Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of
value-priced footwear and accessories, today reported results for
the second quarter ended August 2, 2014.
Second Quarter Highlights
- Net sales increased $5.7 million to
$222.1 million, as compared to net sales reported for the second
quarter of fiscal 2013
- Earnings per diluted share were $0.13,
within the Company’s guidance for the quarter
- Per-store inventories were down 2.2
percent at the end of the quarter, as compared to the second
quarter last year
- 161,000 shares of common stock were
repurchased under the current share repurchase program
- Sixteen new stores were opened during
the quarter, which included entry into two new major markets –
Buffalo, NY and Miami, FL as compared to eight stores in the second
quarter last year
- Omni-channel capabilities advance with
key system initiatives to support long-term growth
“The second quarter proved challenging as store traffic remained
soft and consumers shopped closer to need. As a result, our
comparable store sales turned positive in July as customers shopped
Shoe Carnival’s broad selection of brand-name athletic and casual
shoes at exceptional values for back-to-school,” commented Cliff
Sifford, President and CEO. “As we navigate through this choppy
sales environment, we will continue to make investments that we
believe will benefit our long-term sales and earnings growth. Two
initiatives we are excited about are the conversion from
third-party fulfillment of our e-commerce orders to fulfilling
those orders from our stores and distribution center and the
addition of our first-ever mobile app. With these two initiatives
set to launch in the third quarter, we are aggressively moving
forward in the evolution of the omni-channel shopping experience
for our customer.”
Second Quarter Financial Results
The Company reported net sales of $222.1 million for the second
quarter of fiscal 2014, a 2.6 percent increase, as compared to net
sales of $216.4 million for the second quarter of fiscal 2013.
Comparable store sales decreased 2.1 percent in the second quarter
of fiscal 2014.
The gross profit margin for the second quarter of fiscal 2014
decreased to 28.0 percent compared to 28.9 percent in the second
quarter of fiscal 2013. The merchandise margin decreased 0.2
percent. Buying, distribution and occupancy expenses increased 0.7
percent as a percentage of sales.
Selling, general and administrative expenses for the second
quarter of fiscal 2014 increased $5.0 million to $58.0 million. As
a percentage of sales, these expenses increased to 26.1 percent
compared to 24.5 percent in the second quarter of fiscal 2013.
Net earnings for the second quarter of fiscal 2014 were $2.6
million, or $0.13 per diluted share. For the second quarter of
fiscal 2013, the Company reported net earnings of $5.8 million, or
$0.29 per diluted share.
Six Month Financial Results
Net sales during the first six months of fiscal 2014 increased
$9.1 million to $457.8 million as compared to the same period last
year. Comparable store sales for the twenty-six week period ended
August 2, 2014 decreased 1.8 percent. Net earnings for the first
six months of fiscal 2014 were $11.7 million, or $0.58 per diluted
share, compared to net earnings of $15.4 million, or $0.76 per
diluted share, in the first six months of last year. The gross
profit margin for the first six months of fiscal 2014 was 28.8
percent compared to 29.2 percent last year. Selling, general and
administrative expenses, as a percentage of sales, were 24.5
percent for the first six months of fiscal 2014 compared to 23.7
percent last year. The Company opened 23 stores during the first
six months of fiscal 2014 as compared to opening 21 stores during
the first six months of last year.
Share Repurchase Program
In the second quarter of fiscal 2014, the Company repurchased
approximately 161,000 shares of its common stock at a total cost of
$3.0 million. As of August 2, 2014, approximately 381,000 shares
had been repurchased at an aggregate cost of $7.7 million. The
amount that remained available under the share repurchase
authorization at August 2, 2014 was $17.3 million.
Third Quarter and Second Half Fiscal 2014 Earnings
Outlook
For the 13 weeks ending November 1, 2014, earnings per diluted
share are expected to be in the range of $0.45 to $0.51, compared
to $0.54 in last year’s third quarter. For the second half of
fiscal 2014, earnings per diluted share are expected to be in the
range of $0.53 to $0.64, compared to $0.57 in second half of last
year.
The Company’s guidance is based on the expectation that third
quarter net sales will be in the range of $247 to $252 million.
This expectation includes a range for comparable store sales of
down 1.0 percent to a 1.0 percent gain. For the second half of
fiscal 2014, the Company expects net sales in the range of $462 to
$471 million with comparable store sales in the range of flat to a
2.0 percent gain.
Looking ahead, Mr. Sifford stated, “Given our customers’ recent
purchasing habits, we believe it is prudent to have a conservative
outlook for the third quarter. We are incrementally more positive
on the fourth quarter based on the anticipation of a strong boot
season and we are well positioned with the right product assortment
to take every advantage of improved consumer demand.”
The Company expects to open 32 new stores and close three stores
in fiscal 2014. Store openings and closings by quarter for the
fiscal year are as follows:
New Stores Store Closings 1st quarter 2014 7 1 2nd
quarter 2014 16 0 3rd quarter 2014 0 0 4th quarter 2014 9 2 Fiscal
year 2014 32 3
The 16 new stores opened during the second quarter include
locations in:
City Market Total Stores in the Market Gadsden, AL
Birmingham 6 Jasper, AL Birmingham 6 Nogales, AZ Tucson 2 Coral
Springs, FL Miami 2 Tamarac, FL Miami 2 Panama City Beach, FL
Panama City 2 Orland Park, IL Chicago 24 Shelby Township, MI
Detroit 6 Westland, MI Detroit 6 Hamburg, NY Buffalo 2 Niagara
Falls, NY Buffalo 2 Lawton, OK Wichita Falls 2 Bayamon, PR Puerto
Rico 9 Mayaguez, PR Puerto Rico 9 Madison, WI Madison 1 Brookfield,
WI Milwaukee 3
Conference Call
Today, at 4:30 p.m. Eastern Time, the Company will host a
conference call to discuss the second 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.
