Fiscal 2019 Record Net Sales and Earnings Exceed Company
Expectations
Reports Fourth Quarter Comparable Store Sales Increase of 3.2
Percent
Declares Quarterly Cash Dividend
Shoe Carnival, Inc. (Nasdaq: SCVL) (the “Company”), a leading
retailer of moderately priced footwear and accessories, today
reported results for the fourth quarter and fiscal year ended
February 1, 2020.
Fourth Quarter and Fiscal Year 2019 Highlights
- Net sales of $239.9 million for the quarter and record sales of
$1.037 billion for the fiscal year
- Net income of $3.5 million for the quarter and record net
income of $42.9 million for the fiscal year
- Record earnings per diluted share of $2.92 for the fiscal
year
- Comparable store sales increased 3.2 percent for the quarter
and 1.9 percent for the fiscal year
- Cash and cash equivalents of $61.9 million with no outstanding
debt as of February 1, 2020
- Repurchased 1.1 million shares of common stock at a total cost
of $37.8 million under the Company’s share repurchase programs
during the fiscal year and paid $5.7 million in quarterly cash
dividends during the fiscal year
“2019 was another record year for Shoe Carnival, as we exceeded
our sales and earnings expectations, while extending our leadership
position in the family footwear segment. In addition, we delivered
the eleventh consecutive year of comparable same store sales
growth, driven in large part by strong performance in non-athletic
footwear and accessories,” commented Cliff Sifford, Shoe Carnival’s
Vice Chairman and Chief Executive Officer.
“Last week, we made the difficult decision to close our stores
until April 2, 2020. As the COVID-19 pandemic upends our daily
lives, the health and safety of our employees, our customers, and
our communities are our primary concern. For now we continue to
serve our loyal customers through our website,
www.shoecarnival.com, and our mobile app,” continued Sifford. “From
a corporate standpoint, our strong balance sheet and prudent
expense management provides us the financial flexibility to keep
our steady footing during this challenging economic time. In
addition, our long-standing vendor relationships and proven history
of good inventory management enables us to remain agile. These are
both critical attributes in a dynamic environment. As we look
forward, we believe our customer-centric culture and strategic
investments to enhance our customers’ experience, leverage
technology, and ultimately, drive overall traffic will position
Shoe Carnival for long-term growth and value creation for our
shareholders.”
Fourth Quarter Financial Results
The Company reported net sales of $239.9 million for the fourth
quarter of fiscal 2019, a 2.2 percent increase compared to net
sales of $234.7 million for the fourth quarter of fiscal 2018.
Comparable store sales increased 3.2 percent for the fourth quarter
of fiscal 2019.
Gross profit margin for the fourth quarter of fiscal 2019
increased to 29.1 percent compared to 28.4 percent in the fourth
quarter of fiscal 2018. Merchandise margin increased 0.7 percent
and buying, distribution and occupancy expenses remained flat as a
percentage of net sales compared to the fourth quarter of fiscal
2018.
Selling, general and administrative expenses for the fourth
quarter decreased slightly to $65.1 million compared to the fourth
quarter of fiscal 2018. As a percentage of net sales, these
expenses decreased to 27.1 percent compared to 27.8 percent in the
fourth quarter of fiscal 2018.
Net income for the fourth quarter of fiscal 2019 was $3.5
million, or $0.24 per diluted share. For the fourth quarter of
fiscal 2018, the Company reported net income of $1.4 million, or
$0.09 per diluted share.
Fiscal Year 2019 Financial Results
Net sales during fiscal 2019 increased $6.9 million to a record
$1.037 billion. Comparable store sales for fiscal 2019 increased
1.9 percent. Net income for fiscal 2019 was $42.9 million, or $2.92
per diluted share, compared to net income of $38.1 million, or
$2.45 per diluted share, in fiscal 2018. Included in fiscal 2019
earnings was a tax benefit in connection with the vesting of
equity-based compensation of approximately $1.9 million, or $0.13
per diluted share, that was recorded in the first quarter.
