Investments made in technology and team capabilities have transformed Shoe Carnival, Inc’s promotional model into a “highly profitable, personalized digital first approach,” CEO Mark Worden said.
The Shoe Carnival and Shoe Station parent grew new customer acquisition over 10% compared to first quarter 2021, resulting in over 29 million loyal customers in Q1 2022. Worden spoke during the company’s earnings call, noting the investments have structurally shifted the retailer’s gross margin levels upward by approximately 600 basis points during Q1 2022 versus the previous highest pre-pandemic.
Given the volatility during 2020 and 2021, Shoe Carnival said the most relevant indicator of its strength is the 25.1% sales growth and 107% EPS growth achieved during 2022 versus the first quarter 2019 before the COVID-19 pandemic.
“Combined with our increased scale, the margin growth results in a sustainable operating income level that is double-digit, and EPS that is more than twice the levels generated historically,” Worden said.
Shoe Carnival Continues CRM Work
In recent years, Shoe Carnival has worked on its customer relationship management (CRM) platform and modernizing stores. It completed its acquisition of Shoe Station in December 2021, now operating 395 stores in 35 states and Puerto Rico under its two banners.
[Shoe Carnival SVP of marketing Deb Hannah to serve as co-chair and join a panel of leading industry experts at Analytics Unite. Learn more!]
“We have smoothly completed the integration phase of the acquisition and during 2022, are building out the banners, advanced CRM, analytics, and marketing capabilities,” noted Worden.
The Shoe Station CRM and dotcom platforms are on track to go live ahead of plan and support holiday shopping this year. Worden said the company will double the footprint and sales at the Shoe Station banner in the next two to three fiscal years. The Shoe Carnival banner is also expanding store counts and the total company fleet is expected to reach 400 stores this fiscal year and over 450 stores during fiscal 2024.
As the footwear retailer expands, Worden noted the loyalty customer growth of 10% is important because with enhanced technology, “we can engage with that consumer via cost-effective digital vehicles and personalize the messages and offers.”
“Ultimately, that strength is parlaying to that nearly 600 basis points of enhanced margin that we talk about,” he noted. “That's where the real excitement is. Effectively, efficiently promoting our best products, our best brands, without having to dilute the profit per pair or engagement.”
Understanding the footwear customer best and how to communicate effectively with them is a top strategic priority and driver of Shoe Carnival’s profit model.
“We're still early innings,” said Worden. “We absolutely know how to play the game. We have all the tools, but there are many, many more innings of growth we can derive from this in the years ahead.”
Retail Store Updates
Shoe Carnival, Inc is currently in process of modernizing stores and plans to have over 50% completed by the summer of 2023 and the full program complete by the end of fiscal 2024. Through the first quarter of 2022, 31% of the company’s fleet is complete.
Some of the advantages of the new design are to create distinct brand experiences and present customers shop-in-shop destinations, Worden explained.
“Our new design is full of digital elements that allows us to pivot rapidly from one season to the next, to the hottest new product, or to market latest new brands in conjunction with our strategic vendor partners,” he said.
The company reported two new stores opened in the first quarter of fiscal 2022 and no stores were closed. The retailer aims to open 10 new stores in fiscal 2022, expects no store closures, and store count to exceed 400 stores by the end of fiscal 2022.