Reports Comparable Store Sales Increase of 1.4 Percent
Updates Fiscal 2019 Net Sales and Earnings Outlook
Shoe Carnival, Inc. (Nasdaq: SCVL) (“the Company”), a leading
retailer of moderately priced footwear and accessories, today
reported results for the second quarter and six months ended August
3, 2019.
Second Quarter Highlights
- Comparable store sales increased 1.4 percent
- Earnings per diluted share increased 5.3 percent to $0.80
- Cash and cash equivalents were $37.5 million with no
outstanding debt as of August 3, 2019
Cliff Sifford, Shoe Carnival’s President and Chief Executive
Officer commented, “We are pleased our financial results for the
second quarter were in line with our expectations and we believe we
remain well positioned to achieve our annual outlook. Shoe
Carnival’s robust assortment of family footwear for back-to-school
is resonating with new and existing customers resulting in an
acceleration of our August sales. Comparable store sales through
the first three weeks of August are up 3.5 percent compared to a
6.5 percent increase for the full month of August last year. Our
team continues to focus on the execution of our strategic
initiatives in the second half of fiscal 2019 as we build upon our
strong foundation for sustainable long term growth and shareholder
value creation.”
Second Quarter Financial Results
The Company reported net sales of $268.2 million for the second
quarter of fiscal 2019, a 0.1 percent decrease compared to net
sales of $268.4 million for the second quarter of fiscal 2018.
Comparable store sales increased 1.4 percent for the second quarter
of fiscal 2019.
Gross profit margin for the second quarter of fiscal 2019
decreased 0.6 percent to 30.6 percent compared to 31.2 percent in
the second quarter of fiscal 2018. Merchandise margin was flat and
buying, distribution and occupancy expenses increased 0.6 percent
as a percentage of net sales compared to the second quarter of
fiscal 2018.
Selling, general and administrative expenses for the second
quarter of fiscal 2019 decreased $2.4 million to $66.4 million. As
a percentage of net sales, these expenses decreased to 24.8 percent
compared to 25.6 percent in the second quarter of fiscal 2018.
Net income for the second quarter of fiscal 2019 was $11.8
million, or $0.80 per diluted share. For the second quarter of
fiscal 2018, the Company reported net income of $11.8 million, or
$0.76 per diluted share.
Six Month Financial Results
Net sales for the first six months of fiscal 2019 decreased $3.8
million to $522.0 million compared to the first six months of
fiscal 2018. Comparable store sales increased 0.6 percent for the
first six months of fiscal 2019.
Net earnings for the first six months of fiscal 2019 were $25.7
million, or $1.71 per diluted share, compared to net earnings of
$24.7 million, or $1.59 per diluted share, in the first six months
of fiscal 2018. Included in the first six months of fiscal 2019 was
a tax benefit in connection with the vesting of equity-based
compensation of approximately $1.9 million, or $0.13 per diluted
share. The gross profit margin for the first six months of fiscal
2019 was 30.1 percent compared to 30.6 percent in the same period
last year. Selling, general and administrative expenses for the
first six months decreased $2.9 million to $126.0 million. As a
percentage of net sales, these expenses decreased to 24.1 percent
compared to 24.5 percent in the first six months of fiscal
2018.
Store Openings and Closings
The Company expects to open one store and close six stores
during fiscal 2019 compared to opening three stores and closing 14
stores during fiscal 2018.
Expected store openings and closings by quarter for the fiscal
year are 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
Fiscal 2019 Outlook
Based on performance year-to-date, the Company is maintaining
the high-end of the annual diluted earnings per share guidance of
$2.83 and raising the lower-end of the range to $2.77. This
compares to diluted earnings per share of $2.45 in the prior fiscal
year. With the first half of the year complete, net sales estimates
have been refined while maintaining the comparable store sales
guidance for the year of a low single-digit increase. Total net
sales for the full fiscal year are expected to be in the range of
$1.028 billion to $1.033 billion.