Gross profit margin for fiscal 2019 was 30.1 percent compared to
30.0 percent in fiscal 2018. Selling, general and administrative
expenses for fiscal 2019 decreased $1.6 million to $257.7 million.
As a percentage of net sales, these expenses decreased to 24.9
percent compared to 25.2 percent in fiscal 2018. The decrease in
selling, general and administrative expenses is primarily
attributable to above target incentive and equity compensation
earned in fiscal 2018.
Store Openings and Closings
The Company opened one store and closed six stores during fiscal
2019 compared to three store openings and 14 store closings in
fiscal 2018.
Store openings and closings by quarter for the fiscal year were
as follows:
New Stores
Store Closings
First quarter 2019
0
2
Second quarter 2019
0
2
Third quarter 2019
1
1
Fourth quarter 2019
0
1
Fiscal year 2019
1
6
Share Repurchase Program
For the fiscal year ended February 1, 2020, the Company
repurchased approximately 1.1 million shares of its common stock,
at an average price of $33.81 per share, for a total cost of $37.8
million. As of February 1, 2020, the Company had purchased
approximately 184,000 shares at an aggregate cost of $6.9 million
under the new share repurchase program and had $43.1 million
available for future repurchases. The Company does not anticipate
repurchasing any shares in fiscal 2020 but will continue to
reevaluate further share repurchases on an ongoing basis.
Fiscal 2020 Earnings Outlook
The Company is not providing guidance for fiscal year 2020 due
to the uncertainty caused by COVID-19.
Conference Call
Today, at 4:30 p.m. Eastern Time, the Company will host a
conference call to discuss the fourth quarter and fiscal 2019
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.
First Quarter Fiscal 2020 Cash Dividend
The Company announced today that its Board of Directors has
approved the payment of a quarterly cash dividend. The quarterly
cash dividend of $0.085 per share will be paid on April 20, 2020 to
shareholders of record as of the close of business on April 6,
2020.
Future declarations of dividends are subject to approval of the
Board of Directors and will depend on the Company's results of
operations, financial condition, business conditions and other
factors deemed relevant by the Board of Directors.
Record Date and Date of Annual Shareholder Meeting
The Company also announced that April 10, 2020, has been set as
the shareholder of record date and the Annual Meeting of
Shareholders will be held on June 11, 2020.
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 name brands. As of March 25,
2020, the Company operates 392 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, including,
but not limited to, statements regarding the timing of the
temporary closure of our stores and other statements regarding the
impact of COVID-19 on our operations. 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: the duration and spread of the COVID-19 outbreak,
mitigating efforts deployed by government agencies and the public
at large, and the overall impact from such outbreak on the
operations of our stores, economic conditions, financial market
volatility, consumer spending and our supply chain and distribution
processes; 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 online retailers for fashion purchases and
the impact on traffic and transactions in our physical stores; the
success of the open-air shopping centers where our stores are
located and its impact on our ability to attract customers to our
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; our
ability to control costs and meet our labor needs in a rising wage
environment; changes in the political and economic environments in,
the status of trade relations with, and the impact of changes in
trade policies and tariffs impacting, China and other countries
which are the major manufacturers of footwear; the impact of
competition and pricing; our ability to successfully manage and
execute our marketing initiatives and maintain positive brand
perception and recognition; our ability to successfully manage our
current real estate portfolio and leasing obligations; changes in
weather, including patterns impacted by climate change; changes in
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, other public health crises, political crises and other
catastrophic events on our stores and our suppliers, 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, including
as a result of a cyber-security breach; our ability to manage our
third-party vendor relationships; our ability to successfully
execute our business 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 business plans; higher than anticipated
costs associated with the closing of underperforming stores; the
inability of manufacturers to deliver products in a timely manner;
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; continued volatility and disruption in the capital and
credit markets; and 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
Fifty-Two
Fifty-Two
Weeks Ended
Weeks Ended
Weeks Ended
Weeks Ended
February 1,
2020
February 2,
2019
February 1,
2020
February 2,
2019
Net sales
$
239,875
$
234,658
$
1,036,551
$
1,029,650
Cost of sales (including buying,
distribution and occupancy costs)
169,975
167,992
724,682
720,658
Gross profit
69,900
66,666
311,869
308,992
Selling, general and administrative
expenses
65,123
65,169
257,660
259,232
Operating income
4,777
1,497
54,209
49,760
Interest income
(150
)
(355
)
(730
)
(747
)
Interest expense
36
37
191
150
Income before income taxes
4,891
1,815
54,748
50,357
Income tax expense
1,408
456
11,834
12,222
Net income
$
3,483
$
1,359
$
42,914
$
38,135
Net income per share:
Basic
$
0.25
$
0.09
$
2.97
$
2.51
Diluted
$
0.24
$
0.09
$
2.92
$
2.45
Weighted average shares:
Basic
14,076
14,598
14,427
15,111
Diluted
14,311
15,421
14,686
15,499
Cash dividends declared per share
$
0.085
$
0.080
$
0.335
$
0.315
Financial Note:
Per share amounts are computed independently for each quarter of
the fiscal year. The sum of the quarters may not equal the total
year due to the impact of changes in weighted shares outstanding
and differing applications of earnings under the two-class
method.
