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Jax Daily Record Thursday, Sep. 10, 202005:10 AM EST

Sales surge 12.1% at Shoe Carnival; Smith & Wesson gun sales up 140%

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Footwear company controlled by Wayne Weaver says it was boosted by the decision to not furlough employees during pandemic shutdown.
by: Mark Basch Contributing Writer

Despite the COVID-19 pandemic upending normal consumer behavior, Shoe Carnival Inc. last week reported record sales.

The chain of 382 footwear stores controlled by former Jacksonville Jaguars owner Wayne Weaver said sales in the second quarter ended Aug. 1 jumped 12.1% to $300.8 million, a quarterly record for the company.

Comparable-store sales (sales at stores open for more than one year) rose 12.6%, with all of its stores reopened by June after pandemic-related closings.

“Our sales were undoubtedly supported by our decision to not furlough any employees during the shutdown, as we were able to get our team members back to the store faster than nearly all our competitors,” CEO Cliff Sifford said in Shoe Carnival’s conference call with analysts.

Shoe Carnival also was helped by a surge in online sales during the pandemic, with e-commerce sales more than tripling and accounting for 20% of second-quarter revenue.

Late summer is usually a busy period for Shoe Carnival as parents take their children to buy new shoes for the upcoming school year. But 2020 is no usual year.

“In a typical season we see back-to-school shopping start in mid to late July. However, the pandemic has delayed start dates for nearly all the schools within the markets we operate,” Sifford said.

“As we saw this materializing, we pivoted quickly and realigned our back-to-school marketing to correspond with the shift in the season.”

Sifford said 95% of schools in its markets usually are back in session by the end of August but this year, only 65% returned by Aug. 31.

“We believe the majority of back-to-school volume will be realized through September,” he said. 

However, “we will extend our back-to-school season through the end of October to ensure we are timely serving our customers’ needs.”

With the change in back-to-school buying, comparable-store kids’ shoe sales were down by a low single-digit percentage in the second quarter, Sifford said. 

He also said sales of adult dress shoes dropped by a double-digit percentage, with more people working from home.

That was offset by a 30% jump in adult athletic footwear sales.

While sales increased, profit margins fell in the quarter. Shoe Carnival’s earnings of 71 cents a share were 9 cents lower than the second quarter of fiscal 2019.

Weaver is chairman of Evansville, Indiana-based Shoe Carnival and its largest shareholder. His family controls 30.8% of the stock.

Michaels total sales jump 11.1%

The Michaels Companies Inc. last week also reported a big jump in sales for the second quarter ended Aug. 1.

The Texas-based arts and crafts retailer, which has a distribution center in Jacksonville, reported total sales rose 11.1% to $1.15 billion and comparable-store sales increased by 12%.

“We saw strong demand and customer engagement across our stores, and the multiple omnichannel touchpoints we introduced over the past few months,” CEO Ashley Buchanan said in a news release.

All 1,270 Michaels stores reopened by the beginning of July, but like Shoe Carnival the company more than tripled e-commerce sales in the quarter.

The company said its expanded ominchannel sales efforts include curbside pick-up, same-day delivery and ship from store options.

Adjusted earnings rose by 11 cents a share to 30 cents.

Smith & Wesson gun sales up 140%

After trying to diversify its business with the acquisition of a Jacksonville company four years ago, Smith & Wesson Brands Inc. last week showed why it returned to its roots as a pure-play firearms company.

The gun-maker reported firearms sales jumped 140.9% to $229.9 million in its first quarter ended July 31.

After the quarter ended, Smith & Wesson spun off its outdoor products accessories business into a separate public company called American Outdoor Brands Inc. That business also had a big sales increase in the first quarter, up 52.3% to $50.6 million.

Smith & Wesson in 2016 acquired Jacksonville-based Ultimate Survival Technologies as it sought to diversify from the gun business and it changed its corporate name to American Outdoor Brands.

UST’s Jacksonville facility was closed last year as the company consolidated operations. It also decided to split in two and turn American Outdoor Brands into a separate company.

“Our record revenue and unit sales during the quarter demonstrates our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer,” Smith & Wesson CEO Mark Smith said in a news release.

Smith & Wesson reported adjusted earnings of 97 cents a share for the quarter, up from just 3 cents in last year’s first quarter.

ComSovereign expands operations

ComSovereign Holding Corp., formerly Jacksonville-based Drone Aviation Holding Corp., is continuing to expand its operations.

The company, now headquartered in Dallas, announced a deal last month to acquire a 140,000-square-foot manufacturing facility in Tucson, Arizona, and hire 300 people when it opens in early 2021.

ComSovereign was formed through a merger in November 2019 with Drone Aviation as a holding company for communications technology businesses.

The Drone Aviation business, which makes tethered, unmanned aerial vehicles including lighter-than-air aerostats and drones, continues to be headquartered in Jacksonville.

ComSovereign said in an August Securities and Exchange Commission filing that it signed a lease extension through July 2023 for its small Jacksonville office.

The company said operations at its new Tucson facility will include manufacturing for Drone Aviation.

ComSovereign reported revenue of $5.5 million and a net loss of $14.6 million in the first half of 2020.

Analyst lowers Regency valuation

Morningstar analyst Kevin Brown last week lowered his estimate of Regency Centers Corp.’s value, saying some of the shopping center developer’s tenants will continue having trouble paying their rents.

Regency and competitor Kimco Realty focus on shopping centers anchored by supermarkets, which have done well in the pandemic as consumers buy more food to eat at home, Brown said in his report.

“However, that has not translated to increased revenue for other tenants in a grocery-anchored center. Many nonessential tenants have been closed, either due to local ordinances or voluntarily to reduce operating expenses,” he said.

“While most tenants were open by July, business has not fully returned and thus rent collection remains an issue,” Brown said.

“We believe that it will be a few more quarters before all tenants are fully able to pay rent, which has caused us to lower our outlook.”

Brown lowered his estimate for Regency’s stock fair value from $75 to $62, which is still well above the Jacksonville-based company’s recent trading price mainly in the low $40s.

While Brown expects more stores to close, he thinks occupancy declines in grocery-anchored shopping centers will be more modest than previously thought. So, he has a positive long-term outlook for Regency and Kimco.

“If the second quarter was the worst quarter these companies will face, then operating cashflows should remain positive for these companies and both will likely see solid growth as the economy recovers,” he said.

Beyond the pandemic, Regency’s shopping center portfolio “should see steady but low growth over the next decade as the retail landscape adjusts to the emergence of e-commerce,” Brown said.

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