across across the our enterprise, we the CRM we as and extend are for launch moment store begin and will Carnival plan, to first our during year. CRM this early transformation the years. results into very program store next very banners; this by In And the to rapidly this this and Shoe QX this further closed. is across fiscal growth Shoe in are of on During any will be perks the sequentially growth Having stores expecting scale accelerate conclusion, profitability excited locations of seeing expand profit insights sustainable excellence five the building to are organization fourth, were

sales operating margins year already. we While of was potential double-digit in lack prior first and per XX share of delivered our of that than athletic XX earnings full half the inventory earnings margins, excellent more limited gross XXXX,

With during customers financial highly season, the ask I'll and remainder strategic XXXX. against inflationary key to our deliver that, Our and plan to Carl pressures. engaged our track remain the profit are We've targets further. despite critical back-to-school fiscal generated we the of performance on discuss for our

Carl Scibetta

Mark. you, Thank

today's highlighted, is strong strategy our evidence are results Mark As that working.

ended impacted take chain demand Athletic to anticipated deliver the consumer nonathletic away balance. athletic inventories this receipts teens inventory and we athletic-nonathletic from We issues availability. simply inventories versus second shift we Atlantic fashion to during product quarter, to unable were normal to Supply XXXX. advantage of the in within vendor change. down our this our non-athletic unparalleled relations, XX/XX a our experienced high However, meet sales categories. quarter the Despite position product demand move

will the quarter. we believe Our as be the team third diligently to athletic inventories continues looking ahead, and chain we replenished supply move through manage

guidance are addition, fall XXXX, down supply of of the At of the well year. product we an nonathletic versus and are quarter fiscal from perspective better XXXX. deliver new inventory sales the inventory flowing remainder was X% In on much positioned for end, forward our weeks and profit deliveries than to

carryover are aged and inventory both seasonal Importantly, line. inventories in

no we year. lot dump As and not do discounts in goods a inventory see second of a deep result, the the for or have need half of

late men's, comparable mentioned within as athletic strong categories Turning these XXXX. down inventory the area. slipped with mid-XXs. weakened in quarter's low to women's Versus teens The quarter off and were due down end quarter Mark children's to saw finished the results. store sales to challenges last started the compared athletic The and sales we by deliveries. year, levels athletic

over XX% highlighted, XXs; the the mid-teens. XXXX. and driven over XX%. in Men's children's shoes. up were both was XXs sandals, were nonathletic previously high men's high high casuals, Increases up sales were XXs. nonathletic XX%; with men's up nonathletic up Sales XXXX. I saw singles mid-singles. shoes women's versus in Men's the store, versus in Versus as infants up mid-XXs in continued XX% driven up children's boots sales up up the in casual the However, over and high were were in down over and XXs. was in strength last we up year, Women's dress, up by nonathletic Children's up were the and and low by dress

the categories product nonathletic in the remainder seeing With and results XXXX. see we flow, anticipated trends we of for are the strong sales

not earlier, Mark As a promotions insight Using customer to deliver continue through loyal our path gives gives our dilutive. and data are margins. data continue from effective engage excellent highlighted we with provided smart, us the to that growth. them us to best-in-class This consumers into we margin drive CRM, product

traffic customers Before to increased as I margins. key We loyalty. storewide our brands customers. inflation incentives call our recently to This as along consumers, ongoing drove Kerry, events with drove of created to program strategies. store turning products buster and well We build at new these promotional the an highlighted one and back-to-school loyal would existing traffic engaged and that gasoline while like grocery highlight brand accretive over

past the promotional we marketing With confident in analytics-based innovative of the our levels these campaigns, have help the quarters. several strategies drive that we seen margin are will and marketing to continue

history our inventory the three-day period will flows fact, the combined athletic inflation this I a of the any guidance and modernized our have strategies, the best improving company's days that, produced strength feel With the and of sales levels Based seen of to promotion on margin in for confident categories, we buster delivered year. effectiveness will call sales year. deliver the strong three the In over Kerry entire the emerging of throughout the promotional Kerry? we and on profit turn of balance for review the we financials. fashion

