Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to Shoe Carnival's Second Quarter 2023 Earnings Conference Call. Today's conference is being recorded. It is also being broadcast 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.

also factors company's should discussion earnings statements be conjunction in Forward-looking with press of release. risk filings included SEC the in and today's considered the

only not any speak the obligation factors any the of are to statements, to cautioned on or forward-looking The on events today's contained discussed reflect or press risk announce statements to place update forward-looking to Investors today's any to reliance date. undue developments. those call which future as disclaims revisions or today's publicly company of conference in release

may conference Shoe end. I'll the over now of Mr. and Carnival, Mark turn remarks. Worden, opening CEO you President for to Worden, Mr.

Mark Worden

for and today XXXX Good us Quarter Second you for Conference Carnival's morning, Call. Earnings everyone, joining Shoe thank

Scibetta, Joining Merchandising Steve supporting are Investor Chief Relations. Officer; Officer; Erik me call and on Chief Financial Alexander, today's Carl Gast,

trends saying Let QX. by me start today impacting that improved in customer conditions

the conversion our customers saw As second product robust on in-store to a Customer moderate. average climbed of starting and customer to margins encouraging the engagement impact high, transactions quarter and new signs picked was remains inflation up, that strong. quarter we online were progressed,

QX results conditions, share on this compared to increase year. our to accelerate opportunity soft Based market of improving we per to the these and share grow to sales an see invest in results earnings to growth market and

As our accelerated such, to experience. drive excellent customer we investments and brand-building profitable fuel activities

new markets conditions. on customer store plans drive in with roll engagement new improving our to stores capitalize out modernization continued We to and

demonstrating QX XXXX growth profitable growth increased per faster an in accelerate rate year progressed. of the of to $X.XX, grew investments at QX versus to million. has $XXX.X Earnings X% the our share Sales QX as approximately even XX% to success versus

yet conditions year. have results signs moderated complete, While is provide the August further the during back-to-school not season that inflationary

with we been intensity yet, size modest versus prior QX we're Competitive growth the both improvement margins, while in are season seeing We not profit-losing deep of back-to-school continue customer In that our been targeted QX has to strategies based discounting in high and our running QX loyal products versus and year profit on competitors, conversion. QX, transformation transaction committed promotional strong and knowledge analytics customers. promotions. many sales, see and and to deep

That working. strategy is

margin August shopping profit margin of back-to-school For any highest the profit. accounts company gross of the full With strong among XX% company's the track half results history. in to quarter month deliver example, achieved product QX on date, company's year XX-year for to results period August of profit sales its the gross third were and the to XX%. guidance is

environment to share our result, our investments pleased response market customers to brand in we with customers' face, our gain inflationary the this are Given ability and including very building and experience. customer

we QX. to continue in such, remainder invest areas provide section. in to those the plan guidance detailed Erik As will his more in of

impacting our declare economic the significantly are Although would customers. customer results have premature it trends that no improved, inflationary be and headwinds to longer and

versus year, margin X.X%. declined QX store declined traffic gross in earlier for year. versus improved While Store X.X% prior results strong performance year comparable sales period the declined total remains in versus and accelerated but ago and the QX still versus sales QX,

under income segment lower-income the in softness see to of $XX,XXX, customers. customers urban including continue our our We with household

remainder ongoing headwind the this see as year. throughout of challenge We an the

Station led transactions. favorable seeing higher our We mix our profitable more online Shoe and are banner by also income, shift to a customers,

$XX,XXX. half in are some of shift over with over This in For increase income income significant $XX,XXX, our with were now $XX,XXX. customers of income customers we a meaningful including over seeing over percentage historically, from our XX% households perspective, with under households a households year, with

for ensure same base. retain of part The affluent continue compete remaining customer customers. to share in customer investments environment expensive to brand health XX-year also growth, very the important as care customers levels to broader higher At long-term inflationary invest as expand in place requires to in hiring and and benefits. employees income, talent value to great to continues more the make continual our space to higher our we our we more and it retaining base. build near to acquire and to strategy, unemployment innovation time, With attract new capture well these work lows, our and continue As wages, retail to a invest

