Shoe Carnival Reports Fourth Quarter and Record Full Year 2012 Results

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Shoe Carnival Reports Fourth Quarter and Record Full Year 2012 Results

EVANSVILLE, Ind.--(BUSINESS WIRE)-- Shoe Carnival, Inc. (NAS: SCVL) a leading retailer of value-priced footwear and accessories, today announced net sales and earnings for the fourth quarter and fiscal year ended February 2, 2013. The fourth quarter of fiscal 2012 included 14 weeks compared to 13 weeks in the fourth quarter of fiscal 2011 and the full fiscal year of 2012 included 53 weeks compared to 52 weeks in the full fiscal year of 2011.

Fourth Quarter and Full Year 2012 Highlights

  • Net sales of $205.7 million for the quarter, and record sales of $855.0 million for the year
  • Comparable store sales increased 0.5 percent for the quarter, and increased 4.5 percent for the year
  • Adjusted earnings per diluted share of $0.16 for the quarter ($0.13 in earnings per diluted share on a GAAP basis)
  • Record earnings per diluted share of $1.43 for the year, surpassing the prior record of $1.37 achieved in fiscal 2010
  • Company opened one store in the quarter and 31 during the year, for a 7.6 percent net square footage increase compared to the end of fiscal 2011
  • Company initiated its first-ever dividend, distributing $23.5 million in dividends to its shareholders during the year, and repurchased $4.7 million, or 220,000 shares, of its common stock

"We were pleased with our ability to end 2012 having achieved record sales and earnings. This came during a period of accelerated growth and, as we previously announced, a fourth quarter where performance was below our expectations," said Cliff Sifford, Shoe Carnival's President and CEO. "In 2013 we will focus on key initiatives to drive our growth long-term, which include enhancing our branded offerings in our women's dress and casual, adding 30 to 35 stores primarily in existing markets, leveraging our advertising in markets that are under penetrated with a re-energized marketing campaign and reinvesting in our existing store base with approximately 30 to 35 remodels and seven relocations."

Fourth Quarter Financial Results

Net sales for the 14-week fourth quarter ended February 2, 2013 increased 13.1 percent to $205.7 million compared to net sales of $181.9 million in the 13-week fourth quarter ended January 28, 2012. Sales of approximately $10.7 million were recorded in the extra week of fiscal 2012. Comparable store sales for the 13-week period ended January 26, 2013 increased 0.5 percent compared to the 13-week period ended January 28, 2012.

The gross profit margin for the fourth quarter of fiscal 2012 increased to 29.3 percent compared to 28.3 percent for the fourth quarter of fiscal 2011. The merchandise margin increased 1.4 percent, while buying, distribution and occupancy costs increased 0.4 percent as a percentage of sales.

Selling, general and administrative expenses for the fourth quarter increased $8.4 million to $54.9 million; as a percentage of sales, these expenses increased to 26.7 percent compared to 25.5 percent in the fourth quarter of fiscal 2011.

Net earnings for the fourth quarter of fiscal 2012 were $3.2 million, or $0.16 in adjusted earnings per diluted share, as compared to net earnings of $3.3 million, or $0.16 per diluted share for the fourth quarter of fiscal 2011. GAAP earnings per diluted share for the fourth quarter of fiscal 2012 were $0.13.

While the Company's payment of a $20.4 million special cash dividend in December 2012 had no effect on fourth quarter or annual net income or annual diluted earnings per share, the results for the fourth quarter of fiscal 2012 included a $0.03 reduction in earnings per diluted share due to the application of the two-class method of computing earnings per share in connection with this dividend (see GAAP to Non-GAAP Reconciliation Financial Table below).

Fiscal Year 2012 Financial Results

Net sales increased 12.1 percent to $855.0 million for fiscal 2012, compared to net sales of $762.5 million for fiscal 2011. Comparable store sales for the fiscal 52-week period ended January 26, 2013 increased 4.5 percent compared to the 52-week period ended January 28, 2012. The gross profit margin for fiscal 2012 increased to 30.1 percent from 29.5 percent in fiscal 2011. Selling, general and administrative expenses, as a percentage of sales, were 24.4 percent, as compared to 24.0 percent for the prior year. Net earnings for fiscal 2012 were $29.3 million, or $1.43 per diluted share, compared to net earnings of $26.4 million, or $1.31 per diluted share in fiscal 2011.

Store Growth

During fiscal 2012, the Company opened 31 new stores including new market entries into Dallas, Texas and Puerto Rico. In addition, the Company closed seven stores to end the year at 351 stores. One store was opened in the fourth quarter of fiscal 2012 and two were closed. Total retail selling space increased to 3.8 million square feet at the end of fiscal 2012 from 3.6 million square feet at the end of fiscal 2011.

Store openings and closings by quarter and for the fiscal year were as follows:

   New Stores Store Closings
1st Quarter 2012133
2nd Quarter 2012112
3rd Quarter 201260
4th Quarter 201212
Fiscal Year 2012317
 

In fiscal 2013, the Company expects to open 30 to 35 new stores, relocate seven stores and close five to seven stores. The Company has completed the store openings and closings for the first quarter of fiscal 2013 with the opening of 12 new stores and relocation of three stores. In the first quarter of fiscal 2012, 13 stores were opened, two stores were relocated and three were closed.

First Quarter Fiscal 2013 Outlook

The Company expects net sales in the first quarter of fiscal 2013 to be in the range of $226 to $232 million, with a comparable store sales decrease in the range of 2.0 to 4.0 percent. Earnings per diluted share in the first quarter of fiscal 2013 are expected to be in the range of $0.36 to $0.44. In the first quarter of fiscal 2012, comparable store sales increased 7.3 percent and earnings per diluted share were $0.54.