Kerry Jackson

$XXX.X sustainable quarter, most previous successful are from Thank XXXX the quarters, to period results second as relevant store sales and transformed million stimulus quarter and sales driven the to banner last store $XX.X compared comparable Carl. and comparable by this normalized were profitability results in to the on Station XXXX, with million Similar sales were down in year-to-date see of in QX pandemic. X% XX.X% sales demonstrate acquired pre-pandemic Shoe only the from the you, XX.X% QX, to we These $XXX.X QX a banner. to sales in stores million store QX Net Shoe compared surpassed sales and the Year-to-date December XXXX QX Against and of excited banner enhance history, year's sales declined a another I'm for XXXX, were increased profile in $XX.X XX.X% highest year. of increase as start XX.X% store in of and opened net our million QX for were comparable XXXX, from you the QX the were increase $XX.X prior in which These of company. the versus a banners financial total second sales comparing sales by last X.X% we Carnival increase increased share the Station Sales again quarter nearly equally highlights the million to was both XXXX the XXXX. added net have top Shoe or contributing the with year which against sales XX.X%. from year-to-date. increase. or

XXX increase margin expenses. merchandise quarter to costs was point inflation increase on due margin basis basis partially offset XXX was QX in compared second of An Our fuel impact gross increase XXXX. points a of XXX by the basis in profit XX.X%, distribution point transportation of and to

costs, transportation increased of fuel merchandise over impact our basis margins the Excluding points. XXX and

We year. expect the costs persist higher the remainder for of transportation and fuel

operating cash, the compared million diluted in XXXX. per increase highest share per this XX.X% The our sales or in QX in inventory compared earnings the to was higher continue of operating quarter was sales second us is in in of distribution second to second the increase year-over-year share. XX.X% or in will margins, the half point or This QX allowing increase opened sales of remainder with had income XXXX. quarter rate. or expectation of quarter. XXX% the the million and or of is sales the consecutive of is We $X.XX in this more or earnings compared to an history Mark X diluted of of costs Station year to these percentage double-digit to for by to We for XXXX the million, million This in the compared half QX, due closed in of points the year. annual QX net the the our and more is up we XX.X% second expenses $XX.X million in increases out inventory of leverage the $XX.X However, of line sales. $XX.X the feel XXXX. operating expectations QX Approximately million Shoe outstanding by securities XX.X% supportive SG&A XX% equivalents than quarter last basis $XXX.X mentioned, in increase At for our compared increase to quarter $XX.X And inventory to income. $XX.X of stores the the XXXX. double of million of of run expense no we income second year, buying sales with which XX.X% occupancy Net is moderate quarter cash of are which end XXXX XX was and acquired second the $XX.X debt. marketable year-to-date and as sixth historical year. this total our of an double-digit leveraged

As building QX our this year. is when time expect our we year, the typical back-to-school be for we’re cash balances inventory, as of low into for to the

year, any half share today, year’s of the of repurchases. With the provided second more August, with our effect a balances the end little influx with should the this we $XXX cash of additional balances are million, expectation in balance below cash positive of the from heading million excluding by in than cash $XXX operations year of last sales cash

XX, Summarizing repurchase $X.XX gross from sales margin operating second $X.XX margin from under year, As XXXX, during diluted of XX.X%, earnings range company to range $X.XX. and July to And range XX.X% from quarter, we XX.X% billion from billion, to to profit program. shares repurchases future were our to to expect share per for expectations to the had million to $X.XX for share repurchased. range fiscal XXXX its $XX.X available no the XX.X%