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
investors and analysts. 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 moderately
priced dress, casual and athletic footwear for men, women and
children with emphasis on national name brands. As of August 28,
2019, the Company operates 393 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 online 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;
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; 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, 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; our ability to meet our labor needs while controlling
costs; 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
Twenty-six
Twenty-six
Weeks Ended
Weeks Ended
Weeks Ended
Weeks Ended
August 3, 2019
August 4, 2018
August 3, 2019
August 4, 2018
Net sales
$
268,221
$
268,366
$
522,031
$
525,811
Cost of sales (including buying,
distribution and occupancy costs)
186,126
184,585
364,796
364,703
Gross profit
82,095
83,781
157,235
161,108
Selling, general and administrative
expenses
66,421
68,850
125,953
128,861
Operating income
15,674
14,931
31,282
32,247
Interest income
(86
)
(117
)
(417
)
(119
)
Interest expense
85
36
121
76
Income before income taxes
15,675
15,012
31,578
32,290
Income tax expense
3,843
3,237
5,873
7,560
Net income
$
11,832
$
11,775
$
25,705
$
24,730
Net income per share:
Basic
$
0.81
$
0.77
$
1.76
$
1.60
Diluted
$
0.80
$
0.76
$
1.71
$
1.59
Weighted average shares:
Basic
14,615
15,249
14,614
15,387
Diluted
14,736
15,367
14,964
15,446
Cash dividends declared per share
$
0.085
$
0.080
$
0.165
$
0.155
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
August 3,
2019
February 2,
2019
August 4,
2018
ASSETS
Current Assets:
Cash and cash equivalents
$
37,458
$
67,021
$
38,405
Accounts receivable
2,414
1,219
3,918
Merchandise inventories
336,919
257,539
336,907
Other
10,887
11,534
12,094
Total Current Assets
387,678
337,313
391,324
Property and equipment – net
70,855
70,605
77,254
Deferred income taxes
7,020
9,622
8,384
Other noncurrent assets
4,284
459
343
Operating lease right-of-use assets
223,536
0
0
Total Assets
$
693,373
$
417,999
$
477,305
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
108,410
$
48,715
$
90,928
Accrued and other liabilities
20,179
22,069
25,659
Current portion of operating lease
liabilities
46,783
0
0
Total Current Liabilities
175,372
70,784
116,587
Long-term portion of operating lease
liabilities
199,592
0
0
Deferred lease incentives
0
22,171
25,006
Accrued rent
0
8,436
9,124
Deferred compensation
13,751
12,108
12,074
Other
1,098
67
750
Total Liabilities
389,813
113,566
163,541
Total Shareholders’ Equity
303,560
304,433
313,764
Total Liabilities and Shareholders’
Equity
$
693,373
$
417,999
$
477,305
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twenty-six
Twenty-six
Weeks Ended
Weeks Ended
August 3, 2019
August 4, 2018
Cash Flows From Operating Activities
Net income
$
25,705
$
24,730
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
8,395
11,219
Stock-based compensation
3,440
3,403
Loss on retirement and impairment of
assets, net
205
(227
)
Deferred income taxes
2,602
(202
)
Non-cash operating lease expense
20,352
0
Lease incentives
0
170
Other
1,643
(4,577
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,194
)
2,587
Merchandise inventories
(79,380
)
(76,407
)
Operating lease liabilities
(23,346
)
0
Accounts payable and accrued
liabilities
59,565
58,562
Other
(7,970
)
(5,125
)
Net cash provided by operating
activities
10,017
14,133
Cash Flows From Investing Activities
Purchases of property and equipment
(11,490
)
(2,661
)
Proceeds from sales of property and
equipment
8
0
Other
0
283
Net cash used in investing activities
(11,482
)
(2,378
)
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
104
107
Dividends paid
(3,250
)
(2,393
)
Purchase of common stock for treasury
(14,012
)
(19,043
)
Shares surrendered by employees to pay
taxes on restricted stock
(10,940
)
(275
)
Net cash used in financing activities
(28,098
)
(21,604
)
Net decrease in cash and cash
equivalents
(29,563
)
(9,849
)
Cash and cash equivalents at beginning of
period
67,021
48,254
Cash and cash equivalents at end of
period
$
37,458
$
38,405
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190828005690/en/
Cliff Sifford President and Chief Executive Officer, or W. Kerry
Jackson Senior Executive Vice President, Chief Operating and
Financial Officer and Treasurer
7500 East Columbia Street Evansville, IN 47715
www.shoecarnival.com (812) 867-6471
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