customer-focused in our talented strategic on customer nearly delivering and experience less and the and range increased driving experience. and X,XXX for we continued now are on recovery, the We ourselves team improved lower levels rapidly the engagement, best investments to year. store the our of conversion customer slower during decided we economic With likely With strong brand plan XXXX, team, lower customer end economic our our in members, QX. X we in to customer this pride investing expectation openings of loyalty. By to XX stores new conditions new open new

further. long-term XXX stores Importantly, XXXX. there to taking is operate no in We're over approach measured change market conditions plan near-term to until a growth our organic improve to more

urban the and will as particularly Economic remainder projected, are remain navigate quickly and XXXX, not challenging conditions inflationary as expect we we had we customers. with of they improving that as

that guidance we a guidance few Erik detailed Given commentary updated to reflecting and billion. discuss as full billion are new moments $X.XX updating the to year his part $X.XX in quarter. will sales our XXXX plans, of our on store

continued positioning the improves. our when to are economy like growth investments strategic I'd us profitable Now how for discuss

continue Carnival for summer modernization and completed have the approximately over be we little We're productivity. years investments the drive into Shoe fleet on of complete. program program, fleet of A to X XXXX. in-store to track X/X of store by remodel profitability XX% the experience Our and fleet

at time stages of we I'm operated has XXX Since the last fleet our our were dramatically The we our improved. productivity opened also improvement XXXX very in early profitability excited multi-year back program. rationalization call. store last stores very since productivity that and time, our and store was when we that XXXth earnings

for now comparison, For door per XX%. has increased our stores sales XXX

door, profit XXXX. the With per strategy, increases year increased in XX% versus this has revenue per XXX doors our combined with than targeted productivity more promotional

in highly As of profitable preceding our in fleet has shared the a self-fund stores investments quarters, our to us position business. in solid

Transaction Sales continues Tier profitable increase membership represent than Additionally, XX% the net platform members an CRM over company's investment over loyalty grew prior was in million now XX% QX. for from over members gold XX% our members, of growth, higher reaching XX% membership Gold our drive XX.X to year. most of over the and sales size non-members. customer in

One reactivate invested shoppers. last brand-building in we of the areas was to athletic

in members did XXXX. global those athletic with brand top a Specifically, us not purchase

period get customers to of to the CRM during retry disrupted Carnival. a those where During year's and reengage our into buyers slide active Shoe and stores, With assortment shoppers significant among this assets availability. solid assortment reactivated campaigns many our them chain utilized our number we of This, in QX. to led targeted other

We are to very continue building encouraged customer by brand these results and targeted invest and programs. in

our our is we and are seeing capturing e-com customers, shift and seeing to CRM urban In always-on strategy partially earlier, of customers well, customers. short, in discussed offsetting digital part and some very in which affluent we're working driven our marketing is being traffic converting I softness is a by more capabilities. As the

to ahead, the reengage CRM We driver untapped have in more significantly profitable years of a continued customer customers making engagement. core

Station. of mentioned more evident Shoe is improvement are in I our across earlier, performance particularly base As with business, the conditions improving the customer affluent and this

year, QX the Shoe versus outperforming quarter to sales for station and overall sales mid-teens low each company digits, single growth. driving profitable prior and increased QX date grew

Our margin to momentum. top investments are working, customers sales and online our where to platforms and harmonize Shoe line enabling Station build CRM

to capture the across to margin Shoe programs synergies expansion. further and continue and value We advance drive Carnival efficiencies Shoe Station gain banners and

strong continue to the by challenging rapidly and million prior approximately place than our reducing providing Given branded prioritize year of rightsize year, margins in this sustaining our with back-to-school. the $XXX started we higher inventory to economic customers. position for inventory inventory mix products We plans right with levels, landscape,

up earlier, with but more are inventory to year, for strong to And margins. track in to levels million quarter in on coming ago. details second the year cover below versus annual will $XX Carl by is million the approximately ended inventory the XXXX. reduce only inventory the moments, prior $XX guidance be achieve we be lower year-end a our We year weeks a compared maintaining few importantly, and mentioned to XXXX to inventory I levels versus continuing prior as year-end