However, based of second are increasingly to Carnival half a In mid our profitability to guidance. for of annual quarter comfortable Shoe the expectations, compared more range sustainable on we and our continuation closing, levels. are lower with year-to-date our performance results second pre-pandemic

execute and in acquisitions. and poised second growth review. This for organic confident our selective are to year through concludes a modernization long-term this of ability combination in are We our of we the half financial expansion and store

I’d the to Now, call like for questions. open

Operator

[Operator Research. the Instructions] will Mitch the Kummetz of line with Seaport question We from first take

Mitch Kummetz

Thank I taking the just athletic you, for and better want there. business and inventory questions. the Yes. thanks my Carl, understand to

you your more going positioned inventory non-athletic. made comment prepared that in you the the remarks the think I that quarter towards into

through athletic of in understand late that or the So was bit? shortfall, to the know maybe shortfall you go due right versus I little word, I of occurred how how maybe Can trying was challenges some kind quarter that position guess in inventory the a you going much just the of during to don’t supply quarter. I’m the the chain

Carl Scibetta

And to by athletic business relatively obviously products. new was of Sure, in delay Mitch. hurt flat. We it for receipts quarter the be plan in athletic back-to-school the fresh

quarter, athletic we that and that and the the deliveries really were in product were sales on affected sold of the through side. back, the beginning the at So shape pushed the good

that going we’ve and more over home off we fashion outdoor athletic on a frankly, been based side, that focusing after physical business, were in tied multiple that saw aggressively to non-athletic on the the activity. more products of consumers and really move years really year taking at as were into staying categories On

Mitch Kummetz

on then that based in quarter, year-over-year. you weekly Okay. like down XX% And press in was the the mentioned release, averages inventory the athletic

And kind that through see third do of you does moving where quarter? that stand So now? the where

Carl Scibetta

inventory, Athletic Mitch?

Mitch Kummetz

yes. Yes,

Carl Scibetta

end we’re that resources, of we we in. the see We deliveries athletic be improving. And from it we in the anticipate our for our in to as getting the the to shows inventory position improvement wanted quarter by be an move through Information quarter.

Mitch Kummetz

Okay. And I’m bit. to little guide trying sales then reconcile the a

I guys mid-singles, think is down low that August to are to three-year. like implies QX on three-year. down XX% mid-XXs, said mid-singles. sounds I I take sales the you up low kind think to three-year sales a If date again, on a that of up your It growth

me on from kind how is get to low on mid-teens inventory help mid-XXs based a the just of Or understand So of that we improvement again situation? the three-year? to

Mark Worden

of as also in digit seen markets was a and to low-single Hi decline continued the the and the digit to day a we of operate two-fold. the August, positive traffic to a improvement. addressed. gas day. Mitch, the negative gas low towards back to in. inflation traffic the gas receded prices from got has It the direct We’ve quarter as There’s across declining of traffic price rebounded the one, end direct improvement as of positive spiking and the beginning But quarter. by to the already It’s athletic turned traffic July low-double It’s mid-June $X middle second, increases correlation in it’s Mark. July correlation what of with in Carl it’s inventory time situation, surpassed and we

an the as in see shortfall summary, We shared And the the already inflation, being it year. So unexpected with believe sequentially. we results. we’ll to improving traffic tied we impact anomaly very with seeing QX to QX, that of see athletics we’re in combined in strong

Mitch Kummetz

merchandise Shoe Shoe maybe could consumers businesses. different. the are and difference The little the I to in then a mix know performance And bit lastly, Carnival bit the Okay. you speak Station a different. is little between

of groups health you in talked seeing you of Station of price about the if merchandise I structure. wondering consumer point gas you’re consumer consumer, versus how Just the kind selling Are Mark, price you those about in the the of a or it’s are that – prices. behaving you’re the Shoe know much and different points or the impact as that two think inflation, kind difference maybe selling Carnival.

that that’s discuss bit, Thanks. just for and maybe little it So me. a

Mark Worden

Yes.

