Shoe Carnival, Inc. (Nasdaq: SCVL), a leading retailer of
moderately priced footwear and accessories, today reported results
for the third quarter and nine months ended October 28, 2017.
Third Quarter Highlights
- Net sales increased 4.7 percent to
$287.5 million
- Comparable store sales increased 4.4
percent
- Earnings per diluted share increased
22.2 percent to $0.66
- Inventory was down 4.3 percent on a
per-store basis
Cliff Sifford, Shoe Carnival’s President and Chief Executive
Officer commented, “We are very pleased with our third quarter
financial results, which reflect the strength of our selection of
family footwear for the back-to-school season and our team’s
ability to increasingly connect with customers across Shoe
Carnival’s multi-channel presence. During the quarter, our traffic
was down low single digits, particularly due to the three
hurricanes affecting Texas, Florida and Puerto Rico. Despite the
inclement weather in these regions, we experienced solid increases
in both units per transaction and conversion which helped drive a
4.4 percent increase in comparable store sales for the quarter.
These increases, combined with our ongoing commitment and ability
to effectively manage expenses, resulted in a 22 percent
year-over-year increase in quarterly earnings per diluted share.
Based on our third quarter performance and our outlook for the
remainder of the year, we are pleased to raise our fiscal year
outlook.”
Third Quarter Financial Results
The Company reported net sales of $287.5 million for the third
quarter of fiscal 2017, a 4.7 percent increase, compared to net
sales of $274.5 million for the third quarter of fiscal 2016.
Comparable store sales increased 4.4 percent in the third quarter
of fiscal 2017.
Gross profit margin for the third quarter of fiscal 2017
decreased 0.1 percent to 29.8 percent compared to 29.9 percent in
the third quarter of fiscal 2016. Merchandise margin decreased 0.8
percent and was partially offset by buying, distribution and
occupancy expenses, which decreased 0.7 percent as a percentage of
net sales compared to the third quarter of fiscal 2016.
Selling, general and administrative expenses (“SG&A”) for
the third quarter of fiscal 2017 increased $1.2 million to $67.8
million. As a percentage of net sales, these expenses improved 0.7
percent to 23.6 percent compared to 24.3 percent in the third
quarter of fiscal 2016.
Net income for the third quarter of fiscal 2017 was $10.7
million, or $0.66 per diluted share. For the third quarter of
fiscal 2016, the Company reported net income of $9.7 million, or
$0.54 per diluted share.
Nine Month Financial Results
Net sales during the first nine months of fiscal 2017 increased
$9.0 million to $775.9 million compared to the same period last
year. Comparable store sales for the thirty-nine week period ended
October 28, 2017, increased 0.4 percent.
Net earnings for the first nine months of fiscal 2017 were $22.8
million, or $1.38 per diluted share, compared to net earnings of
$24.4 million, or $1.31 per diluted share, in the first nine months
of fiscal 2016. The gross profit margin for the first nine months
of fiscal 2017 was 29.1 percent compared to 29.3 percent in the
same period last year. SG&A for the first nine months increased
$3.1 million to $188.5 million. As a percentage of net sales, these
expenses increased to 24.3 percent compared to 24.2 percent in the
first nine months of fiscal 2016. The Company opened 19 stores and
closed ten stores during the first nine months of fiscal 2017
compared to 15 store openings and five store closings in the first
nine months of fiscal 2016.
Store Openings and Closings
The Company expects to open 19 stores and close 26 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 5 4 3rd quarter 2017 7 1 4th
quarter 2017 0 16 Fiscal year 2017 19 26
The seven new stores opened during the third quarter include
locations in:
City Market
Total Stores inthe Market
Bridgeton, MO St. Louis, MO 14 Exon, PA Philadelphia, PA 12
Freeport, IL Rockford, IL 2 Heath, OH Columbus, OH 3 Poplar Bluff,
MO Paducah, KY 4 Topeka, KS Topeka, KS 1 Waukegan, IL Chicago, IL
22
Fiscal 2017 Earnings Outlook
The Company expects fiscal 2017 net sales to be in the range of
$1.020 billion to $1.025 billion, with comparable store sales flat
to up low single digits. Earnings per diluted share for the fiscal
year are expected to be in the range of $1.42 to $1.49. 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 third 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.