debt. balance sheet as cash And operate in and with with an important, is yesterday. securities as Our even over position hand equally to $XX zero stronger of marketable million on continue building we to

from profitably funding we in significant business. we're past, As the cash grow business strong by flows our to have investments the operating the generated the

will QX. our strategy sales, per quarter it during our branding challenging hand experience of and Before by quarter on saying within context share improvement of delivered results I customer I in a backdrop. Carl, We increased the net and that summarize over advertising, earnings momentum investment demonstrated economic to the second the versus

highly-valued investments We our as business loyalty the current program, on XXXth and best-in-class in share the Our conversion store growth customers urban lower-income stores, the modernization conditions We opened in remain to high and related expect for strategies, gains drove strategic our our our our the footwear to customers. and customer with environment. we second but we experience family inflation saw in to store will invest channel. economic in continue of quarter the cautious store improving be in CRM continued market impact continue some of challenged, consumers new

continues to to to year a our But measured balance consumer challenging. likely economic the the remain approach best We're starts growth improve, strategy we is to we'll a profitable lower-income conditions When be and segment our drive sheet strong, be taking a position will great drive expect the in priority. of importantly, growth. to as

now over Carl on the ahead. quarter to to hand color year and And provide further I'll Carl? it

Carl Scibetta

Thank you, Mark.

saw customers quarter new we and progressed some and second strong. we customer season you want the Product as that it. athletic moderated. our inventory trends on remained picked Average climbed inflation up our improving meaningfully. was of discussed, and engagement ongoing transactions Back-to-school highs conversion where As Customer exactly the impact healthy. margins customer is quarter to children's

has early our While remain and strategies. to QX in CRM been high we our transformation profit competitive and committed targeted QX, intensity

strategic the delivering using continuing our and consumers include sales, on our strong inventory objectives, CRM continue focus driving connecting to We product our maximize reduce our margin. with program which to year to throughout

with We many reengage to forward, profitable customer engagement. untapped more core making have CRM a customers going of driver

were Moving footwear trend nonathletic of prior to versus X.X%, August Total perspective, was decline women's category QX improvement versus [BTS], XX%. with balance XXXX. comp we seeing QX the saw continuing which the for a over low-double-digit were Including down down second low in sales a the are quarter. teens an but down quarter down From improved year, sales comp dress 'XX. of in we

leisure was both and digit, Boots in were was sandals non-athletic Men's single with Casuals down were single digit low both the quarter, Sport up down were casuals Men's led down and Canvas low singles. mid-teens were high were performance quarter. and with [indiscernible]. down low teens boots digits by sales slip-ons. mid-teens. mid-single in down in strong comp up down the dress mid-single-digit

improved continue low comp during strong were position children's nonathletic to driven trend for athletic, by we low Children's our in led by that improvement athletic, digit, back-to-school, and low-single-digit, in Children's in quarter the led sales court, signals. performance see inventory partially down by August. up by offset single reflected trend up children's The

down athletic more women's. Comp adult sales with down men's low slightly in to single digit than improved

with we led inventory in was and court skate softness of As and continued part levels, in by trend of improved August down continued in as the and back-to-school optimize basketball running. low-single-digit

QX. I was high As earlier, competitive mentioned intensity in

However, investments versus and our disciplined based versus XX merchandise the which in customer our margin year, decreased in basis improving QX drive product and points are performance CRM, strong by prior on the data, reflecting only sequentially margin. quarter to insights strategy

million or margins. inventory inventory. X%. quarter for first customers quarter than up with the by $XX to the up importantly, continue XX% right-size ended prioritize higher mix previous inventory million We million our and first $XX sustaining year of the we XX% only And products We inventory approximately strong our quarter or prior approximately a with approximately ended versus freshest providing or year versus the the to XXXX. inventory strategy We with second with entered levels the $XXX right

be back-to-school approximately end be inventory of XXXX. Inventory 'XX in the at continue and will that the XXXX to of but we lower our the inventory than our the at with $XX year than expect fiscal of higher than prior QX in was end end QX, September, million to level level progress, fiscal expect we lower

