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--Company Exceeds Quarterly Earnings per Share Guidance
Shoe Carnival, Inc. (SCVL), a leading retailer of value-priced
footwear and accessories, today reported results for the second quarter
ended July 28, 2012.
Second Quarter Highlights
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Net sales of $182.2 million, a 9.3 percent increase compared to the
second quarter last year
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Growth in comparable store sales of 3.0 percent
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Earnings per diluted share of $0.14, flat with the prior year
comparative period
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Company opened 11 new stores, including its first two stores in Puerto
Rico. Pre-opening expenses were $1.2 million, a $795,000 increase when
compared to the second quarter last year. This increase in expense
equates to approximately $0.025 in diluted earnings per share.
Mark Lemond, President and CEO, commented, "We are in the midst of a
strong athletic footwear cycle and customers continue to respond well to
our athletic product assortment, generating sales at the high end of our
guidance. Our sales increase combined with a consistent emphasis on
controlling inventory helped us generate a higher than anticipated
merchandise margin for the quarter. This resulted in our second quarter
earnings exceeding the high end of our guidance."
Financial Results and Payment of Quarterly Dividend
The Company reported net sales of $182.2 million for the second quarter
of fiscal 2012, a 9.3 percent increase over net sales of $166.7 million
in the second quarter of fiscal 2011. Comparable store sales increased
3.0 percent in the second quarter of fiscal 2012. Net earnings for the
second quarter of fiscal 2012 increased 5.3 percent to $2.9 million over
net earnings of $2.7 million in the second quarter of fiscal 2011. Due
to a slight increase in diluted shares outstanding in fiscal 2012,
earnings per diluted share were $0.14 in both quarters.
The gross profit margin for the second quarter of fiscal 2012 increased
to 28.7 percent compared to 27.8 percent for the second quarter of
fiscal 2011. The merchandise margin increased 0.7 percent, while buying,
distribution and occupancy costs decreased 0.2 percent as a percentage
of sales. Selling, general and administrative expenses for the second
quarter increased $5.4 million to $47.6 million; as a percentage of
sales these expenses increased to 26.1 percent compared to 25.3 percent
in the second quarter of 2011. The increase in expense was primarily due
to operating more stores, higher pre-opening expenses for new stores and
increased incentive compensation. Total pre-opening expenses included in
both cost of sales and selling, general and administrative expenses
increased $795,000 in the second quarter to $1.2 million. These expenses
increased primarily as a result of opening 11 new stores as compared to
opening five stores in the second quarter last year.
Mr. Lemond continued, "The back-to-school season represents a key sales
period for us. Comparable store sales have increased approximately 6
percent to-date in the third quarter as compared to the same period last
year. With this strong start, we are optimistic about our sales and
earnings prospects for the entire third quarter. The Shoe Carnival
model, with its broad assortment of trend-right, value-priced footwear,
continues to resonate well with today’s consumer."
Also during the second quarter of fiscal 2012, the Board of Directors
for Shoe Carnival, Inc. approved the payment of a quarterly cash
dividend to shareholders. The initial quarterly cash dividend of $0.05
per share was paid on July 16, 2012, to shareholders of record as of the
close of business on July 2, 2012. Future declarations of dividends are
subject to approval of the Board of Directors and may be adjusted as
business needs or market conditions change.
Net sales during the first six months of fiscal 2012 increased $39.7
million to $404.8 million as compared to the same period last year.
Comparable store sales increased 5.4 percent. Net earnings for the first
half of fiscal 2012 were $13.9 million, or $0.68 per diluted share,
compared to net earnings of $12.6 million, or $0.63 per diluted share,
in the first half of last year. The gross profit margin for the first
six months of fiscal 2012 was 29.9 percent compared to 29.6 percent last
year. Selling, general and administrative expenses, as a percentage of
sales was 24.3 percent for the first six months fiscal 2012 compared to
24.0 percent last year. The Company has opened 24 stores during the
first six months of fiscal 2012 as compared to opening nine stores
during the first half of last year. Total pre-opening expenses included
in both cost of sales and selling, general and administrative expenses
increased $1.9 million in the first half of fiscal 2012 to $2.9 million.
This increase equates to a reduction of approximately $0.06 in diluted
earnings per share.
Third Quarter Fiscal 2012 Earnings Outlook
The Company expects third quarter net sales to be in the range of $240
to $245 million with a comparable store sales increase in the range of 4
to 6 percent. Earnings per diluted share in the third quarter of fiscal
2012 are expected to be in the range of $0.55 to $0.60. In the third
quarter of fiscal 2011, the Company earned $0.52 per diluted share.
Included in this guidance is an increase in pre-opening costs of
$670,000, or $0.02 per diluted share, over the third quarter of fiscal
2011.
