Brown Shoe, DSW, or Shoe Carnival: Which Company Had the Best Quarter?

Brown Shoe (NYSE: BWS  ) , DSW (NYSE: DSW  ) , and Shoe Carnival (NASDAQ: SCVL  ) are three of the largest retailers in the highly competitive footwear industry. All three companies have recently released quarterly results, which included the holiday season, so let's break down the reports to determine which retailer performed the best and could provide the highest returns for investors.

Quarterly report breakdown

Source: Famous Footwear Blog.

Brown Shoe kicked off earnings season for the footwear retailers when it released its fourth-quarter report on March 14; here's a breakdown and year-over-year comparison of the results:

Metric Reported Expected
Earnings Per Share $0.14 $0.10
Revenue $600.0 million $622.6 million

Source: Benzinga.

  • Earnings per share increased 55.6%.
  • Revenue decreased 3%.
  • Comparable-store sales at Famous Footwear declined 1.8%.
  • Gross profit declined 2.4% to $241.4 million.
  • Gross margin expanded 20 basis points to 40.2%.
  • The company closed or relocated 13 Famous Footwear stores and added nine new locations during the quarter. It now operates 1,044 Famous Footwear stores and 179 speciality retail shops worldwide. 
  • Maintained its quarterly dividend of $0.07 per share.

Source: DSW.

DSW was the second to report, releasing its fourth-quarter results on March 18; here's a breakdown and year-over-year comparison of the results:

Metric Reported Expected
Earnings Per Share $0.31 $0.29
Revenue $572.27 million $590.23 million

Source: Benzinga.

  • Earnings per share decreased 11.4%.
  • Revenue decreased 3.7%.
  • Comparable-store sales remained flat.
  • Gross profit fell 6.8% to $159.98 million.
  • Gross margin declined 90 basis points to 28%.
  • The company opened four new stores during the quarter, bringing its total store count to 397.
  • Raised its quarterly dividend by 50% to $0.1875 per share.

Source: Shoe Carnival Facebook page.

The last of the three companies to report was Shoe Carnival, with its fourth-quarter report released on March 20; here's a breakdown and year-over-year comparison:

Metric Reported Expected
Earnings Per Share $0.03 $0.04
Revenue $200.31 million $203.84 million

Source: Benzinga.

  • Earnings per share decreased 76.9%.
  • Revenue decreased 2.6%.
  • Comparable-store sales declined 2.5%.
  • Gross profit declined 5% to $57.18 million.
  • Gross margin declined 80 basis points 28.5%.
  • The company closed five stores and opened three new locations during the quarter, bringing its total down to 376. 
  • Maintained is quarterly dividend of $0.06 per share.earnings reports:

What to expect in the year ahead

Source: Famous Footwear.

In its report, Brown Shoe provided its outlook on fiscal 2014; here's an overview of its expectations versus the consensus analyst estimates:

Metric Outlook Analyst Expectations
Earnings Per Share $1.45-$1.55 $1.62
Revenue $2.58 billion-$2.60 billion $2.61 billion

This outlook would result in earnings per share growing 2.8%-9.9% and revenue growing 2.7%-3.6% from fiscal 2013, but this fell below expectations. Brown Shoe also said it expects comparable-store sales growth in the low single-digits at Famous Footwear and slight gross margin expansion during the year. It may be low growth compared to what we have seen in recent years from Brown Shoe, but low growth is better than no growth.

Source: DSW Facebook page.

DSW also provided its outlook on fiscal 2014 in its fourth-quarter report, so here's how it compared to analyst expectations:

Metric Outlook Analyst Expectations
Earnings Per Share $1.87-$2.02 $2.09
Revenue $2.51 billion-$2.53 billion $2.57 billion

This outlook would result in EPS growth of minus (0.5%)- to 7.4% and revenue growth of 5.9%-6.8% from fiscal 2013, but both are below analyst expectations. DSW also said it plans to open approximately 35 new stores during the year, which would bring its total to 432, and noted that its store count could rise to between 500 and 550 over the long term. While 2014 does not appear to be a high-growth year, DSW's ongoing expansion plans could help set it up for success later on.

Source: Shoe Carnival Facebook page.

In its report, Shoe Carnival only provided its outlook on the first quarter of fiscal 2014; here's how it stacked up versus analyst estimates:

Metric Outlook Analyst Expectations
Earnings Per Share $0.45-$0.52 $0.50
Revenue $232 million-$241 million $252.81 million

Shoe Carnival's outlook would result in EPS growth of minus (4.3%) to10.6% and revenue growth of minus (0.1%) to 3.8%, which was mixed compared to analyst estimates. The company also expects comparable-store sales to be flat to down 3.5%, compared to 4.3% growth a year ago. Although this outlook seems weak, management noted that it will begin advertising on cable television in April, which could greatly increase brand awareness and help drive customer traffic.earnings reports: http://investor.brownshoe.com/press-release/brown-shoe-company-reports-fourth-quarter-and-full-year-2013-resultshttp://investors.dswshoe.com/2014-03-18-DSW-Inc-Reports-Fourth-Quarter-and-Fiscal-Year-2013-Financial-Resultshttp://phx.corporate-ir.net/phoenix.zhtml?c=89461&p=irol-newsArticle&ID=1910642&highlight=

And the winner is... 
After reviewing the retailers' earnings results and future outlooks, the winner of this matchup is Brown Shoe. Brown Shoe was the only company to show earnings growth and margin expansion during the highly promotional holiday season's quarter, and these were keys to the victory on the earnings front. In terms of outlook, Brown Shoe was alone in calling for positive growth at both the low end and high end of its guidance, while DSW and Shoe Carnival projected the possibility of negative growth. If you are a Foolish investor seeking an investment in the footwear industry, take a deeper look into the champion of the fourth quarter, Brown Shoe.

To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.


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