change our we clean, our goals. content reason strategy Currently, achieve to our see to is no inventory and

most levels and offerings through to We inventory to and fiscal product stores will balance million stocked we manage our clear, XXXX year. that are right-size time for ensure our optimize inventory we flow continue the move appropriate ongoing selection inventory of for continue diligently fiscal the as desired $XX To lower strategy even going year-end than the with to forward. while maintaining our and freshest to be be prior customers the will guidance achieve our XXXX are after is product

the with a And will financials. review call of over turn our for that, Erik Erik? to I

Erik Gast

Thank you, everyone. Carl, and good morning,

XXXX, and the will quarter In the my of I remarks, second needed, comparison for quarter QX year-end in context. XXXX our to results. financial comparing not results Moving be XXXX, if with second to

line. top with Starting

QX QX of X% a e-commerce by The perspective an in represented performance, comp were by prior partially To in the than offer a approximately X.X% on driven XXXX. of sales sales decline lower year, in versus This as year, offset X% increase versus million. the X.X% $XXX.X while performance was our prior the reduction to comp sales. quarter down were traffic prior some on was X.X% in net year. net improvement net compared decline QX Our

improving, stores Some XXXth a for traffic. inflationary low-single-digit are opened XXX the banner mid-single-digit still our August, Station a and economic store Shoe comprised we sales in are Shoe year with stores. at versus Station decline. Carnival prior Carnival fleet and of impacting sales but banner trends in QX In increase Shoe now customer came headwinds came XX Shoe at and

advancement stores. Our was overall at XXX XX%. conversion since customer exceeding XXth margin high and profit continued productivity members margin resulting XXXX, in The significantly we loyalty reflecting gross the capabilities, CRM and XX.X%, profitability have increased our consecutive the quarter. QX reflects which operated was or increased last time of in quarter the

decreased improvement occupancy XXXX, which costs and margins merchandise strategy, year, XX in basis our an led prior points, margin. product reflecting CRM strong distribution driving to Compared by versus declined QX is quarter. the Buying,

deleveraging the the partially by were expense of occupancy costs, lower distribution stores as points basis costs sales and occupancy of The we're However, buying by reductions offset related result result and XX primarily decline. and freight to a new higher modernization. distribution store

over our million, experience representing QX increase in an $X.X quarter. QX by branding XXXX, decisions the in expense driven $XX.X of customer million during SG&A was investment and

of to We are investments, our to response pleased with those to areas we the continue and in plan customer invest QX. in the remainder

in to percentage a expenses and of the were QX QX in was or diluted million of for As XX.X% quarter in income as QX share. income million operating compared sales $XX.X in XX.X% the net million X.X% quarter XXXX. XX.X% sales, and second or $X.XX in of XXXX XXXX SG&A XX.X% to $XX.X sales compared XXXX. Net $XX.X was of earnings QX per

XXXX. or was second We This quarter million with $XX than versus and year an X.X% While lower of XXXX, prior compares which store current than higher $XXX on in year-end level diluted up prior out QX to closed of compared million XXX, million favorably per approximately to reflected QX inventory higher $XX per for increase basis. year the XXXX. at quarter the inventory earnings XX% higher share the XXXX QX $XX million a the

year prior XXXX, $XX levels as we approximately XXXX inventory be by With it lower is XXXX. and to be expect compared in to back-to-school track below to progress, in year-end on shopping September million

discounting expectation aged merchandise. have carrier in no inventories and liquidate our Importantly, are of line, deep seasonal to and we

to million. equivalents end debt. as securities consecutive And without total the with as sheet of we cash the total XXXX, operations cash, of that At our XX $XX and was continued QX, company end $XX balance strong years position. liquidity maintained the approximately debt yesterday, had now the over no had million marketable outstanding At no debt of quarter. second Moving for its through and funding of

in earnings currently entire earlier guidance were no cover amount the million will repurchase of $XX there so During items program. few we provided release the repurchases a fiscal of We those press updated have share a XXXX morning, I for and quarter, our this and for available share detailed authorized now. the

