Record Q4 EPS, growing over 550 percent compared to
2019
2022 full year EPS guidance achieved
Record customer count, surpassing 32 million loyalty
customers
Increasing dividend 11 percent
Shoe Carnival, Inc. (Nasdaq: SCVL) (the "Company"), a leading
retailer of footwear and accessories for the family, today reported
results for the fourth quarter and fiscal year ended January 28,
2023.
(In thousands, except per share data)
Thirteen Weeks Ended
January 28,
February 1,
January 30,
January 29,
2023
2020
2021
2022
Net sales
$
290,779
$
239,875
$
253,897
$
313,371
Gross profit
$
111,322
$
69,900
$
78,152
$
116,821
Gross profit margin
38.3
%
29.1
%
30.8
%
37.3
%
SG&A as a percentage of net sales
28.4
%
27.1
%
26.6
%
28.4
%
Operating income margin
9.9
%
2.0
%
4.2
%
8.9
%
Reported
Net income
$
21,610
$
3,483
$
7,443
$
20,591
Diluted net income per share ("EPS")
$
0.79
$
0.12
$
0.26
$
0.72
Non-GAAP
Adjusted net income
$
23,828
Adjusted EPS
$
0.83
Fifty-Two Weeks Ended
January 28,
February 1,
January 30,
January 29,
2023
2020
2021
2022
Net sales
$
1,262,235
$
1,036,551
$
976,765
$
1,330,394
Gross profit
$
468,164
$
311,869
$
279,982
$
526,787
Gross profit margin
37.1
%
30.1
%
28.7
%
39.6
%
SG&A as a percentage of net sales
25.5
%
24.9
%
26.5
%
24.0
%
Operating income margin
11.6
%
5.2
%
2.2
%
15.6
%
Reported
Net income
$
110,068
$
42,914
$
15,991
$
154,881
Diluted net income per share ("EPS")
$
3.96
$
1.46
$
0.56
$
5.42
Non-GAAP
Adjusted net income
$
158,118
Adjusted EPS
$
5.53
"The Shoe Carnival team successfully delivered operating income
margins and overall profitability more than double those generated
just three years ago, consistent with our strategic plans and 2022
guidance. These results demonstrate the sustainability of our
profit transformation and set the new benchmark for us going
forward," said Mark Worden, President and Chief Executive
Officer.
"Our growth strategies to increase scale, modernize our customer
experience, leverage customer data, and carry the hottest branded
merchandise are working. As a result, the total earnings per share
generated over the last two years have exceeded the earnings per
share the corporation achieved over the preceding 13 years
combined. As we move forward, we expect this profit level to
continue on our track to becoming a multi-billion-dollar retailer
by 2028," concluded Mr. Worden.
Operating Results Compared to 2019
The transformational increase in gross profit margin (full year
up 700 basis points compared to 2019) and increased scale through
the acquisition of Shoe Station increased shareholder returns, with
full year 2022 EPS up 171 percent compared to 2019. Following is
further detail on the Company’s successes compared to pre-pandemic
results in 2019.
Fourth quarter 2022 net sales of $290.8 million increased $50.9
million, or 21.2 percent, compared to the pre-pandemic fourth
quarter 2019, with the Shoe Station bannered stores contributing
$24.3 million. Comparable store sales increased 12.6 percent. The
primary merchandise category driving the increased net sales was
non-athletics.
Full year net sales grew $225.7 million, or 21.8 percent,
compared to 2019, with the Shoe Carnival banner growing $125.8
million and the Shoe Station stores acquired and recently opened
contributing $99.9 million. A key contributor to the growth in net
sales was an 8 million, or over 30 percent, increase in Shoe Perks
loyalty members since 2019.
Fourth quarter 2022 gross profit margin increased 920 basis
points to 38.3 percent compared to fourth quarter 2019. An
approximate 920 basis point increase in merchandise margin was
primarily due to increased customer relationship management
capabilities, which have resulted in more targeted promotional
pricing and higher average selling prices. Buying, distribution and
occupancy costs were flat as a percent of net sales compared to
fourth quarter 2019.
Operating income for fourth quarter 2022 was $28.7 million and
was 9.9 percent of net sales, nearly five times higher than the
operating margin in fourth quarter 2019.
Fourth quarter 2022 net income and EPS on a GAAP basis were a
record at $21.6 million and $0.79, respectively, with EPS
increasing over 550 percent compared to fourth quarter 2019.
Operating Results Compared to 2021
Fourth quarter 2022 net sales of $290.8 million decreased $22.6
million, or 7.2 percent, compared to a stimulus-elevated fourth
quarter 2021. In January 2023, the first comparable month without
government stimulus, net sales increased low single digits versus
January 2022.