Shoe Station outperform we seeing far We’re what thought.

household resilience. fact, to back hypothesis out we’ve expectations. the to early the far is business And was be profitability for business. complementary had $XX,XXX banner $XX,XXX Shoes would What a is frames, And sales, as absolutely sales continue would higher show higher that range. the healthy, seeing Shoe Our profitability from incomes concerns help during that to we’re outpace far consumer Station our consumer no guided time this above The inflationary is outpacing belief was or inventory higher synergies balance our true. first The Station continuing is in There’s year. up. that

lower So demographic the acting consumer than as is particularly the Station, as the differently spiked in at the Carnival Shoe inflation been has that really consumer urban banner, pressured it QX. of Shoe segment healthy is

what We’re pleased very, very we’ve purchased. with

growth expand next doing think years. be the engine message this I is, going is so and we’re ready in for our rapidly to

Mitch Kummetz

luck. again Thanks and good Okay.

Mark Worden

Mitch. you, Thank

Operator

Williams question comes with Poser of Please next line Sam from Your ahead. Trading. the go

Sam Poser

Thanks gentlemen. for taking question, my

you give on Shoe all – Shoe you terrible, some I I a the normally first can math based Station. When is at $XXX half and as us talked mean, is with secondly, historics? mean, you trends view the back – million are now revenue you And you I us know. on better based than revenue? can Station’s mean, about we look – Just on conservative being half give my

is your Station? of on accretion EPS numbers, Shoe based the So what

Mark Worden

surpass human and rate about guidance accounting It’s with range $XXX Shoe things that’s coming think With achieved back the of across the into the office, all track was run overall the XX% the the by original that first the Shoe XX%. million for integration synergies efforts million to we’re resources, the approximately on synergized half, higher Sam. $XX and Carnival now enterprise. pleasing in like the Mark. really What us broader Hi, takes Station, We though been entire is year. to

expectation has have further. line even in op the to pacing and the be progress accretive XX% margin be potential if now with synergies original Carnival XX% Shoe either Our will in XX% is to or slightly

Sam Poser

as And that, with EPS associated the Kerry? as far

Kerry Jackson

We I that should you right to Sam. – don’t have now, me to that. on back get with have We’ll

Sam Poser

Okay. let’s the the it And you of Carl, looks within guys where us know trends, look – is a – And some seeing, and the seeing how than down non-athletic are is? the the that same categories and do break you’re when you best you non-athletic bit you’re differently business – give that say, you little at everybody Can the dress, at I dress you best believe on sustainable the others way. or not improvements?

Carl Scibetta

Sam, think the been sustainable. We’ve dresses dress is running I business very on April really XXXX. hot since

categories back And up see product. that dress. see their closets continuing fill as in current be I multiple more business with strong that consumers we to of progressing So

gain and to area platforms, casual as in aggressive in of trends, continues non-athletic the XXXX the fashion as based fall of that I’ll in business. and XXXX the ‘XXs for and elements emerge Those all of that, Beyond a the consumers’ just because seeing in XXXX pandemic. sort of same trends, took behavior on change hiatus emerge piece cannabis we sports of and started bottoms, late well that non-athletic more shoes, say, business combat traction, the the

Sam Poser

for like-for-like And you’re talk inflation then about product? what seeing on you product lastly, can

Carl Scibetta

products probably, digits. inflation rate would say, on going third single I an was that saw quarter, into We high that

temper that the containers with cost freight down. of cost of and seeing We’re going now the

see that We have we out to And based move inflation. were into forward. not as do that seen any on any consumers increases resistance leveling price forced our by we we

Sam Poser

I’ll of amount versus just percent this The of Okay. what same new time more. at your – you pre-pandemic? the Carl, year call the in sneak time product one – what

Carl Scibetta

they my we of the it where much good in we said, we I year better products better much don’t non-athletic was year. inventory, buying ago been had we like flow pre-pandemic. I with that are will ago, supply deliveries more say, and feel feel from remarks, than from change in inventory disruptions in in line would XXXX. opportunity year compared would a a I boot were. ago, see in it’s much much pretty major And good coming year have a boot any with a as just to chain about last And than where

Sam Poser

very right. All much. Thanks

Continued success.

