Sterne Agee CRT Maintains Buy Following Shoe Carnival's (SCVL) 1Q Results

Sterne Agee CRT maintains a Buy rating and $32 price target on Shoe Carnival (NASDAQ: SCVL) following an in line 1Q. SCVL reported EPS of $0.52 versus estimates of $0.53. Reported revenue was $253M compared to estimates of $256M.

Analyst Sam Poser commented on SCVL, saying, "After recovering from a weak start, with SSS down 5% in February, to post a 3% increase in SSS for 1Q15 is commendable. All categories and genders posted SSS increases in the quarter. 2Q15 SSS to date are running up “significantly,” which means over 6%. The company is managing its inventory and costs well, and is taking actions to become more efficient over time. Also, the ongoing roll-out of e-commerce and mobile commerce platforms, as well as national advertising, are resulting in an increase in SCVL’s loyalty program, and increased traffic and conversions. We are maintaining our FY15 EPS estimates, though shifting some sales and earnings from 2Q to 3Q due to a change in timing of tax-free holidays in a number of states."

Poser also added, "QTD SSS are up HSD, versus down MSD for the same time last year. However, management is guiding 2Q15 SSS to be only be flat to up LSD. This year, two states are canceling their back-to-school tax-free holidays, and eight states are moving those tax-free holidays from July to August. As such, management expects ~$7M in sales to shift from 2Q to 3Q. A significant amount of merchandise margin recovery is expected, after 70bps & 20bps of MM reduction in 2Q13 & 2Q14.
Better trends and inventory management should drive the MM recovery. SG&A is expected to be levered modestly in 2Q. We are lowering our 2Q15 SSS/EPS estimates from 5.5%/$0.21 to 3.0%/$0.19, to reflect the shift in tax-free holiday, but maintaining our FY15 EPS estimates of $1.50."

For an analyst ratings summary and ratings history on Shoe Carnival click here. For more ratings news on Shoe Carnival click here.

Shares of Shoe Carnival closed at $28.08 yesterday.

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