Fourth quarter 2022 gross profit margin increased 100 basis
points to 38.3 percent compared to fourth quarter 2021, primarily
reflecting higher merchandise margins in fourth quarter 2022 and
$1.1 million of Shoe Station acquisition-related charges in fourth
quarter 2021.
Operating income for fourth quarter 2022 was $28.7 million and
was 9.9 percent of net sales. In fourth quarter 2021 operating
income margin was 8.9 percent, inclusive of $4.3 million in Shoe
Station acquisition-related charges.
Fourth quarter 2022 net income and EPS on a GAAP basis were
$21.6 million and $0.79, respectively. Fourth quarter 2021 net
income and EPS were previous record highs at $20.6 million, and
$0.72, respectively. Excluding the Shoe Station acquisition-related
charges incurred in fourth quarter 2021, fourth quarter 2021
adjusted net income and adjusted diluted EPS were $23.8 million and
$0.83, respectively.
Merchandise Inventory
The Company ended 2022 with inventory of $390.4 million, an
increase of $130.9 million compared to 2019. Approximately 40
percent of the increase was inventory for the Shoe Station stores
acquired last year or opened this year and higher in-transit
inventory. The remaining increase in inventory was supportive of
the net sales increases compared to 2019 and the expectation of
increased sales in 2023. Management is planning inventory levels to
reduce by approximately $40 million by year end in 2023,
principally during the back-to-school shopping season. The planned
increase in free cash flow during 2023, inclusive of lower
inventory, is expected to fund store growth.
Fiscal 2023 Earnings Outlook
The Company expects to deliver on the following annual guidance
for 2023, which includes 53 weeks compared to 52 weeks in 2022:
2023
Vs
Guidance
2022
EPS
$3.96 to $4.20
Flat to + 6%
Net sales (in billions)
$1.26 to $1.32
Flat to + 4.5%
Gross profit margin
~ 37%
~ Flat
SG&A as a percentage of net sales
~ 25.6%
~ Flat
Operating income (in millions)
$143 to $150
- 2% to + 3%
Operating income margin
~ 11.4%
~ - 20 bps
Net income (in millions)
$109 to $114
-1% to + 4%
Return on beginning equity
21% to 22%
Cash flows from operations (in
millions)
$170 to $210
Capital expenditures (in millions)
$60 to $70
Free cash flows (in millions)
$110 to $140
Merchandise inventories (in millions)
- ~$40
Comparable store sales
-2% to +2%
New stores
10 to 20
Stores modernized
~ 80
This annual guidance includes the expectation of a mid-single
digit decline in net sales in first quarter 2023.
Store Count, Modernization and Planned Store Growth
The Company ended its fiscal year with 397 total stores, 373
Shoe Carnival stores and 24 Shoe Station stores. It is currently
modernizing its Shoe Carnival and Shoe Station stores through a
comprehensive remodel program. Thus far, over 40 percent of the
fleet remodel has been completed and the Company is on track to be
over 60 percent complete by the end of 2023.
Since its fiscal year end, the Company has opened one Shoe
Station store and the Shoe Station ecommerce site,
www.shoestation.com, went live. The Company is on track to operate
over 400 stores in third quarter 2023. The Company has a strategic
growth roadmap in place to surpass 500 stores and be a
multi-billion dollar retailer by 2028, inclusive of organic and
acquired growth.
In light of its strong balance sheet with no debt and history of
steady operating cash flows, the Company believes this growth goal
of more than 500 stores is achievable. As previously disclosed, the
Shoe Station transaction that closed in December 2021 was
consummated with cash on-hand. No debt was incurred nor was any
stock issued, although the Company has the flexibility of doing so
in future acquisitions if desirable.
Dividend and Share Repurchase Program
The Board of Directors approved an 11 percent increase to the
quarterly cash dividend from $0.09 to $0.10 per share. The
quarterly cash dividend will be paid on April 17, 2023 to
shareholders of record as of the close of business on April 3,
2023. Additionally, the Company has $50 million available in
calendar 2023 for future repurchases under its share repurchase
program if deemed appropriate.
Record Date and Date of Annual Shareholder Meeting
The Company announced that April 19, 2023, has been set as the
shareholder of record date and the Annual Meeting of Shareholders
will be held on June 20, 2023.
Conference Call
Today, at 8:30 a.m. Eastern Time, the Company will host a
conference call to discuss the fourth 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 Financial Measures
The non-GAAP adjusted results for the fourth quarter and full
year of 2021 discussed herein exclude immediate purchase accounting
impacts associated with the Company’s fourth quarter 2021
acquisition of Shoe Station. These impacts included the
non-recurring amortization expense included in cost of sales
associated with the fair value adjustment to acquisition-inventory
and expenses included in SG&A involving deal formation and
legal and accounting advice. These adjusted results are provided to
enhance the user's overall understanding of the Company's
historical operations and financial performance, and free cash flow
is included to enhance the user's understanding of our liquidity.
