SCVL - Shoe Carnival Is Not An Opportunity Even Under Optimistic Scenarios

2024-03-22 04:07:19 ET

Summary

• Shoe Carnival has shown consistent growth and margins for over 30 years, but margins are currently decreasing due to decreased store productivity.
• The company's value proposition is being a one-stop-shop for affordable shoes for the whole family.
• After the pandemic, Shoe Carnival experienced a significant increase in sales and gross margins, but it is uncertain if these margins will be sustainable in the future.
• The current stock price already discounts even the most positive scenarios.

Shoe Carnival ( SCVL ) is an American footwear retailer with 430 stores.

The company showed consistent growth and margins for over 30 years since going public in 1993. After the pandemic, growth accelerated, coupled with operational leverage and lower promotions, which led to double operating margins....

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