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering a broad assortment of value priced
dress, casual and athletic footwear for men, women and children
with emphasis on national and regional name brands. As of September
3, 2014, the Company operates 398 stores in 33 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 and Puerto Rico in which our stores are
located; 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; 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 hurricanes or other 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; our ability to successfully grow our
e-commerce business; the inability of manufacturers to deliver
products in a timely manner; changes in the political and economic
environments in China, Brazil, Europe and East Asia, where the
primary manufacturers of footwear are located; the impact of
regulatory changes in the United States and the countries where our
manufacturers are located; the continued favorable trade relations
between the United States and China and the other countries which
are the major manufacturers of footwear; the resolution of
litigation or regulatory proceedings in which we are or may become
involved; and our ability to meet our labor needs while controlling
costs; 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)
(Unaudited)
Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks
Ended Weeks Ended Weeks Ended August 2, 2014 August 3, 2013 August
2, 2014 August 3, 2013 Net sales $ 222,073 $ 216,417 $
457,843 $ 448,704 Cost of sales (including buying, distribution and
occupancy costs) 159,854 153,906 326,042
317,580 Gross profit 62,219 62,511 131,801 131,124
Selling, general and administrative expenses 57,955
52,953 112,328 106,320 Operating income 4,264
9,558 19,473 24,804 Interest income (3 ) (3 ) (9 )
(5
)
Interest expense 41 41 83 91
Income before income taxes 4,226 9,520 19,399 24,718 Income tax
expense 1,642 3,682 7,664 9,361
Net income $ 2,584 $ 5,838 $ 11,735 $ 15,357 Net income per
share: Basic $ 0.13 $ 0.29 $ 0.58 $ 0.76 Diluted $ 0.13 $ 0.29 $
0.58 $ 0.76 Weighted average shares: Basic 19,856
19,936 19,908 19,907 Diluted 19,869
19,957 19,923 19,927 Cash dividends
declared per share $ 0.06 $ 0.06 $ 0.12 $ 0.12
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)
August 2,
2014
February 1,2014
August 3,
2013
ASSETS Current Assets: Cash and cash equivalents $
32,686 $ 48,253 $ 37,790 Accounts receivable 3,808 4,337 2,459
Merchandise inventories 337,648 284,801 321,059 Deferred income
taxes 852 1,208 2,498 Other 12,876
3,916
6,655 Total Current Assets 387,870 342,515 370,461 Property
and equipment - net 100,648 90,193 84,765 Deferred income taxes
7,164 3,426 1,866 Other noncurrent assets 432 717
582 Total Assets $ 496,114 $ 436,851 $ 457,674
LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities:
Accounts payable $ 105,721 $ 62,671 $ 94,733 Accrued and other
liabilities 19,396 14,988 19,988 Total Current
Liabilities 125,117 77,659 114,721 Deferred lease incentives 26,426
24,430 20,119 Accrued rent 10,115 9,224 8,393 Deferred compensation
9,105 8,232 7,496 Other 202 434 482 Total
Liabilities 170,965 119,979 151,211 Total Shareholders' Equity
325,149 316,872 306,463 Total Liabilities and
Shareholders' Equity $ 496,114 $ 436,851 $ 457,674
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Twenty-sixWeeks EndedAugust 2, 2014
Twenty-sixWeeks EndedAugust 3, 2013
Cash Flows From Operating Activities Net income $ 11,735 $
15,357 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 9,518 8,420
Stock-based compensation 1,812 1,871 Loss on retirement and
impairment of assets 267 259 Deferred income taxes (3,382 ) (451 )
Lease incentives 3,060 2,602 Other (42 ) 577 Changes in operating
assets and liabilities: Accounts receivable 529 (258 ) Merchandise
inventories (52,847 ) (48,777 ) Accounts payable and accrued
liabilities 47,439 32,385 Other (8,918 ) (1,744 ) Net
cash provided by operating activities 9,171
10,241 Cash Flows From Investing Activities Purchases
of property and equipment (19,730 ) (15,429 ) Proceeds from notes
receivable 250 200 Net cash used in
investing activities (19,480 ) (15,229 ) Cash
Flows From Financing Activities Proceeds from issuance of stock 155
184 Dividends paid (2,430 ) (2,433 ) Excess tax benefits from
stock-based compensation 35 177 Purchase of common stock for
treasury (3,000 ) 0 Shares surrendered by employees to pay taxes on
restricted stock (18 ) (906 ) Net cash used in
financing activities (5,258 ) (2,978 ) Net decrease
in cash and cash equivalents (15,567 ) (7,966 ) Cash and cash
equivalents at beginning of period 48,253
45,756 Cash and Cash Equivalents at End of Period $ 32,686
$ 37,790
Cliff Sifford President, Chief Executive Officer and Chief
Merchandising OfficerorW. Kerry Jackson, Senior Executive Vice
President, Chief Operating and Financial Officer and Treasurer(812)
867-6471www.shoecarnival.com
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