NEW YORK -- Sterne, Agee & Leach is boosting its ratings on Shoe Carnival, citing sales and better-than-expected store growth potential.
Analyst Sam Poser said that after meeting with Chief Financial Officer Kerry Jackson, he realized that he underestimated the footwear and accessories company's square footage growth and the ways in which it can leverage modest increases in revenue at established stores.
Shoe Carnival already has 17 leases signed for next year and 10 others that are close to being signed, Poser said. And with new construction ramping up, Poser says the retailer may be able to open 50 new stores a year.
The company had respectable sandal sales that began in the first quarter thanks to unseasonably warm weather. The company will see continued strong sales of athletic products during the second half of the year, Poser said. He also expects the retailer to capitalize on a strong selection of leather boots.
Poser raised his rating on Shoe Carnival Inc. to "Buy" from "Neutral" and gave a $28 price target.