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
November 16, 2017, the Company operates 424 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 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; 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 Thirty-nine Thirty-nine Weeks Ended Weeks
Ended Weeks Ended Weeks Ended
October 28,2017
October 29,2016
October 28,2017
October 29,2016
Net sales $ 287,469 $ 274,524 $ 775,922 $ 766,901
Cost of sales (including buying,
distribution and occupancy costs)
201,802 192,514 549,872 542,105
Gross profit 85,667 82,010 226,050 224,796
Selling, general and administrative
expenses
67,787 66,558 188,519 185,399
Operating income 17,880 15,452 37,531 39,397 Interest
income (1 ) (1 ) (3 ) (6 ) Interest expense 57
43 248 127 Income before income taxes
17,824 15,410 37,286 39,276 Income tax expense 7,127
5,738 14,462 14,839 Net income $
10,697 $ 9,672 $ 22,824 $ 24,437 Net income
per share: Basic $ 0.66 $ 0.54 $ 1.38 $ 1.31 Diluted
$ 0.66 $ 0.54 $ 1.38 $ 1.31 Weighted average
shares: Basic 15,957 17,609 16,287
18,220 Diluted 15,966 17,614
16,293 18,225 Cash dividends declared
per share $ 0.075 $ 0.070 $ 0.220 $ 0.205
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)
October 28,2017
January 28,2017
October 29,2016
ASSETS Current Assets: Cash and cash equivalents $
21,050 $ 62,944 $ 33,509 Accounts receivable 7,365 4,424 3,540
Merchandise inventories 302,935 279,646 314,925 Other 6,883
4,737 5,630 Total Current Assets 338,233 351,751
357,604 Property and equipment - net 93,041 96,216 102,932 Deferred
income taxes 10,769 9,600 8,163 Other noncurrent assets 663
911 970 Total Assets $ 442,706 $ 458,478 $ 469,669
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
Liabilities: Accounts payable $ 59,355 $ 67,808 $ 69,986 Accrued
and other liabilities 21,933 18,488 18,936
Total Current Liabilities 81,288 86,296 88,922 Deferred lease
incentives 29,297 30,751 30,320 Accrued rent 10,689 11,255 11,465
Deferred compensation 10,974 10,465 10,171 Other 884
829 767 Total Liabilities 133,132 139,596 141,645 Total
Shareholders' Equity 309,574 318,882 $ 328,024 Total
Liabilities and Shareholders' Equity $ 442,706 $ 458,478 $ 469,669
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Thirty-nineWeeks EndedOctober 28,2017
Thirty-nineWeeks EndedOctober 29,2016
Cash Flows From Operating Activities Net income $ 22,824 $
24,437 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 17,944
17,698 Stock-based compensation 2,073 3,438 Loss on retirement and
impairment of assets 1,831 500 Deferred income taxes (1,169 ) 56
Lease incentives 3,515 1,838 Other (5,212 ) (3,064 ) Changes in
operating assets and liabilities: Accounts receivable (2,047 )
(1,409 ) Merchandise inventories (23,289 ) (22,047 ) Accounts
payable and accrued liabilities (8,446 ) (1,298 ) Other 940
1,303 Net cash provided by operating
activities 8,964 21,452 Cash
Flows From Investing Activities Purchases of property and equipment
(16,708 ) (17,426 ) Net cash used in investing
activities (16,708 ) (17,426 ) Cash Flows From
Financing Activities Borrowings under line of credit 88,600 0
Payments on line of credit (88,600 ) 0 Proceeds from issuance of
stock 196 186 Dividends paid (3,603 ) (3,780 ) Excess tax benefits
from stock-based compensation 0 2 Purchase of common stock for
treasury (29,798 ) (35,428 ) Shares surrendered by employees to pay
taxes on restricted stock (945 ) (311 ) Net cash used
in financing activities (34,150 ) (39,331 ) Net
decrease in cash and cash equivalents (41,894 ) (35,305 ) Cash and
cash equivalents at beginning of period 62,944
68,814 Cash and Cash Equivalents at End of Period $ 21,050
$ 33,509
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 nine months of fiscal 2017.
Fifty-two Weeks Ended
January 28,2017
% ofNet 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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