Shoe Carnival Stock: One Size Fits All Investors

Key Points

• Shoe Carnival operates 430 stores across the United States, offering off-price brand-name footwear and private-label merchandise.
• Shoe Carnivals recorded record Q2 20245 sales after pivoting its back-to-school marketing to digital and social media from traditional TV advertising.
• Shoe Carnival trades at 17.14X forward earnings and has a 1.19% annual dividend yield.

Shoe Carnival Inc. NASDAQ: SCVL is one of the largest family footwear retailers in the United States, operating 430 stores under the Shoe Carnival, Shoe Station and Rogan's Shoes banners. Like the name, the atmosphere of the self-serve stores is bright, colorful, high energy and family-oriented with its iconic Spin ‘N Win wheel with loads of promotions. They carry top brands and private label merchandise with a heavy emphasis on off-price brand discounts, which is why their business is booming despite general weakness in the consumer discretionary sector.

Shoe Carnival: Discovering Bargains Without Sacrificing Quality

While full-priced fashion retailers struggle in this economy, off-price retailers like The TJX Companies Inc. NYSE: TJX, Ross Stores Inc. NASDAQ: ROST and Burlington Stores Inc. NYSE: BURL are thriving in the segment in the consumer discretionary sector.

Just like enterprises are undergoing deal scrutiny and elongated sales cycles, consumers are also trying to stretch their dollars by looking for bargains without sacrificing quality.

Dollar Stores Are Out, Off-Price Stores Are In 

This is why dollar stores like Dollar Tree Inc. NASDAQ: DLTR and Dollar General Inc. NYSE: DG are hurting while off-price retailers are thriving. There’s nothing like the thrill of discovering a bargain or a 'steal' when you can get a $100 "regular priced" brand name item for the discount price of $30. Shoe Carnival fits right into this theme as social media regularly shows examples of consumers finding bargains right in front of their eyes. Their Spin ‘N Win wheels are located in-store and also online where consumers can receive discounts on their purchases.

Show Perks Loyalty Program: 35 Million Members and Rising

Shoe Carnival’s Shoe Perks loyalty program earns members points on every purchase they make in-store and online. Points earn rewards and never expire. Members get free in-store pickup, free shipping, same-day delivery and various payment methods, including buy-now-pay-later (BNPL) options like Klarna. The Shoe Perks program has grown to over 35 million members.

Back-To-School Robust Sales Momentum

Shoe Carnival reported Q2 2024 EPS of 83 cents, beating analyst expectations by 2 cents. Revenues climbed 13% YoY to $332.7 million, beating $330.03 million consensus estimates. Comp sales for the back-to-school season rose, driven by children's and athletic categories.

Shoe Carnival issued mixed guidance for Q3 2024 EPS of 70 cents versus 69 cents consensus estimates. Revenues are expected to be around $320 million, falling just shy of the $321.44 million consensus estimates.

Shoe Carnival expects the full-year 2024 EPS between $2.60 to $2.75, up from $2.55 to $2.75 in previous estimates versus $2.70 consensus estimates. Revenues are expected between $1.21 billion to $1.25 billion versus $1.24 billion consensus estimates. The company expects momentum to carry into the holiday shopping season.

Tapping Digital Marketing Over Traditional TV Commercials

Shoe Carnival pivoted its back-to-school marketing campaign to digital ads and social media and away from traditional TV commercials. Shoe Carnival, like many other retailers, is discovering the accountability, flexibility and agility that digital advertising has over traditional TV marketing. It enabled them to amp up messaging in real-time to accommodate the demand and promote the brands that its customers are most responding to at the moment.

CEO Mark Worden commented, “The customer engagement with our social and influencer content was very exciting to see in Q2, and results spiked as we turned on the full weight of the investments during back-to-school. Bottom line, this new approach contributed to a record setting Q2 sales and comparable sales growth during back-to-school without spending additional marketing dollars versus the prior year.”

Here’s What Driving the Growth of Ad-Supported Streaming

Worden is sold on digital marketing, “The effectiveness of our spend and added flexibility to react immediately to the customer are exciting to me, but we intend to continue building our expertise in this area going forward.” This underscores why digital adtech platforms like The Trade Desk Inc. NASDAQ: TTD are absolutely thriving, especially in the CTV segment, as ad-supported video streaming continues to grow to be a win-win for streaming networks like Netflix Inc. NASDAQ: NFLX and advertisers like Shoe Carnival.

SCVL Forms a Rare Bullish Megaphone Pattern

A bullish megaphone is formed by diverging trendlines comprised of an ascending upper trendline resistance and an ascending lower trendline support. While both trendlines are moving higher, the channel between them widens. The breakout triggers an explosive surge through the upper trendline.

SCVL formed its bullish megaphone as the upper trendline resistance ascends faster than the ascending lower trendline support. The daily anchored VWAP support is rising at $39.06. The daily relative strength index (RSI) rose to the 63-band. Fibonacci (Fib) pullback support levels are at $241.14, $236.74, $223.95 and $214.79.

Shoe Carnival’s average consensus price target is $42.00, and its highest analyst price target is $51.00.  

Actionable Options Strategies: Bullish investors can buy on pullbacks using cash-secured puts near the lower trendline support and anchored VWAP support or at fib pullback support levels.

Bullish options investors can spend less capital and profit from modest upside gains by implementing a bullish call debit spread.