Provides Business Update on COVID-19
Shoe Carnival, Inc. (Nasdaq: SCVL) (the “Company”), a leading
retailer of moderately priced footwear and accessories, today
reported results for the first quarter ended May 2, 2020 and
provided a business update on COVID-19.
First Quarter Highlights
- Net sales were $147.5 million for the quarter
- Net loss was $16.2 million, or a loss of $1.16 per diluted
share, for the quarter
- All stores closed effective March 19, 2020 as a result of the
COVID-19 pandemic; between late- April and May 5, 2020, over 50
percent of stores re-opened in states that relaxed or cancelled
stay-at-home orders
- No employees were furloughed during the quarter
- Comparable store sales increased 3.9 percent through March 12,
2020 prior to when the Company began experiencing the effects of
COVID-19, but decreased 42.3 percent for the entirety of the
quarter
- E-commerce sales increased over 160 percent for the quarter,
and for the time period the brick-and-mortar stores were closed,
e-commerce sales increased over 350 percent
- As of May 2, 2020, cash and cash equivalents were $13.1 million
and no cash borrowings were outstanding on the Company’s recently
amended $100 million line of credit
“Our customers and the entire organization were challenged
during the first fiscal quarter of 2020 as, together, we navigated
uncharted waters as the COVID-19 virus engulfed the country in
mid-March. In this trying time, the commitment and dedication of
our team really shined through, and I could not be prouder. We
continued to serve our loyal customers through our e-commerce
platform, which resulted in triple-digit sales increases, while at
the same time, we made swift decisions to ensure we mitigated the
impact of this global pandemic on our business,” commented Cliff
Sifford, Shoe Carnival’s Vice Chairman and Chief Executive
Officer.
“We are thrilled that, as of late-April, we are once again
serving our customers in-person at our stores. As of today, we have
successfully re-opened over 80 percent of our stores, which are
delivering sales above our expectations. While many unknowns
remain, we are taking the necessary steps to ensure we are
well-positioned to address our customers’ summer footwear needs.
These are unprecedented times, but Shoe Carnival’s customer-centric
culture, dedicated workforce, brand strength and business model
resilience will enable us to emerge stronger as a leader in the
family footwear segment.”
First Quarter Financial Results
The Company reported net sales of $147.5 million for the first
quarter of fiscal 2020, a 41.9 percent decrease compared to net
sales of $253.8 million for the first quarter of fiscal 2019. The
decrease resulted from substantially all stores being closed for
approximately 50 percent of the quarter, offset by increased
e-commerce sales.
Gross profit margin for the first quarter of fiscal 2020
decreased to 21.3 percent compared to 29.6 percent in the first
quarter of fiscal 2019. Merchandise margin decreased 1.9 percent
and buying, distribution and occupancy expenses, which are
generally fixed costs, increased 6.4 percent as a percentage of net
sales compared to the first quarter of fiscal 2019. The decrease in
merchandise margin was primarily due to higher shipping costs
associated with e-commerce sales. The increase in buying,
distribution and occupancy costs as a percentage of sales was
primarily due to the deleveraging effect of lower sales.
Selling, general and administrative expenses for the first
quarter of fiscal 2020 decreased $4.8 million to $54.7 million. As
a percentage of net sales, these expenses increased to 37.1 percent
compared to 23.4 percent in the first quarter of fiscal 2019
primarily due to the deleveraging effect of lower sales. The
decrease in selling, general and administrative expenses was
primarily due to lower wages and the recording of an employee
retention payroll tax credit authorized by the CARES Act offsetting
wages paid to employees while they were not working. Expenses were
also lower in the quarter due to market return volatility
associated with the Company’s deferred compensation plans. The
decrease was partially offset by impairments of long-lived assets
recorded on seven stores during the first quarter of fiscal
2020.
Net loss for the first quarter of fiscal 2020 was $16.2 million,
or a loss of $1.16 per diluted share. For the first quarter of
fiscal 2019, the Company reported net income of $13.9 million, or
$0.91 per diluted share. Included in the first quarter of fiscal
2019 was a tax benefit of approximately $1.9 million, or $0.13 per
diluted share, associated with the vesting of equity-based
compensation.