Mr. Sifford concluded, "Last year unseasonably warm weather early in the spring selling season shifted sales of higher margin spring footwear from the second quarter into the first quarter, driving record first quarter results. However, during March this year, we experienced cold, wet weather across our central and northern regions, generating comparatively slower sales of our higher margin spring sandal and athletic categories. This slow start to the spring selling season has resulted in our conservative first quarter outlook."

"At the same time, we are pleased to report that our southern region has generated mid-single digit comparable store sales increases to date in the first quarter of fiscal 2013. This leaves us feeling confident that, as more seasonal weather arrives across our markets, we are well positioned with the right product assortment to meet the spring footwear needs of our customers. Due to the slow start to the spring selling season in the first quarter this year, we believe second quarter comparable store sales will increase up to mid-single digits."

Conference Call

Today, at 4:30 p.m. Eastern time, the Company will host a conference call to discuss the fourth quarter and full year 2012 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.

Record Date and Date of Annual Shareholder Meeting

The Company also announced that April 12, 2013 has been set as the shareholder of record date and the Annual Meeting of Shareholders will be held on June 13, 2013.

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 April 1, 2013, the Company operates 363 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.

Non-GAAP Measure

The non-GAAP measure shown in this release, adjusted earnings per diluted share for the fourth quarter of fiscal 2012, excludes the $0.03 negative effect to earnings per diluted share resulting from the treatment of undistributed losses under the two-class method related to the $20.4 million special cash dividend paid in December 2012. Reconciliation of this non-GAAP measure to the most directly comparable GAAP measure is included below. This measure is not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Management believes that adjusted earnings per diluted share for the fourth quarter of fiscal 2012 is a useful measure of the Company's performance in the comparative quarterly periods presented, as it allows management and investors to analyze the financial and business trends related to the Company's results of operations separate from the impact of the special cash dividend.

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; 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)

 
FourteenThirteenFifty-threeFifty-two
Weeks EndedWeeks EndedWeeks EndedWeeks Ended

February 2,
2013

January 28,
2012

February 2,
2013

January 28,
2012

    
Net sales$205,744$181,940$854,998$762,534

Cost of sales (including buying, distribution and occupancy costs)

 145,570 130,375 597,521 537,681
 
Gross profit60,17451,565257,477224,853
 

Selling, general and administrative expenses

 54,909 46,556 208,983 182,716
 
Operating income5,2655,00948,49442,137
Interest income(3)(13)(32)

(79

)

Interest expense 70 66 273 266
 
Income before income taxes5,1984,95648,25341,950
Income tax expense 1,987 1,681 18,915 15,568
 
Net income$3,211$3,275$29,338$26,382
 
Net income per share:
Basic$0.13$0.16$1.44$1.32
Diluted$0.13$0.16$1.43$1.31
 
Weighted average shares:
Basic 19,878 19,753 19,911 19,524
Diluted 19,878 19,876 19,972 19,694
 
Cash dividends declared per share$1.05$0.00$1.15$0.00

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. Additionally, there was a $0.03 reduction in earnings per diluted share in the fourth quarter of fiscal 2012 due to the application of the two-class method of computing earnings per share in connection with the $1.00 per share special cash dividend paid in December 2012.

 
SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

  

February 2,
2013

January 28,
2012

 
ASSETS
Current Assets:
Cash and cash equivalents$45,756$70,602
Accounts receivable2,1522,621
Merchandise inventories272,282237,655
Deferred income taxes2,9142,496
Other 4,9182,887
Total Current Assets328,022316,261
Property and equipment-net77,36469,232
Deferred income taxes9990
Other noncurrent assets 811 1,069
Total Assets$407,196$386,562
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable$65,026$61,238
Accrued and other liabilities 16,995 14,522
Total Current Liabilities82,02175,760
Deferred lease incentives18,42612,964
Accrued rent7,4756,029
Deferred income taxes01,930
Deferred compensation6,4126,054
Other 494 141
Total Liabilities114,828102,878
Total Shareholders' Equity 292,368 283,684
Total Liabilities and Shareholders' Equity$407,196$386,562
 
 
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

  

Fifty-three
Weeks Ended
February 2, 2013

Fifty-two
Weeks Ended
January 28, 2012

 
Cash flows from operating activities:
Net income$29,338$26,382

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization15,95514,450
Stock-based compensation4,0492,135
Loss on retirement and impairment of assets628666
Deferred income taxes(3,347)3,040
Lease incentives7,1895,903
Other(566)(810)
Changes in operating assets and liabilities:
Accounts receivable470(971)
Merchandise inventories(34,627)(24,726)
Accounts payable and accrued liabilities9,2693,960
Other (2,508) 846
 
Net cash provided by operating activities 25,850 30,875
 
Cash flows from investing activities:
Purchases of property and equipment(25,977)(21,260)
Proceeds from sale of property and equipment05
Proceeds from notes receivable 200 100
 
Net cash used in investing activities (25,777) (21,155)
 
Cash flows from financing activities:
Proceeds from issuance of stock2,4202,654
Dividends paid(23,460)0
Excess tax benefits from stock-based compensation8371,254
Purchase of common stock for treasury(4,675)0
Shares surrendered by employees to pay taxes on restricted stock (41) (3,219)
 
Net cash (used in) provided by financing activities (24,919) Read Full Story

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