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
February 1,
2020
February 2,
2019
ASSETS
Current Assets:
Cash and cash equivalents
$
61,899
$
67,021
Accounts receivable
2,724
1,219
Merchandise inventories
259,495
257,539
Other
5,529
11,534
Total Current Assets
329,647
337,313
Property and equipment – net
67,781
70,605
Deferred income taxes
7,833
9,622
Other noncurrent assets
8,106
459
Operating lease right-of-use assets
215,007
0
Total Assets
$
628,374
$
417,999
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
60,665
$
48,715
Accrued and other liabilities
18,695
22,069
Current portion of operating lease
liabilities
43,146
0
Total Current Liabilities
122,506
70,784
Long-term portion of operating lease
liabilities
194,108
0
Deferred lease incentives
0
22,171
Accrued rent
0
8,436
Deferred compensation
13,345
12,108
Other
1,052
67
Total Liabilities
331,011
113,566
Total Shareholders’ Equity
297,363
304,433
Total Liabilities and Shareholders’
Equity
$
628,374
$
417,999
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fifty-Two
Fifty-Two
Weeks Ended
Weeks Ended
February 1,
2020
February 2,
2019
Cash Flows From Operating Activities
Net income
$
42,914
$
38,135
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
16,950
21,843
Stock-based compensation
6,486
10,162
Loss (gain) on retirement and impairment
of assets, net
1,503
(1,264
)
Deferred income taxes
2,619
(1,440
)
Non-cash operating lease expense
42,322
0
Lease incentives
0
634
Other
1,236
(8,650
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,505
)
3,905
Merchandise inventories
(1,956
)
2,961
Operating lease liabilities
(45,933
)
0
Accounts payable and accrued
liabilities
9,468
12,688
Other
(7,158
)
(4,833
)
Net cash provided by operating
activities
66,946
74,141
Cash Flows From Investing Activities
Purchases of property and equipment
(18,501
)
(7,413
)
Other proceeds
750
2,998
Net cash used in investing activities
(17,751
)
(4,415
)
Cash Flow From Financing Activities
Borrowings under line of credit
20,000
0
Payments on line of credit
(20,000
)
0
Proceeds from issuance of stock
182
177
Dividends paid
(5,671
)
(4,763
)
Purchase of common stock for treasury
(37,768
)
(46,046
)
Shares surrendered by employees to pay
taxes on restricted stock
(11,060
)
(327
)
Net cash used in financing activities
(54,317
)
(50,959
)
Net (decrease) increase in cash and cash
equivalents
(5,122
)
18,767
Cash and cash equivalents at beginning of
year
67,021
48,254
Cash and Cash Equivalents at End of
Year
$
61,899
$
67,021
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200325005719/en/
Cliff Sifford Vice Chairman and Chief Executive Officer, or W.
Kerry Jackson Senior Executive Vice President, Chief Financial and
Administrative Officer and Treasurer
7500 East Columbia Street Evansville, IN 47715
www.shoecarnival.com (812) 867-6471
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