QX driven and to compared sales guidance the updating for our by $X.XX results billion we that $X.XX $X.XX billion. to traffic XXXX consumer are remain lower Given trends to the $X.XX of challenging, prior range fiscal to billion billion

now We sales of store to expect comparable X%. X% down down

plan recovery, customer economic to and now a XXXX. Given experience our investments and in of open we total stores strategic XX slower X increased brand new to in the

margin be continue to We profit XX%. expect between XX% and to gross

and to be continue $XXX of SG&A XX% we invest and million building $XXX as We between to expense sales approximately in store total million brand now net expect or experience.

we previous including lowering extra the from our to to to year, $X.XX. the For our diluted guidance $X.XX of $X.XX $X.XX expectation are week, EPS

earlier, I fiscal at to XXXX we discussed approximately million be lower the As prior year. inventory $XX continue the expect than to end of

To to close, some headwinds income expect customers. inflationary our significantly improving conditions are urban will we continue impact economic and but we seeing lower

We are the of taking the a measured year. balance approach to

Our a remain strategy priority. will drive growth to

is Our cash we with no strong balance and outstanding sheet have debt.

This financial concludes our review.

we questions. the call would for to up like Now open

Operator

Research. is [Operator Instructions] question the of Mitch of Your Kummetz first Seaport line from

Mitch Kummetz

could is start I've that the the on what there. maybe just consumer, that a was you're you you with just your got Maybe reconcile start hoping lower to moderate. by handful. with Mark, especially inflation seeing elaborating prepared maybe starting could income if I impact you remark could

Mark Worden

quarter began. declines we urban challenge. with joining are to us continued saw guidance quarter. and the broader And In activity. driving the the within see the -- improvements Thanks progressed we advertising, significant through that, from QX the improved of the base improvement the traffic and investing meaningful markets The see led to market the trends brand into saw started beginning to we us as building for as QX, today. we [indiscernible] part that -- QX,

more situations, inter unpack that cities challenged. If we're X our different X markets, across a little, urban the in you traffic being seeing geography

other side, signs. seeing conditions encouraging we're the show where is inflationary impact to On improvement starting the

but different we're we started QX that X as So the as through pleased seeing continue into we QX. went moderate and situations, progressed. what with to And quarter very continued

Mitch Kummetz

your know, the of helpful. what And XQ to you was it then then on That's year-over-year. I be curious really XX information you know you BOGOs years I'd margin down this say changed Can BOGOs Okay. any guys have provide margin, X that kind compared is merch versus to also, ago. And like on bps strategy. in way of us 'XX. there can BOGO Is quarter maybe merch

Carl Scibetta

Mitch, event. particular this get the run get something is for very part inventory. for do curated have see they product margins that. are specifically running we were X X, longer points When on BOGOs us, it's that Carl. those a we on inventory tend X -- we And our BOGO a From a entire of ago, have We years buy strategy. stock about strategy, would most XXXX the the any no a of when BOGO -- would from to buy bought run than basis entire a back higher X.X

Mark Worden

And Mitch, on second. a for let that me build

than a versus XXXX. margin in up still X take with compared landing we back perspective, that. XXXX. can XX.X at we're points a this in QX that on basis gross ran higher back, front gross improvement right margin we over you XXX run But we're gross we basis If over little margin follow us years points we what XXX to XXXX, of for to -- XXXX,

Mitch Kummetz

back comp any second that we on but kind could is Okay. Good. XQ XQ, then, margin -- or the there provide year, the half whether anything there? Erik, the just of of guide, versus it's color you And into can

Mark Worden

going grab I'm to Mark. is this that. Mitch,

see improving again, digits. versus mid-single down started digits, shared improvement year. seen So QX moderate the off, and to in QX. double that conditions but to and QX I continued we've throughout progress, as was down QX we've nice

perspective that year, results with back the half similar now. taking whole look that seeing balance the So when year right of we we're the we're the at continues