Kerry Jackson

the the let EPS. finish of EPS asked guidance, Yes, about me of off $X.XX the Shoe should about high be you end question At Station our accretive.

Sam Poser

Thanks, Okay. Kerry.

Operator

question line Crespi Monness, next comes Please . the Your of Jim go Hardt and ahead. Chartier from with

Jim Chartier

you then cost my for taking first integration Good morning. half incremental the to any question. the to related Thanks half of related did back in Station Kerry, And that in either. have Shoe costs the of the year? any

Kerry Jackson

Not material and not that we weren’t expecting.

Jim Chartier

quarter? there? What’s Is a Okay. And be that? for the to e-commerce for fourth coming outlook it going then ready Shoe Station, how launch is the

Mark Worden

Mark. It’s Jim. Hi,

launching our platform CRM quarter. We’re this

We’re thrilled.

the so that Shoe on technologies them at successful bringing been We’re here have to Carnival.

that’s we’ll our can shoestation.com us the able XX rolling which this running banners, and out will launched talk completely a and our after program daily Perks we million plan. And plan Shoe We’re this roll be quarter, again the across up over quarter, later have basis. out is by this on to holiday our season to year consumers is

Jim Chartier

Great. of for think year. stores opening for the next thoughts by Station said Shoe What’s next outlook of pipeline I Carnival XX end then banner? you any the the Shoe store on year? for And kind the

Mark Worden

annually store real years. becomes in available as and XXXX starting still XXXX counts more accelerate to double-digit We’re estate open in and out aiming

plans And open fleet XXX said, with we’re with store that our two and track on current that store the as for no grow remaining so in decades. closures proud is first the an for We’re productivity store now milestone to account, which time we is important we’ve completed the us. entire view quite

specifically acquired Station, December in we XX year. said, last it at when Shoe stores you As was

We’re to of stores they available. for surpass looking as XX on end target we’re as sites new by quick become and the fiscal XXXX,

Jim Chartier

luck. had. I all That’s of Great. Best

Operator

Mitch the Research. Your next of line from question Kummetz comes with Seaport

Mitch Kummetz

Carl, last boots of inventory, kind how a your year, some I think comment talked trends, of the in about the and of you then of feel said constraints especially so follow-ups. you I you also that of Thanks. last A that. things to relative that about business better us the think comparison. out of sense made you have to Sam’s played Can around just good like you dress fourth lugs, kind in questions we some response one of boot And couple remind the just the of quarter, year.

to And particularly So how trends? do then more. in fourth have those quarter? they are the important your about And how boot one you feel I business,

Carl Scibetta

entire Sure, the frankly, us XX deliveries, back pressure as we December which anywhere a of on a through and in flow move a Mitch. XX XXXX, to November, flow. even obviously month think days, put more see that’s deliveries of lagged came time then January. inventory from more We much opportunity the boots frame, into as like situation with and October had we Boot levels inventory we into normalized go throughout we into normalized

some them. chunkier well, to see far boots lace-up strong, what As in combat lug see that trend, continue and in heels especially on we see as and with we as bottom we boots, performing

categories being not good life – especially feel We some the boots, but about booties maybe platform but a that continue we maybe in then although there, some see to taller bit really And some Chelsea little category strong. boot other big and little shafted opportunity. the a out boots bit a of see are of anymore, of booty dress we

Mitch Kummetz

not the last late on follow-up correctly, gone – stuff may and I of So then I boots deliveries stores. and some year, question. If have the the boots one I got given warehouse to think of recall left the hit some the other a on

were there some not. have packaways. buying would maybe I or I there on margins be would that then accretive, know margin that on it’s versus Is I more guess XXXX. if don’t benefit mean, of so given for I And stuff from one you’re And the kind last fall of the that that? the material some pretty cost any product question. some again, of