Business Update – COVID-19
As the Company implemented its response to the impact of
COVID-19, the primary focus has been on the well-being of its
employees, customers and the communities Shoe Carnival serves.
During the first quarter, the following actions were implemented to
mitigate the financial impact of the pandemic and ensure the safety
of Shoe Carnival employees and customers:
- Closed all stores effective March 19, 2020 to prevent the
spread of the virus and align with guidance from health
officials
- Began re-opening stores in late-April, and by May 5, 2020, over
50 percent of stores were re-opened in states where stay-at-home
orders were relaxed or cancelled. As of May 20, 2020, 318 stores
are open, which represents 82 percent of store locations. Pending
any government changes, the Company expects to have over 95 percent
of stores open by the second week of June.
- Maintained the Company’s store base as shipping points for
e-commerce sales; e-commerce traffic and conversion significantly
increased in the quarter
- Implemented a new pay option to allow e-commerce customers to
pay for merchandise over time
- Undertook measures to ensure stores were supplied with personal
protective equipment (PPE), intensified cleaning and sanitation
procedures and prominently displayed signage to reinforce social
distancing and hygiene
- Reduced non-essential corporate spending
- Exercised the accordion feature in the Company’s credit
agreement, which increased the capacity of the line of credit from
$50 million to $100 million
- Assessed potential benefits of the CARES Act, including
recording approximately $2 million of credits associated with an
employee retention payroll tax credit in the first fiscal quarter
of 2020
- No employees were furloughed during the quarter
- Temporarily reduced the base salaries of the Company’s
executives and other senior members of the management team and the
annual cash retainer fee of the Board of Directors and delayed the
implementation of wage increases for certain employees
- Temporarily suspended the repurchase of common stock as a part
of the Company’s share repurchase program
- Worked with supply chain partners to reduce inventories and
extend credit terms
- Negotiated modified lease terms including the deferral of
certain lease payments
- Deferred non-essential capital projects
- Postponed marketing activities for brick-and-mortar stores and
evaluated promotional activities
- Implemented a temporary freeze on company hiring efforts
As stores have re-opened, the Company has experienced higher
conversion ratios and higher per unit transactions, offset by
reduced traffic. Generally, sales have been better than the
original plan set for fiscal 2020 for those stores that are open,
with some stores exceeding plan and some stores showing declines.
E-commerce sales continue to trend higher than in the prior year
and the original plan for fiscal 2020; however, some tapering of
this increase is anticipated.
Fiscal 2020 Earnings Outlook
The impacts of the COVID-19 pandemic are expected to continue as
the Company’s operations and supply chains, economic conditions and
consumer spending adapt to the impacts of COVID-19 being present
where the Company operates, procures merchandise and raises
capital. Considerable uncertainty exists regarding how this
pandemic may affect sales and operations for the remainder of the
fiscal year. As a result, the Company is not providing guidance for
fiscal year 2020.
Store Openings and Closings
No new stores were opened in the first quarter of fiscal 2020
and two stores were closed. The Company expects to open four stores
and close seven to ten stores during fiscal 2020 compared to one
store opening and six store closings in fiscal 2019.
Share Repurchase Program
As of May 2, 2020, the Company had $43.1 million available for
future repurchases under its share repurchase program. The Company
does not anticipate repurchasing any shares in fiscal 2020 but will
continue to reevaluate further share repurchases on an ongoing
basis.
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.
Annual Shareholder Meeting
As previously announced, the Company will hold its Annual
Meeting of Shareholders at 9:00 a.m. Central Daylight Time on June
11, 2020 at its corporate headquarters located at 7500 East
Columbia Street, Evansville, Indiana. The Company is actively
monitoring COVID-19 developments and is sensitive to the public
health and travel concerns shareholders may have and the protocols
that federal, state, and local governments may impose. In the event
it is not possible or advisable to hold the annual meeting in
person or at the scheduled date, time or location, the Company will
announce alternative arrangements for the meeting via a press
release as promptly as practicable, which may include holding the
meeting solely by means of remote communication in a virtual
meeting format.
