Shoe Carnival, Inc. (Nasdaq: SCVL), a leading retailer of
moderately priced footwear and accessories, today reported results
for the first quarter ended April 29, 2017.
First Quarter Highlights
- Net sales decreased 2.7 percent to
$253.4 million
- Comparable store sales decreased 3.9
percent
- Earnings per diluted share of
$0.48
- Repurchased 767,000 shares of common
stock at a total cost of $19.2 million under share repurchase
program
- Inventory was down 1.0 percent on a
per-store basis
Cliff Sifford, Shoe Carnival’s President and Chief Executive
Officer, commented, “While February was a very challenging month
due to the delay in the tax refunds, we are encouraged by the
improvement in our sales as we progressed through the quarter.
Comparable store sales for March and April combined, which includes
the shift in the Easter selling season, were up low single digits.
Our focus on inventory management resulted in higher merchandise
margins and a per-store reduction in inventory for the quarter. We
continue to manage our inventory effectively while keeping our
product offering fresh and relevant. Looking forward, our
consistently strong financial position provides the financial
flexibility to support our future strategies and further enhance
shareholder value over time as a result of our dividend and share
repurchase programs.”
First Quarter Financial Results
The Company reported net sales of $253.4 million for the first
quarter of fiscal 2017, a 2.7 percent decrease, compared to net
sales of $260.5 million for the first quarter of fiscal 2016.
Comparable store sales decreased 3.9 percent in the first quarter
of fiscal 2017.
Gross profit margin for the first quarter of fiscal 2017
decreased to 28.5 percent compared to 29.0 percent in the first
quarter of fiscal 2016. Merchandise margin increased 0.3 percent
and was offset by buying, distribution and occupancy expenses,
which increased 0.8 percent as a percentage of net sales compared
to the first quarter of fiscal 2016.
Selling, general and administrative expenses (“SG&A”) for
the first quarter of fiscal 2017 increased $0.7 million to $58.9
million. As a percentage of net sales, these expenses increased to
23.3 percent compared to 22.4 percent in the first quarter of
fiscal 2016.
Net income for the first quarter of fiscal 2017 was $8.2
million, or $0.48 per diluted share. For the first quarter of
fiscal 2016, the Company reported net income of $10.7 million, or
$0.56 per diluted share.
Store Openings and Closings
The Company expects to open approximately 19 stores and close
approximately 18 to 20 stores during fiscal 2017 compared to
opening 19 stores and closing nine stores during fiscal 2016.
Expected store openings and closings by quarter for the fiscal
year are as follows:
New Stores Store Closings 1st quarter 2017 7 5 2nd
quarter 2017 6 4 3rd quarter 2017 6 2 4th quarter 2017 0 7 to 9
Fiscal year 2017 19 18 to 20
The seven new stores opened during the first quarter include
locations in:
Total Stores in City Market the Market Auburn Hills,
MI Detroit 7 Land O Lakes, FL Tampa 8 Roanoke, VA Roanoke 2 Tampa,
FL Tampa 8 Waxahachie, TX Dallas 12 West Palm Beach, FL West Palm
Beach 6 Whitehall, PA Philadelphia 11
Fiscal 2017 Earnings Outlook
The Company expects fiscal 2017 net sales to be in the range of
$1.002 billion to $1.018 billion, with comparable store sales flat
to down low single digits. Earnings per diluted share for the
fiscal year are expected to be in the range of $1.30 to $1.45.
Fiscal 2016 earnings per diluted share were $1.28 and adjusted
earnings per diluted share were $1.40.
Conference Call
Today, at 4:30 p.m. Eastern Time, the Company will host a
conference call to discuss the first quarter results. Participants
can listen to the live webcast of the call by visiting Shoe
Carnival's Investors webpage at www.shoecarnival.com. While the
question-and-answer session will be available to all listeners,
questions from the audience will be limited to institutional
analysts and investors. A replay of the webcast will be available
on the Company’s website beginning approximately two hours after
the conclusion of the conference call and will be archived for one
year.
Date of Annual Shareholder Meeting
As previously announced, the Company will hold its Annual
Meeting of Shareholders on June 13, 2017 at its corporate
headquarters located at 7500 East Columbia Street, Evansville,
Indiana.
