Reports Record Quarterly Net Income, Diluted Net Income Per
Share and Gross Profit
Reports Comparable Store Sales Increase of 0.9 Percent
Shoe Carnival, Inc. (Nasdaq: SCVL) (the “Company”), a leading
retailer of moderately priced footwear and accessories, today
reported results for the third quarter and nine months ended
October 31, 2020.
Third Quarter Highlights
- Net sales were $274.6 million
- Net income and diluted net income per share were all-time
records of $14.7 million and $1.03 per share, respectively
- Gross profit increased $3.0 million to a record $87.8 million
and gross profit margin increased 110 basis points to 32 percent
compared to the third quarter of fiscal 2019
- Comparable store sales increased 0.9 percent, on top of a 3.5
percent comparable store sales increase in the third quarter of
fiscal 2019
- E-commerce sales increased over 150 percent compared to the
third quarter of fiscal 2019
- Membership in our Shoe Perks customer loyalty program
approached 10 percent growth compared to the prior year bringing
total membership in the program to nearly 26 million
- Cash and cash equivalents were $46.7 million with no
outstanding debt as of October 31, 2020
“Our strong fiscal third quarter results clearly demonstrated
the strength and dedication of our team’s ability to execute on our
strategic initiatives. We achieved same store sales growth and
delivered the most profitable quarter in Shoe Carnival’s history,
despite the extended back-to-school season. This would not have
been possible without the hard work of our Shoe Carnival team
members, our incredibly solid vendor partnerships, and dedicated
customers,” commented Cliff Sifford, Shoe Carnival’s Vice Chairman
and Chief Executive Officer.
“Our disciplined focus on financial flexibility and the strength
of our business model continue to fuel our market leading
performance notwithstanding the ongoing disruption caused by the
global pandemic. We are excited about our market share gains in the
quarter and believe our enduring competitive advantages position us
for future growth,” concluded Mr. Sifford.
Third Quarter Financial Results
The Company reported net sales of $274.6 million for the third
quarter, which was flat compared to the third quarter of fiscal
2019. Comparable store sales increased 0.9 percent. E-commerce
sales increased over 150 percent and represented more than 13
percent of total sales in the third quarter of fiscal 2020.
Gross profit margin for the third quarter of fiscal 2020
increased to 32.0 percent compared to 30.9 percent in the third
quarter of fiscal 2019. Merchandise margin increased 1.6 percent
and buying, distribution and occupancy expenses increased 0.5
percent as a percentage of net sales compared to the third quarter
of fiscal 2019. The increase in merchandise margin was primarily
due to lower promotional activity during the quarter. The increase
in buying, distribution and occupancy costs as a percentage of
sales was primarily due to higher distribution expense.
Selling, general and administrative expenses for the third
quarter of fiscal 2020 increased $1.0 million to $67.6 million. As
a percentage of net sales, these expenses increased to 24.7 percent
compared to 24.3 percent in the third quarter of fiscal 2019.
Net income for the third quarter of fiscal 2020 was $14.7
million, or $1.03 per diluted share. For the third quarter of
fiscal 2019, the Company reported net income of $13.7 million, or
$0.94 per diluted share.
Nine Month Financial Results
Net sales for the first nine months of fiscal 2020 were $722.9
million compared to $796.7 million in the first nine months of
fiscal 2019. Comparable store sales decreased 8.8 percent for the
first nine months of fiscal 2020. The decrease in sales was due to
temporary store closures in the first half of the year due to the
global pandemic.
Net income for the first nine months of fiscal 2020 was $8.5
million, or $0.60 per diluted share, compared to net income of
$39.4 million, or $2.66 per diluted share, for the first nine
months of fiscal 2019. Included in the first nine months 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 that was recorded in the first quarter of fiscal
2019.
The gross profit margin for the first nine months of fiscal 2020
was 27.9 percent compared to 30.4 percent in the same period last
year. Selling, general and administrative expenses for the first
nine months decreased $2.0 million to $190.5 million. As a
percentage of net sales, these expenses increased to 26.3 percent
compared to 24.2 percent in the first nine months of fiscal 2019
primarily due to the deleveraging effect of lower sales.
Fiscal 2020 Earnings Outlook
We continue to closely monitor and manage the impact of the
COVID-19 pandemic and take action to maintain financial flexibility
and keep our employees and customers safe. The COVID-19 pandemic is
expected to continue to affect macroeconomic conditions and
consumer spending in the retail sector. Considerable uncertainty
exists surrounding the impact the pandemic may have on the
Company’s sales and operations for the remainder of the fiscal
year, including during the peak holiday shopping period. As a
result, the Company is not providing guidance for fiscal year
2020.