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 May 20, 2020,
the Company operates 390 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
re-opening of our stores, customer traffic, conversion rates and
sales (including e-commerce traffic, conversion rates and sales)
after re-opening, the PPE installed at 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
Weeks Ended
Weeks Ended
May 2, 2020
May 4, 2019
Net sales
$
147,495
$
253,810
Cost of sales (including buying,
distribution and occupancy costs)
116,031
178,670
Gross profit
31,464
75,140
Selling, general and administrative
expenses
54,725
59,532
Operating (loss)/income
(23,261
)
15,608
Interest income
(89
)
(331
)
Interest expense
56
36
(Loss)/income before income taxes
(23,228
)
15,903
Income tax (benefit)/expense
(7,038
)
2,030
Net (loss)/income
$
(16,190
)
$
13,873
Net (loss)/income per share:
Basic
$
(1.16
)
$
0.95
Diluted
$
(1.16
)
$
0.91
Weighted average shares:
Basic
13,992
14,612
Diluted
13,992
15,192
Cash dividends declared per share
$
0.085
$
0.080
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
May 2,
February 1,
May 4,
2020
2020
2019
ASSETS
Current Assets:
Cash and cash equivalents
$
13,084
$
61,899
$
21,616
Accounts receivable
6,316
2,724
2,003
Merchandise inventories
303,988
259,495
289,356
Other
14,186
5,529
9,769
Total Current Assets
337,574
329,647
322,744
Property and equipment – net
64,928
67,781
72,313
Deferred income taxes
7,249
7,833
8,159
Other noncurrent assets
9,454
8,106
760
Operating lease right-of-use assets
210,345
215,007
224,642
Total Assets
$
629,550
$
628,374
$
628,618
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
90,040
$
60,665
$
56,488
Accrued and other liabilities
12,517
18,695
17,611
Current portion of operating lease
liabilities
49,078
43,146
47,089
Total Current Liabilities
151,635
122,506
121,188
Long-term portion of operating lease
liabilities
184,896
194,108
202,517
Deferred compensation
12,646
13,345
13,386
Other
915
1,052
24
Total Liabilities
350,092
331,011
337,115
Total Shareholders’ Equity
279,458
297,363
291,503
Total Liabilities and Shareholders’
Equity
$
629,550
$
628,374
$
628,618
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Thirteen
Thirteen
Weeks Ended
Weeks Ended
May 2, 2020
May 4, 2019
Cash Flows From Operating Activities
Net (loss)/income
$
(16,190
)
$
13,873
Adjustments to reconcile net (loss)/income
to net cash used in operating activities:
Depreciation and amortization
3,831
4,277
Stock-based compensation
1,054
1,958
Loss on retirement and impairment of
assets, net
2,089
164
Deferred income taxes
584
1,463
Non-cash operating lease expense
10,250
10,993
Other
(1,065
)
1,278
Changes in operating assets and
liabilities:
Accounts receivable
(3,592
)
(783
)
Merchandise inventories
(44,493
)
(31,817
)
Operating lease liabilities
(8,881
)
(11,853
)
Accounts payable and accrued
liabilities
23,508
4,011
Other
(9,958
)
(2,878
)
Net cash used in operating activities
(42,863
)
(9,314
)
Cash Flows From Investing Activities
Purchases of property and equipment
(3,189
)
(9,199
)
Other proceeds
194
3
Net cash used in investing activities
(2,995
)
(9,196
)
Cash Flow From Financing Activities
Borrowings under line of credit
8,691
0
Payments on line of credit
(8,691
)
0
Proceeds from issuance of stock
63
63
Dividends paid
(1,320
)
(2,006
)
Purchase of common stock for treasury
0
(14,012
)
Shares surrendered by employees to pay
taxes on restricted stock
(1,700
)
(10,940
)
Net cash used in financing activities
(2,957
)
(26,895
)
Net decrease in cash and cash
equivalents
(48,815
)
(45,405
)
Cash and cash equivalents at beginning of
period
61,899
67,021
Cash and cash equivalents at end of
period
$
13,084
$
21,616
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200520005815/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
Shoe Carnival (NASDAQ:SCVL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Shoe Carnival (NASDAQ:SCVL)
Historical Stock Chart
From Sep 2023 to Sep 2024