Non-GAAP Adjusted Results
The non-GAAP adjusted results for the full year of fiscal 2016
discussed herein exclude the impact of non-cash asset impairment
charges related to long-lived assets associated with seven of the
Company’s Puerto Rico stores, which are recorded in SG&A. These
adjusted results are provided to enhance the user's overall
understanding of the Company's historical operations and financial
performance. Specifically, the Company believes the adjusted
results provide investors with relevant period-to-period
comparisons of the Company’s core operations. The unaudited
adjusted results are provided in addition to, and not as
alternatives for, the Company’s reported results determined in
accordance with generally accepted accounting principles. A
complete reconciliation of actual results to the adjusted results
appears below in the table entitled “Reconciliation of Non-GAAP
Financial Measures to GAAP.”
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering a broad assortment of moderately
priced dress, casual and athletic footwear for men, women and
children with emphasis on national and regional name brands. As of
May 24, 2017, the Company operates 418 stores in 35 states and
Puerto Rico, and offers online shopping at www.shoecarnival.com.
Headquartered in Evansville, IN, Shoe Carnival trades on The NASDAQ
Stock Market LLC under the symbol SCVL. Shoe Carnival's press
releases and annual report are available on the Company's website
at www.shoecarnival.com.
Cautionary Statement Regarding Forward-Looking
Information
This press release contains forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995, that involve a number of risks and uncertainties. A number of
factors could cause our actual results, performance, achievements
or industry results to be materially different from any future
results, performance or achievements expressed or implied by these
forward-looking statements. These factors include, but are not
limited to: general economic conditions in the areas of the
continental United States in which our stores are located and the
impact of the ongoing economic crisis in Puerto Rico on sales at,
and cash flows of, our stores located in Puerto Rico; the effects
and duration of economic downturns and unemployment rates; changes
in the overall retail environment and more specifically in the
apparel and footwear retail sectors; our ability to generate
increased sales at our stores; our ability to successfully navigate
the increasing use of on-line retailers for fashion purchases and
the impact on traffic and transactions in our physical stores; our
ability to attract customers to our e-commerce website and to
successfully grow our e-commerce sales; the potential impact of
national and international security concerns on the retail
environment; changes in our relationships with key suppliers; the
impact of competition and pricing; our ability to successfully
manage and execute our marketing initiatives and maintain positive
brand perception and recognition; changes in weather patterns,
consumer buying trends and our ability to identify and respond to
emerging fashion trends; the impact of disruptions in our
distribution or information technology operations; the
effectiveness of our inventory management; the impact of natural
disasters on our stores, as well as on consumer confidence and
purchasing in general; risks associated with the seasonality of the
retail industry; the impact of unauthorized disclosure or misuse of
personal and confidential information about our customers, vendors
and employees; our ability to manage our third-party vendor
relationships; our ability to successfully execute our growth
strategy, including the availability of desirable store locations
at acceptable lease terms, our ability to open new stores in a
timely and profitable manner, including our entry into major new
markets, and the availability of sufficient funds to implement our
growth plans; higher than anticipated costs associated with the
closing of underperforming stores; the inability of manufacturers
to deliver products in a timely manner; changes in the political
and economic environments in, and continued favorable trade
relations with, China and other countries which are the major
manufacturers of footwear; the impact of regulatory changes in the
United States and the countries where our manufacturers are
located; the resolution of litigation or regulatory proceedings in
which we are or may become involved; our ability to meet our labor
needs while controlling costs; future stock repurchases under our
stock repurchase program and future dividend payments; and other
factors described in the Company’s SEC filings, including the
Company’s latest Annual Report on Form 10-K.
In addition, these forward-looking statements necessarily depend
upon assumptions, estimates and dates that may be incorrect or
imprecise and involve known and unknown risks, uncertainties and
other factors. Accordingly, any forward-looking statements included
in this press release do not purport to be predictions of future
events or circumstances and may not be realized. Forward-looking
statements can be identified by, among other things, the use of
forward-looking terms such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “pro forma,” “anticipates,” “intends” or the
negative of any of these terms, or comparable terminology, or by
discussions of strategy or intentions. Given these uncertainties,
we caution investors not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
We disclaim any obligation to update any of these factors or to
publicly announce any revisions to the forward-looking statements
contained in this press release to reflect future events or
developments.