Specifically, the Company believes the adjusted results and
disclosure of free cash flow provide investors with relevant
comparisons of the Company’s core operations and liquidity.
Unaudited adjusted results and free cash flow 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 these non-GAAP measures to
the Company's GAAP results appears below in the table entitled
"Reconciliation of GAAP to Non-GAAP Financial Measures" with
respect to adjusted operating results in 2021 and in the text of
the press release with respect to free cash flow.
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering a broad assortment of dress, casual
and athletic footwear for men, women and children with emphasis on
national name brands. As of March 22, 2023, the Company operates
397 stores in 35 states and Puerto Rico under its Shoe Carnival and
Shoe Station banners and offers shopping at www.shoecarnival.com
and www.shoestation.com. Headquartered in Evansville, IN, Shoe
Carnival, Inc. trades on The Nasdaq Stock Market LLC under the
symbol SCVL. Press releases and annual reports are available on the
Company's website at www.shoecarnival.com.
Cautionary Statement Regarding Forward-Looking
Information
As used herein, "we", "our" and "us" refer to Shoe Carnival,
Inc. 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: our ability to control costs and meet our labor needs
in a rising wage, inflationary, and/or supply chain constrained
environment; our ability to maintain current promotional intensity
levels; the duration, spread and any remaining effects of the
COVID-19 pandemic, mitigating efforts deployed, including the
effects of government stimulus on consumer spending, and the
pandemic’s overall impact on our operations; our ability to achieve
expected operating results, synergies, and other benefits from the
Shoe Station acquisition within expected time frames, or at all;
the potential impact of national and international security
concerns, including those caused by war and terrorism, on the
retail environment; general economic conditions in the areas of the
continental United States and Puerto Rico where 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; 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
many of 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 platform and to successfully grow our omnichannel
sales; the effectiveness of our inventory management, including our
ability to manage key merchandise vendor relationships and
direct-to-consumer initiatives; changes in our relationships with
other 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; 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 impact of
natural disasters, other public health crises, political crises,
civil unrest, and other catastrophic events on our operations and
the operations of 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
cybersecurity breach; our ability to successfully execute our
business strategy, including the availability of desirable store
locations at acceptable lease terms, our ability to identify,
consummate or effectively integrate future acquisitions, our
ability to implement and adapt to new technology and systems, 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; an increase in the cost, or a disruption in the
flow, of imported goods; the impact of regulatory changes in the
United States, including minimum wage laws and regulations, 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. 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," "aims," "may," "will," "should," "seeks," "on track,"
"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
Fifty-Two
Fifty-Two
Weeks Ended
Weeks Ended
Weeks Ended
Weeks Ended
January 28,
January 29,
January 28,
January 29,
2023
2022
2023
2022
Net sales
$
290,779
$
313,371
$
1,262,235
$
1,330,394
Cost of sales (including buying,
distribution and occupancy costs)
179,457
196,550
794,071
803,607
Gross profit
111,322
116,821
468,164
526,787
Selling, general and administrative
expenses
82,628
88,908
321,720
319,133
Operating income
28,694
27,913
146,444
207,654
Interest income
(407
)
(10
)
(972
)
(24
)
Interest expense
70
120
294
478
Income before income taxes
29,031
27,803
147,122
207,200
Income tax expense
7,421
7,212
37,054
52,319
Net income
$
21,610
$
20,591
$
110,068
$
154,881
Net income per share:
Basic
$
0.80
$
0.73
$
4.00
$
5.49
Diluted
$
0.79
$
0.72
$
3.96
$
5.42
Weighted average shares:
Basic
27,152
28,160
27,543
28,233
Diluted
27,456
28,552
27,812
28,596
Cash dividends declared per share
$
0.090
$
0.070
$
0.360
$
0.280
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
January 28,
January 29,
2023
2022
ASSETS
Current Assets:
Cash and cash equivalents
$
51,372
$
117,443
Marketable securities
