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Expenses trip up Shoe Carnival profits

BY Dan Berthiaume

Evansville, Ind. – Increases in cost of sales and selling, general and administrative expenses (SG&A) drove a year-over-year reduction in net income during the second quarter of fiscal 2014 at Shoe Carnival Inc. The company reported net income of $2.58 million, down 59% from $5.84 million the same period a year earlier.

Net sales fared better, rising 3% to $222.1 million from $216.4 million. Same-store sales dropped 2.1%.

Looking ahead, Shoe Carnival plans to open nine new stores and close two stores in the fourth quarter. In addition, in the third quarter, the company plans to convert from third-party fulfillment of e-commerce orders to fulfilling those orders from its stores and distribution center, as well as launch its first-ever mobile app.

Shoe Carnival anticipates third quarter net sales will be in the range of $247 million to $252 million. This expectation includes a range for comparable store sales of down 1% to a 1% gain.

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360pi: Meeting Amazon prices doesn’t guarantee success

BY Dan Berthiaume

Ottawa, Canada – Trying to stay competitive with Amazon.com on price may not be the best path to success for department store and discount retailers. According to pricing analysis of 1,000-plus household goods based on Amazon’s own assortment relative to Kohl’s, Walmart, Target and Macy’s conducted by 360pi and Retail Systems Research from March-June 2014, Kohl’s was consistently 30%-60% above Amazon’s pricing for this sample, but also reported the healthiest financials of the group.

In the same category and timeframe, Macy’s was consistently 20%-40% above Amazon until April 2014, then lowered its prices to be more competitive. 360pi/Retail Systems Research analysis indicates this likely contributed to missed second quarter expectations for Macy’s.

Meanwhile, Wal-Mart has consistently been underpricing Amazon in the household goods category since mid- January 2014. Together, Target and Walmart have closed the pricing gap with Amazon to within a 5% range in July, compared to a 30% spread in fall 2013. At the same time, however, Wal-Mart and Target have both experienced under-performing sales and financial losses, while Amazon is experiencing mounting pressure to improve profitability.

“We found this particular analysis fascinating because it puts a very large mirror on the pricing strategy that so many retailers fall prey to, the race to the bottom in which no one wins the gold medal,” said Jenn Markey, VP marketing, 360pi. “This holiday season will be a test to see which retailers will get it right by being responsive to the competition rather than reactive, and leverage a combination of loyalty programs with personalized offers and a unique assortment to deliver on the brand promise conveyed to their target shoppers.”

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Labor Day boosts Havertys business

BY Dan Berthiaume

Atlanta – Havertys Furniture Company Inc. reports its total written business for the third quarter to date of 2014 is up approximately 3.1% from the same period last year and written same-store sales are up approximately 3.5%. This increase was driven by a record setting Labor Day holiday weekend for which total written business was up approximately 7.4% from the same four-day period the prior year.

Havertys will enter the Rogers, Arkansas market with a new store scheduled to open in second quarter 2015. The 29,700-sq.-ft. showroom will be located in the Pinnacle Hills Promenade.

The company will also enter the Waco, Texas, market as part of a new phase of the Central Texas Marketplace development. The 31,500-sq.-ft. store is scheduled to open in third quarter 2015.

Havertys is expanding in southeast Florida with a store in Coconut Creek slated to open late this year. Havertys` expansion in this area also includes a 40,000-sq.-ft. store in Fort Lauderdale scheduled to open in second quarter 2015.

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