Carl Scibetta

that may offset some the they particular in delivering inflation on and significant of don’t that margin There benefits new, we think we’re the will know I items, overall. saw the be other it’s of to items those I

Mitch Kummetz

Okay. when the of a margin lastly, this of kind it’s macro year. higher the costs. look and op consumer to tracking are And you there’s inflation I tough think year, And XX.X% distribution guys with we then kind an at

curious the I’m and you Obviously, pre-COVID of on just the that? to what’s kind improve a So of business. well profitability made of changes where ahead lot your were of takeaway you that’s

year. you think that’s this that is as kind to year of improve next new don’t the – level next bit year could on of that. side, distribution on especially know grow that some a you – of accomplish little if the I challenges to were you Given be maybe about to that of that do kind freight – the potentially base cost think a margin, that how able

Mark Worden

Mitch, it’s Mark. This absolutely base. is new the

operating We’re into profit. double-digit six quarters

with improvement But few generated the my to over years that’s August further transformed a QX the our profitability were. watermark then of As speech that as and we’ve gathered it levels see base and and That XXX the the low the XXX and with our healthy QX of shared, basis has what XXXX need new compared where last clearly of expected XXXX. one in retailer to is. that clarity we QX the are of cadence the incredibly cadence margin analytics operating the for key we have margins we’ve difference that a few And It we in sequential with be we this sustainably promote inflated said in CRM up all the a in alluded us promotions. value-based without learnings are is promotions, profitable to but are for doubled the the environment promotions misunderstand, over for driven, we’ve at, And acceleration back isn’t August. promotionally what competitive promotions. no or investments we doubt, was a base I month basis as But of we’re continue the we’re and we’ve do normal last points up points but gives to those that changing pre-pandemic. seeing promotions were of in years, shadow and should us of way a

will digits future. whatever We to us efficiencies doubt, a just sustainable. setting does synergies the at the down margins grow that without in we and the inflationary as clear, see help we see So see double be environment operating in and base the this calms new point

Mitch Kummetz

Okay. Great. Thanks again.

Operator

Your next question Poser William’s comes Sam from the with line of Trading.

Sam Poser

Thank you.

Just a quick follow-up to that, Mark.

a being athletic. margins of little that runs helping You athletic, nonathletic how mix talked about overstated what because I But shipments that from is Like understand, is higher in margin? the up. margin the August late much and given margins

of – you And nonathletic normal between that to and it’d if the athletic of be so margins ton, up? you a sort sort a if still – but product balance out would foresee know what I be mix a normalized up more you so balance

Mark Worden

it and in the a is right. then impact The athletic sustainable. We from margin. challenge thin, causes the Yes. see razor It’s change QX – you’re QX razor mix

to when supply also be better BD&O things from able down we’ll to get settle chain. lower the However, continue costs distribution in

right So takes that the this the operating profit, this and confident the gross margin. us puts is right have is

a to into have start XXXX now get to these We stop comparing stimulus lapping base as we infused quarters. and real

Sam Poser

just – to is to clarify just this that. And

new saying you’re itself establish So of high will XX as that in base? the is – sort

Mark Worden

Correct.

Sam Poser

right. Okay. All very Thanks much.

Mark Worden

the All you. best Thank Sam.

Operator

Mr. over back are There further turn call Worden, time. questions I’d no you. at to this the

Mark Worden

to wonderful and forward vendor team all us all with like future. wish partners our And Shoe and in customers, thank shareholders. Well, successes members, We thank joining you for our you sharing near our today’s our a I’d the in QX Carnival call. to many look you

Operator

you your call. today’s Thank participation. concludes This for

disconnect. now may You

Shoe Carnival (SCVL) 25 Aug 222022 Q2 Earnings call transcript