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share data) (Unaudited)
Thirteen Thirteen Weeks Ended Weeks Ended April 29,
April 30, 2017 2016 Net sales $
253,389 $ 260,470
Cost of sales (including buying,
distribution and occupancy costs)
181,233 184,914 Gross profit 72,156
75,556
Selling, general and administrative
expenses
58,929 58,271 Operating income 13,227
17,285 Interest income (1 ) (3 ) Interest expense 42
43 Income before income taxes 13,186 17,245 Income
tax expense 4,955 6,584 Net income $
8,231 $ 10,661 Net income per share: Basic $
0.48 $ 0.56 Diluted $ 0.48 $ 0.56
Weighted average shares: Basic 16,814
18,775 Diluted 16,818 18,780
Cash dividends declared per share $ 0.07 $ 0.065
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) (Unaudited) April
29, January 28, April 30, 2017 2017 2016
ASSETS Current Assets: Cash and cash equivalents $ 25,261 $
62,944 $ 65,998 Accounts receivable 1,878 4,424 1,657 Merchandise
inventories 309,601 279,646 303,011 Deferred income taxes 0 0 1,411
Other 6,711 4,737 7,550 Total Current Assets
343,451 351,751 379,627 Property and equipment - net 97,323 96,216
102,636 Deferred income taxes 9,769 9,600 8,078 Other noncurrent
assets 812 911 617 Total Assets $ 451,355 $
458,478 $ 490,958
LIABILITIES AND SHAREHOLDERS’
EQUITY Current Liabilities: Accounts payable $ 70,572 $ 67,808
$ 69,119 Accrued and other liabilities 21,855 18,488
20,688 Total Current Liabilities 92,427 86,296 89,807
Deferred lease incentives 29,625 30,751 31,106 Accrued rent 11,211
11,255 11,301 Deferred compensation 10,597 10,465 10,159 Other
888 829 715 Total Liabilities 144,748 139,596
143,088 Total Shareholders' Equity 306,607 318,882
347,870 Total Liabilities and Shareholders' Equity $ 451,355
$ 458,478 $ 490,958
SHOE CARNIVAL, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Thirteen Thirteen Weeks Ended
Weeks Ended April 29, 2017 April 30, 2016 Cash Flows From
Operating Activities Net income $ 8,231 $ 10,661
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 5,835 5,853 Stock-based compensation
46 635 Loss on retirement and impairment of assets 741 47 Deferred
income taxes (169 ) (1,270 ) Lease incentives 467 263 Other (1,572
) (676 ) Changes in operating assets and liabilities: Accounts
receivable 2,545 474 Merchandise inventories (29,955 ) (10,133 )
Accounts payable and accrued liabilities 1,144 (5,761 ) Other
2,974 4,307 Net cash (used in) provided
by operating activities (9,713 ) 4,400
Cash Flows From Investing Activities Purchases of property and
equipment (7,477 ) (4,161 ) Net cash used in
investing activities (7,477 ) (4,161 ) Cash
Flows From Financing Activities Proceeds from issuance of stock 89
72 Dividends paid (1,169 ) (1,247 ) Purchase of common stock for
treasury (19,151 ) (1,596 ) Shares surrendered by employees to pay
taxes on restricted stock (262 ) (284 ) Net cash used
in financing activities (20,493 ) (3,055 ) Net
decrease in cash and cash equivalents (37,683 ) (2,816 ) Cash and
cash equivalents at beginning of period 62,944
68,814 Cash and Cash Equivalents at End of Period $ 25,261
$ 65,998
SHOE CARNIVAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP (In
thousands, except per share data) (Unaudited)
The following table provides
reconciliations of GAAP to non-GAAP financial measures, to reflect
the exclusion of non-cash impairment charges of long-lived assets
for seven Puerto Rico stores. There were no non-cash impairment
charges of long-lived assets for our Puerto Rico stores for the
first quarter of fiscal 2017.
Fifty-two Weeks Ended January 28, % of 2017
Net Sales Non-cash impairment charges $ 3,573 0.3% Tax
effect 1,346 0.1% Non-cash impairment charges net of income
taxes $ 2,227 0.2% Reported selling, general and
administrative expenses $ 251,323 25.1% Non-cash impairment charges
3,573 0.3% Adjusted selling, general and administrative
expenses, pre-tax $ 247,750 24.8% Reported operating income
$ 37,912 3.8% Non-cash impairment charges 3,573 0.3%
Adjusted operating income, pre-tax $ 41,485 4.1% Reported
net income $ 23,517 2.4% Non-cash impairment charges net of income
taxes 2,227 0.2% Adjusted net income $ 25,744 2.6%
Reported net income per diluted share $ 1.28 Non-cash impairment
charges net of income taxes 0.12 Adjusted diluted earnings
per share $ 1.40
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Shoe Carnival, Inc.Cliff SiffordPresident and
Chief Executive OfficerorW. Kerry
JacksonSenior Executive Vice President, Chief Operating and
Financial Officer and Treasurer(812) 867-6471
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