Store Openings and Closings
One new store was opened in the third quarter of fiscal 2020 and
no stores were closed. For the first nine months of fiscal 2020,
the Company has opened three stores and closed 12 stores. The
Company expects a total of four store openings and 13 store
closings during fiscal 2020 compared to one store opening and six
store closings in fiscal 2019.
Share Repurchase Program
As of October 31, 2020, the Company had $43.1 million available
for future repurchases under its share repurchase program. Due to
the volatility this year, no shares have been repurchased in fiscal
2020, and 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 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.
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering customers a broad assortment of
moderately priced dress, casual and athletic footwear for men,
women and children with emphasis on national name brands. As of
November 18, 2020, the Company operates 383 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: 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, civil
unrest, 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; 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 and
Quarterly Reports on Form 10-Q.
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.
Financial Tables Follow
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 31, 2020
November 2, 2019
October 31, 2020
November 2, 2019
Net sales
$
274,579
$
274,645
$
722,868
$
796,676
Cost of sales (including buying,
distribution and occupancy costs)
186,818
189,911
521,038
554,707
Gross profit
87,761
84,734
201,830
241,969
Selling, general and administrative
expenses
67,598
66,584
190,530
192,537
Operating income
20,163
18,150
11,300
49,432
Interest income
(2
)
(163
)
(95
)
(580
)
Interest expense
119
34
293
155
Income before income taxes
20,046
18,279
11,102
49,857
Income tax expense
5,368
4,553
2,554
10,426
Net income
$
14,678
$
13,726
$
8,548
$
39,431
Net income per share:
Basic
$
1.04
$
0.95
$
0.61
$
2.71
Diluted
$
1.03
$
0.94
$
0.60
$
2.66
Weighted average shares:
Basic
14,090
14,404
14,057
14,544
Diluted
14,266
14,556
14,225
14,826
Cash dividends declared per share
$
0.090
$
0.085
$
0.265
$
0.250
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
October 31,
February 1,
November 2,
2020
2020
2019
ASSETS
Current Assets:
Cash and cash equivalents
$
46,740
$
61,899
$
33,707
Accounts receivable
8,435
2,724
2,470
Merchandise inventories
274,264
259,495
298,002
Other
10,727
5,529
10,868
Total Current Assets
340,166
329,647
345,047
Property and equipment – net
63,434
67,781
69,147
Deferred income taxes
6,283
7,833
7,678
Other noncurrent assets
11,802
8,106
3,692
Operating lease right-of-use assets
201,658
215,007
222,148
Total Assets
$
623,343
$
628,374
$
647,712
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
50,897
$
60,665
$
66,089
Accrued and other liabilities
25,346
18,695
22,052
Current portion of operating lease
liabilities
48,984
43,146
42,481
Total Current Liabilities
125,227
122,506
130,622
Long-term portion of operating lease
liabilities
179,335
194,108
202,138
Deferred compensation
14,600
13,345
13,220
Other
964
1,052
984
Total Liabilities
320,126
331,011
346,964
Total Shareholders’ Equity
303,217
297,363
300,748
Total Liabilities and Shareholders’
Equity
$
623,343
$
628,374
$
647,712
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Thirty-nine
Thirty-nine
Weeks Ended
Weeks Ended
October 31, 2020
November 2, 2019
Cash Flows From Operating Activities
Net income
$
8,548
$
39,431
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
12,034
12,652
Stock-based compensation
2,881
5,207
Loss on retirement and impairment of
assets, net
2,427
767
Deferred income taxes
1,550
1,944
Non-cash operating lease expense
31,087
30,932
Other
494
1,111
Changes in operating assets and
liabilities:
Accounts receivable
(5,711
)
(1,251
)
Merchandise inventories
(14,769
)
(40,463
)
Operating leases
(26,673
)
(34,306
)
Accounts payable and accrued
liabilities
(2,544
)
17,173
Other
(9,154
)
(5,165
)
Net cash provided by operating
activities
170
28,032
Cash Flows From Investing Activities
Purchases of property and equipment
(10,083
)
(15,081
)
Other
194
8
Net cash used in investing activities
(9,889
)
(15,073
)
Cash Flow From Financing Activities
Borrowings under line of credit
24,903
20,000
Payments on line of credit
(24,903
)
(20,000
)
Proceeds from issuance of stock
152
148
Dividends paid
(3,856
)
(4,466
)
Purchase of common stock for treasury
0
(30,915
)
Shares surrendered by employees to pay
taxes on restricted stock
(1,736
)
(11,040
)
Net cash used in financing activities
(5,440
)
(46,273
)
Net decrease in cash and cash
equivalents
(15,159
)
(33,314
)
Cash and cash equivalents at beginning of
period
61,899
67,021
Cash and cash equivalents at end of
period
$
46,740
$
33,707
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201118005997/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) 867-4034
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