X%. minus we'll minus So at X% approach. to better a take We said be

what to So just we've a month we've very achieved measured similar in similar conservative August, QX, of achieved to just the in what approach. very but

that if then economic we have advertising in as conditions and brand the each However, upside the quarter, they continue to to going we been start to or should see see building we we're invest and have get improve it. to go better sequentially potential, after

Mitch Kummetz

SG&A, on it it I up half, help little like were And to just SG&A into and like bit you here the Okay. a back If the down sounded investments SG&A the $X.X little a quarter, because about actually talked continue. expect are dollars million dollars you investment. looks then in year-over-year, accelerated back

back which you So questions. invest? if X SJ I and kind led the accelerated half guess Or any investments maybe business other out to down into and that in you're dollar big why of to are increase dollars some were in really XQ, finding One, pull -- continuing is to the of areas?

Erik Gast

Sure, Mitch. This I'll speak get is with to you. Erik.

continue when can saw I up the think talked improve did improved, you in as it, Mark X%. acceleration a XX%. And our conditions growth. market up EPS sales with And was do we the As we see, about some about that did we where new in bit just particularly I'll a you'll was and little we stores. invested have of to in brand bit, elaborate building, the have for investments, little pull-forward spend advertising in did half and

about a in bit Station We our of February little but Shoe launched it, also business 'XX. talked we

So that there's related digital a to end. cost

These costs of investments the to we half are that in-store was continue other increase working, had strategy continue. The will We that will modernization and experience. invest.

back of mentioned, as I however, think of expenses. about when forward those we half some So pull did I the year, the

see we'll continue to moderate opportunistic we And that will watch Mark out. plays expense that talked we'll as are. So how we see and and about, how

Mitch Kummetz

guess I last question Carl. for then And

on of of just to product I'm sequential Max things of there's You positioned like business? Or you've mean lot know noticed I Air It a in dilutive? the got is lot that are the X curious just your thoughts inventory. online I on sounds improvement maybe And -- in I'm closeout? athletic curious a promos if about was margin of talked kind better that how that And athletics. you're just those product. like broader promo

Carl Scibetta

So a to vendors. coming back-to-school year with do ago much Mitch, soon and back-to-school better delivery, products of into on-time of we're the key delivery athletic inventories versus from heading really with position had in our our out a

them stated, a as are to -- as promotion promotion up while we most at maintain need price promotions. not we the achieve far market promotional liquidate that most valuable our to to move product activity, remain able us in in we that distressed take global inventory we global aggressive of with have place margin pull since to As we've that get remodeled and and on, that competitive balance environment and is more since continue and sort are very strategy products we the frankly doing we’re have goals

Operator

Sam line Trading. question Poser in of next comes Williams Your of

Sam Poser

end and to for holiday do have Or where in year I getting range, your in even to receipts bring the things I your of have and up you the both of want the the includes My is and at would should buy end to better inventory things be going if want you're still early, million back about almost is. math spring you you how still that be more the below talk the be that other just to the to open $XX of And receipts down it inventory then And above aggressive is, to probably well have goods at get down and going? the enough to down the if you more that in question inventory newness how XX%. keep know of to for for me, tells to with year. inventory achieve my now half it be to number, it and the drive year? you

Carl Scibetta

inventory to reduction is would an accumulation ago. several be down strategies. Receipts The of year a

big same receipts inventories at receipts We're If the the chain a down when appropriate of fourth to more time a you inventory. came quarter amount to frame. that in in late to due in that remember time as significantly issues, chain due the early with in supply caused supply balloon improved receipts the situation year blip ago, the line and that at

X, creative trend year work well half That's of everything plants, our to as go we based as mild on get that many on the very Part as X. with part closely back through we're ways partners reevaluating continue to seeing. to sales we the reduce vendor stocks, the letter inventory

hit in stores move So going something in strong And ongoing stated, number. by we continue we deliver being It will to believe progress. continue it's margins. to end get that form as forward. we we're very product to to And we our as very We're our confident be year. and great we're here of the careful there assortment to the

Sam Poser

And -- up productivity store then what be Shoe now? was guided your you digits also, can to tell us Okay. had prior low you stand year. double Station And that year-over-year. for the Where does