Store Growth
The Company expects to open 31 new stores and close six stores in fiscal
2012. Store openings and closings by quarter are as follows:
Fiscal 2012 New Stores Store Closings
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1st quarter 13 3
2nd quarter 11 2
3rd quarter 0 0
4th quarter 7 1
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Fiscal year 31 6
The 11 new stores opened during the second quarter include locations in:
City Market Total Stores in
the Market
---------------- -------------- ---------------
Barceloneta, PR Puerto Rico 2
Bozeman, MT Butte 1
Dallas, TX Dallas 7
Erie, PA Erie 1
Hatillo, PR Puerto Rico 2
Knoxville, TN Knoxville 4
Layton, UT Salt Lake City 9
Mt. Pleasant, SC Charleston 4
Riverdale, UT Salt Lake City 9
Tucson, AZ Tucson 1
Zanesville, OH Zanesville 1
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 moderately priced dress,
casual and athletic footwear for men, women and children with emphasis
on national and regional name brands. As of August 23, 2012, the Company
operates 346 stores in 32 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 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; 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; 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; and the
continued favorable trade relations between the United States and China
and the other countries which are the major manufacturers of footwear.
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)
Thirteen Thirteen Twenty-six Twenty-six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
July 28, 2012 July 30, 2011 July 28, 2012 July 30, 2011
------------------ ------------------ ------------------ --------------------
Net sales $ 182,207 $ 166,672 $ 404,820 $ 365,122
Cost of sales (including buying,
distribution and occupancy costs) 129,878 120,299 283,952 256,989
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Gross profit 52,329 46,373 120,868 108,133
Selling, general and administrative
expenses 47,637 42,259 98,199 87,884
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Operating income 4,692 4,114 22,669 20,249
Interest income (9 ) (21 ) (25 ) (49 )
Interest expense 66 71 134 132
------- ------- ------- -------
Income before income taxes 4,635 4,064 22,560 20,166
Income tax expense 1,776 1,349 8,681 7,532
------- ------- ------- -------
Net income $ 2,859 $ 2,715 $ 13,879 $ 12,364
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Net income per share:
Basic $ 0.14 $ 0.14 $ 0.68 $ 0.64
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Diluted $ 0.14 $ 0.14 $ 0.68 $ 0.63
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Weighted average shares:
Basic 19,934 19,508 19,907 19,408
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Diluted 20,010 19,714 19,991 19,611
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Cash dividends declared per share $ 0.05 $ 0.00 $ 0.05 $ 0.00
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SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 28, January 28, July 30,
2012 2012 2011
----------- ------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 52,895 $ 70,602 $ 44,096
Accounts receivable 1,679 2,621 2,889
Merchandise inventories 294,387 237,655 258,069
Deferred income tax benefit 2,981 2,496 3,307
Other 5,567 2,887 5,894
------- ------- -------
Total Current Assets 357,509 316,261 314,255
Property and equipment-net 75,670 69,232 66,660
Other 859 1,069 1,177
------- ------- -------
Total Assets $ 434,038 $ 386,562 $ 382,092
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LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 86,254 $ 61,238 $ 76,293
Accrued and other liabilities 16,424 14,522 14,005
------- ------- -------
Total Current Liabilities 102,678 75,760 90,298
Deferred lease incentives 15,280 12,964 10,082
Accrued rent 6,858 6,029 5,681
Deferred income taxes 284 1,930 1,697
Deferred compensation 6,718 6,054 5,685
Other 292 141 816
------- ------- -------
Total Liabilities 132,110 102,878 114,259
Total Shareholders’ Equity 301,928 283,684 267,833
------- ------- -------
Total Liabilities and Shareholders’ Equity $ 434,038 $ 386,562 $ 382,092
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SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twenty-six Twenty-six
Weeks Ended Weeks Ended
July 28, 2012 July 30, 2011
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Cash flows from operating activities:
Net income $ 13,879 $ 12,634
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 7,763 7,058
Stock-based compensation 2,888 1,822
Loss on retirement of assets 427 483
Deferred income taxes (2,131 ) 1,996
Lease incentives 3,139 2,434
Other 397 (185 )
Changes in operating assets and liabilities:
Accounts receivable 942 (1,239 )
Merchandise inventories (56,732 ) (45,140 )
Accounts payable and accrued liabilities 30,036 20,635
Other (3,337 ) (3,627 )
------- -------
Net cash used in operating activities (2,729 ) (3,129 )
------- -------
Cash flows from investing activities:
Purchases of property and equipment (16,371 ) (12,165 )
Proceeds from sale of property and equipment 0 4
Proceeds from notes receivable 200 100
------- -------
Net cash used in investing activities (16,171 ) (12,061 )
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Cash flows from financing activities:
Proceeds from issuance of stock 1,662 454
Dividends paid (1,023 ) 0
Excess tax benefits from stock-based compensation 570 1,276
Shares surrendered by employees to pay taxes on restricted stock (16 ) (2,637 )
------- -------
Net cash provided by (used in) financing activities 1,193 (907 )
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Net decrease in cash and cash equivalents (17,707 ) (16,097 )
Cash and cash equivalents at beginning of period 70,602 60,193
------- -------
Cash and Cash Equivalents at End of Period $ 52,895 $ 44,096
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SOURCE: Shoe Carnival, Inc.
Shoe Carnival, Inc.
Mark L. Lemond
President and Chief Executive Officer
or
W. Kerry Jackson
Executive Vice President, Chief Financial Officer and Treasurer
(812) 867-6471
www.shoecarnival.com
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