11,601
14,961
Accounts receivable
3,052
14,159
Merchandise inventories
390,390
285,205
Other
13,308
10,264
Total Current Assets
469,723
442,032
Property and equipment – net
141,435
88,533
Operating lease right-of-use assets
318,612
220,952
Intangible assets
32,600
32,600
Goodwill
12,023
11,384
Deferred income taxes
0
2,699
Other noncurrent assets
15,388
14,064
Total Assets
$
989,781
$
812,264
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
78,850
$
69,092
Accrued and other liabilities
20,281
33,053
Current portion of operating lease
liabilities
58,154
51,563
Total Current Liabilities
157,285
153,708
Long-term portion of operating lease
liabilities
285,074
194,788
Deferred income taxes
11,844
0
Deferred compensation
9,840
10,901
Other
170
334
Total Liabilities
464,213
359,731
Total Shareholders’ Equity
525,568
452,533
Total Liabilities and Shareholders’
Equity
$
989,781
$
812,264
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fifty-Two
Fifty-Two
Weeks Ended
Weeks Ended
January 28,
January 29,
2023
2022
Cash Flows From Operating Activities
Net income
$
110,068
$
154,881
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
23,196
18,752
Stock-based compensation
5,434
5,531
(Gain) Loss on retirement and impairment
of assets, net
(501
)
1,404
Deferred income taxes
14,543
2,936
Non-cash operating lease expense
47,766
43,011
Other
962
4,566
Changes in operating assets and
liabilities:
Accounts receivable
11,410
(6,196
)
Merchandise inventories
(106,192
)
(24,281
)
Operating lease liabilities
(48,992
)
(46,562
)
Accounts payable and accrued
liabilities
925
3,781
Other
(8,181
)
(9,930
)
Net cash provided by operating
activities
50,438
147,893
Cash Flows From Investing Activities
Purchases of property and equipment
(77,293
)
(31,387
)
Investments in marketable securities and
other
(976
)
(18,975
)
Sales of marketable securities and
other
3,850
1,800
Acquisition, net of cash acquired
385
(70,685
)
Net cash used in investing activities
(74,034
)
(119,247
)
Cash Flow From Financing Activities
Proceeds from issuance of stock
187
160
Dividends paid
(9,972
)
(7,998
)
Purchase of common stock for treasury
(30,515
)
(7,147
)
Shares surrendered by employees to pay
taxes on stock-based compensation awards
(2,175
)
(2,750
)
Net cash used in financing activities
(42,475
)
(17,735
)
Net (decrease) increase in cash and cash
equivalents
(66,071
)
10,911
Cash and cash equivalents at beginning of
year
117,443
106,532
Cash and cash equivalents at end of
year
$
51,372
$
117,443
SHOE CARNIVAL, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Thirteen Weeks
% of
Fifty-two Weeks
% of
Ended January
Net
Ended January
Net
29, 2022
Sales
29, 2022
Sales
Reported gross profit
$
116,821
37.3%
$
526,787
39.6%
Non-recurring amortization expense related
to fair value adjustment to acquisition inventory
1,056
0.3%
1,056
0.1%
Adjusted gross profit, pre-tax
$
117,877
37.6%
$
527,843
39.7%
Reported selling, general and
administrative expenses
$
88,908
28.4%
$
319,133
24.0%
Acquisition-related fees and expenses
(3,221
)
-1.1%
(3,221
)
-0.3%
Adjusted selling, general and
administrative expenses, pre-tax
$
85,687
27.3%
$
315,912
23.7%
Reported operating income
$
27,913
8.9%
$
207,654
15.6%
Non-recurring amortization expense related
to fair value adjustment to acquisition inventory
1,056
0.3%
1,056
0.1%
Acquisition-related fees and expenses
3,221
1.1%
3,221
0.3%
Adjusted operating income, pre-tax
$
32,190
10.3%
$
211,931
15.9%
Reported income tax expense
$
7,212
2.3%
$
52,319
3.9%
Tax effect of amortization of
acquisition-related inventory fair value adjustment and
acquisition-related fees and expenses
1,040
0.3%
1,040
0.1%
Adjusted income tax expense
$
8,252
2.6%
$
53,359
4.0%
Reported net income
$
20,591
6.6%
$
154,881
11.6%
Non-recurring amortization expense related
to fair value adjustment to acquisition inventory
1,056
0.3%
1,056
0.1%
Acquisition-related fees and expenses
3,221
1.1%
3,221
0.3%
Tax effect of amortization of
acquisition-related inventory fair value adjustment and
acquisition-related fees and expenses
(1,040
)
-0.3%
(1,040
)
-0.1%
Adjusted net income
$
23,828
7.6%
$
158,118
11.9%
Reported net income per diluted share
$
0.72
$
5.42
Non-recurring amortization expense related
to fair value adjustment to acquisition inventory
0.04
0.04
Acquisition-related fees and expenses
0.11
0.11
Tax effect of amortization of
acquisition-related inventory fair value adjustment and
acquisition-related fees and expenses
(0.04
)
(0.04
)
Adjusted diluted net income per share
$
0.83
$
5.53
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230322005176/en/
W. Kerry Jackson Shoe Carnival Investor Relations (812)
867-4034
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