Mark Worden

past transformational. singles are has the the they've productivity we Revenues or I twos in of won't XX midst store one way X approaching percent had but over XX and of the from they’re ever years. been. been And said, highest importantly, just and XXX doors. like each time more per Store the profit uplifting touch the high has They Sam. last dramatically the Thanks, progressed watermark

half completed and our fleet conversion strong was outstanding. that response Now is modernization we've and the the

long Profit per touch grown in or the sales we the XXX we're watermark it's with up productivity doors over I as stimulus the term to Neither where when is years, incredibly over now compared program. going are pleased of high the the said, near term. midst of XX%, were to

to We with incredibly customer been it's and of Shoe response with that fresh it's could integration, accelerating. pleased capture terms performance spectacular. the margin be Station, the with more In the running portfolio, the synergies, with

guidance, we're Shoe the is Station the as specific not prepared year environment. see growth it been, in it's this to going the We're in where throughout meaningfully and expecting but the at accelerated look context, in you mid-teens grow remarks, challenging into When difficult said to very breaking buck we QX. my QX out started QX in I climbed and this retail and in trend

Sam Poser

want just I here. to So walk something through

everything. about You feel great

by guidance XX%. EPS your cut You've

well. cut percent cutting your You've last as guidance revenue quarter after X-plus by

So you than against a to are that saying, now results now. balance the business to confidence to seem need you're rather think what And right your on what's the of than do put stuff. saying it's just feel us sort that macro what better telling you lot based everybody fix wants right on to really going and I

Mark Worden

our so and Yes, seeing year. we're at really underlying we do the feel good through improvements about -- the business

improving of urban we the the balance As we're traffic my in in the therefore, store prepared approach remarks, year, said measurably and with difficulty on dimension. I that are other a Station, growth, markets. particularly times affluent to and in many that's We having When affluent that taking turning measured see the the goes. don't results, e-commerce QX side, as showing by whether talked I more compared you of at shopper meaningful about, signs to customer Shoe or as our improving we're look encouraged year the

transaction see forward to highs. and bottom climbing or implies. it's do it point our challenging moving getting QX is positively. better to we But growth market, line many getting of economic guide not Our during are There things as a The that underlying... so a new are into the is QX

Sam Poser

sort affected? percent talk has however been moderate revenue urban does of that overall mostly percent what total to the business seems business What customer about One more last business of has is represented. thing. that historically the you your that or want your -- -- What of it

Mark Worden

Yes.

across of that about of come XX,XXX. segment about which there's under our and below customers comes urban a talking that business per double-digit percent the struggling. from households was though, that sub-$XX,XXX the the represent segment in historically from about year households we about markets country our households. have households It's household in half I of portion So urban under the -- the $XX,XXX double-digit that's XX,XXX And over that, it portion The in that's particular income. half revenue earlier markets,

improving, the That's fast giving in by the moderating, mid-singles, again. half we're Simply nonurban that optimism in of things QX the It's conditions, been I put have traffic markets, QX economic going urban to to reiterate digit, back headwind portion the working to I under enough year. us we which see households put, wanted said, that's the markets, headwinds. some until but as offset better see improving our don't are in the QX a $XX,XXX double

Operator

follow-up Seaport Research. Kummetz of a question have We from Mitch

Mitch Kummetz

up you're to them think Does can of targets of Just the from income do kind right to consumer, on them? you Sam. consume that regain the below now in follow Walmarts of question as the that better that gets household the that losing macro you and kind $XX,XXX world

Mark Worden

engaging with seeing our engagement us. under in strong income. which over household under during convert at They're 'XX. $XX simply, and And dissect as now still seeing same But $XX,XXX but over that's CRM understand XX% we're them can we who's million, at did We database and growth. 'XX we're and not that levels we $XX,XXX look still still is broad engaged the

converting, we say says but QX as which opportunity we back-to-school. as engage to an not active, to we So have to them with started we in continue did

encouraging broader results. think position doing athletic best that saw showed reengaging continue with have we very in about weakness to I Mitch, thing We've those segment still but They see back-to-school improvement. seen... you our customers was

