Shoe Carnival, Inc. (NASDAQ:SCVL) Q1 2023 Earnings Conference Call May 24, 2023 8:30 AM ET

Company Participants

Mark Worden - President and Chief Executive Officer

Carl Scibetta - Senior Executive Vice President and Chief Merchandising Officer

Erik Gast - Executive Vice President and Chief Financial Officer

Conference Call Participants

Mitch Kummetz - Seaport Research

Operator

Good morning and welcome to Shoe Carnival Inc.'s Fiscal Year 2023 First Quarter Earnings Call. Today’s conference is being recorded. It is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited.

Management’s remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company’s actual results to be materially different from those projected in such statements. Forward-looking statements should also be considered in conjunction with the discussion of risk factors included in the company’s SEC filings and today’s earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today’s date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today’s conference call or contained in today’s press release to reflect future events or developments.

I'll now turn the conference over to Mr. Mark Worden, President and CEO of Shoe Carnival for opening remarks. Mr. Worden, you may begin.

Mark Worden

Good morning everyone and thank you for joining us today for Shoe Carnival’s first quarter 2023 earnings conference call. Joining me on today’s call are Carl Scibetta, Chief Merchandising Officer and Erik Gast, our new Chief Financial Officer. Erik joined the company a few weeks ago and we are excited to have him on the team and to engage with the investment community ahead.

Let me start out today saying that Q1 was a challenging quarter. While we continued to make significant progress against our long-term strategies and achieved many important milestones, we saw softer than expected consumer trends develop in March and April and unseasonable weather persist throughout quarter end. The biggest headwinds that our customer faced in Q1 were persistent inflation across everyday expenses they need to spend on, interest rates continuing to climb and unexpectedly federal tax refunds ended the quarter with a nearly 10% reduction versus the prior year.

Historically, our traffic and sales surge when our customer receives their annual tax refund. This year, the reduced tax refund announced did not generate traffic levels as prior year. These headwinds resulted in store traffic declining approximately 10% versus prior year. What we saw was a segment of customers from lower income households who had stretched disposable income they delayed their shopping trips for footwear, apparel and accessories.