SHOE Carnival is attracting a new higher-income audience and may recapture sales figures.
Low-income customers are being hit hard by inflation, severely impacting Shoe Carnival's customer base. In the second quarter they saw a big hit on sales from earners making less than $30,000 a year.
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However, the company is beginning to see a rise in sales from high-income earners, mostly through their online sales.
Before this most recent sales update, more than 50 percent of Shoe Carnival customers had a median income of under $50,000. Now, they have flipped that, and a majority of their customers make more than $50,000.
This shift included a drastic increase in households making more than $75,000 a year.
“As part of our long-term strategy, we continue to invest to build our brand and acquire these higher income, more affluent customers to expand our customer base,” Shoe Carnival president and CEO Mark Worden said in a call with analysts.
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Worden partly accredited this increase in sales to wealthier customers moving away from high-end retail and department stores.
“We’re capturing, as part of our strategy, the former department store shopper through the brand assortments and the depth of product that Carl Scibetta and his organization are bringing in,” Worden said.
He is confident that Shoe Carnival will be able to maintain these customers thanks to their broad selection of footwear and family focused layout.
Meanwhile, Worden understands that the low to median-income household is currently less involved with Shoe Carnival's business plan due to inflation.
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“Until the households under $30,000 have better economic conditions, we’re going to see a headwind in our urban markets, offset by the things that are working in the non-urban markets,” Worden said.
He did make it known that customers of these income are still interacting with the brand, just not at the same rate as previous years.
As part of their earnings release, Shoe Carnival provided an update on the market, saying that conditions improved greatly from the end of the second quarter into the third. The company's sales in august were among their best ever in their 45-year history.
Despite brining in the new, high-end brand of customer, Shoe Carnival did have to provide a reality check for their investors.
The company expects their net sales for the year to land around $1.19 billion to $1.21 billion, making $3.10 to $3.25 per share. This is down from their earlier projection of $1.23 billion to $1.25 billion and $3.60 to $3.85 per share.
If Shoe Carnival can recapture their low-income customer base while also retaining their new high-income shoppers, they should be set for a great year in 2024.
That is, if they can avoid the rampant theft other retailers are dealing with. With theft on the rise, profits are generally down. Perhaps Shoe Carnival's growing online model can help evade those struggles.