Mitch Kummetz

be or better seem is your down with upper retain the new doing that you improves? so, do maybe income department stores? you retail also curious, customer do you specialty where think that I'm of from then the strength trading And as if how to macro And some people that consumer

Mark Worden

Yes.

department product the shopper, as households, the and assortment quarter. what they're as past and We're growth private the depth his on heavily that and they that the able the footwear see. instead $XX,XXX label in board -- strategy across what focused capturing to higher-end our in. assortments Our biggest are the family the best of of satisfy for we be the part used of are organization store brand, the We're continuing consumer. through that as saw is former That were department bringing liking well is KPIs brand Carl depth some over to working are store to the

private do footwear we shopper, label-focused the have I And retailers don't the think family shopper have. as and mall retain store the same assortments we them department

Mitch Kummetz

the through being your Okay. the as about back-to-school. getting But and reads on you're I category weren't very of don't a much into quarter, in Carl. And of kind you've maybe kind performance you the XQ boots say And August any last year. half early of of back think you thought were for good. that you then X as I boots When for remind thinking are quarter. good I of of gotten kind going boots heard me how

Carl Scibetta

Mitch, the time, we're QX, a this of in Swift with That especially concert write-down thing. not lot in whole is at a stadium action seeing we did happens an typically uptick which Western, festivals lot QX of the in short-lived. boots during early see Taylor typically and

early a lack way, -- weather little although too much point. fashion the anything are some is and We on new hearing, we're not this combat, us. that's to about which small some frankly with it. the It's of seeing frankly, a very there, the -- But surprising at experiencing in sales

Operator

of And Trading. we have Sam Poser another follow-up Williams question from

Sam Poser

single the you Carl, digits. was down athletic adult business said low that

Your Is down mean, some you I -- double of inventory Is relationship? it low inventory there? -- just some us the stock-to-sales give idea had that Can improved. as ratio like well? ratio digits of single up

Carl Scibetta

I say, Sam. what Here's would

of second early As lot athletic last singles. with a and than a low August, out ago athletic the levels had deliver of timing do of were we we the in to all down sales fact year deliveries down that inventory late inventory with came the higher a That at didn't September. that quarter, year until

real move with at this of year. we really is say QX the forward we going a as the end wouldn't inventory feel I'll comfortable comparison through So point. athletic fair our be and

Sam Poser

really And running basketball court at can were much And better running business then and you up and tunnel. do state that that to soft? good. one were and follow soft our the The you and light any mentioned get end time. more with of see -- skate that

Carl Scibetta

at say will that strong, channel. seeing the we're see some the to improvements point, ride I business brands likely Shoe court is biggest scale. until come we'll Carnival, the seeing improvement And we any very basketball and don't athletic say has hot is is businesses other a in very this large the in that to continue we our in would and running access percentage I At that business, and turned back. that where small improvement. done are the strong. percentage certainly We have business category. We're of performance

Sam Poser

stock then Erik, on these and days? what I you is everything and And where the given where about spending are lastly, mean, else, -- on buyback so share

Carl Scibetta

Thanks, Sam.

Our We lastly, we'll that still at the beginning the $XX the million the have an priorities, know, of at stock you invested position, authorized business, was as dividends. And if opportunistic there's then buybacks. the look in we year. then

to that's -- So going for an opportunity us. that's

evaluate we So will be it. to continuing

Operator

call turn management There further at the this remarks. back team are time. questions the for like to now I closing would to

Mark Worden

you QX Thank I as joined Alexander the top out today's discussing recently at look or for I questions with us joining call, year. of Investor this you has our call. later so might to reach mentioned results Please all And him function. much Steve any to forward Relations to support have. the follow-ups

Carl Scibetta

Mark. you very the in Thanks speaking hopefully all for I'm and for the forward. joining look today. call you to Thanks, much with to joining person meeting Thanks everyone forward again again call. day. going I

Operator

today's concludes call. conference This

You now disconnect. may

Shoe Carnival (SCVL) 29 Aug 232023 Q2 Earnings call transcript