Shoe Carnival Reports Second Quarter 2013 Results

Shoe Carnival Reports Second Quarter 2013 Results

EVANSVILLE, Ind.--(BUSINESS WIRE)-- Shoe Carnival, Inc. (NAS: SCVL) a leading retailer of value-priced footwear and accessories, today reported results for the second quarter ended August 3, 2013.

Second Quarter Highlights

  • Net sales increased $34.2 million to $216.4 million, as compared to net sales reported for the second quarter of fiscal 2012, with approximately $15.7 million of this increase attributable to the one-week shift in the calendar due to fiscal 2012 being a 53-week year
  • Comparable store sales increased 2.6 percent
  • Earnings per diluted share were $0.29, an increase of $0.15 as compared to the second quarter of fiscal 2012
  • Company opened eight new stores

Cliff Sifford, President and CEO, stated, "In the second quarter, our selection of women's seasonal and children's footwear drove our comparable store sales increase. We are pleased our sales increase, when combined with our team's focus on managing the controllable aspects of our business, enabled us to achieve earnings towards the high-end of our guidance."

Second Quarter Financial Results

The Company reported net sales of $216.4 million for the second quarter ended August 3, 2013, an 18.8 percent increase, as compared to net sales of $182.2 million for the second quarter ended July 28, 2012. Comparable store sales for the thirteen-week period ended August 3, 2013 increased 2.6 percent as compared to the thirteen-week period ended August 4, 2012.

As a result of fiscal 2012 consisting of 53 weeks, each of the first three quarters in fiscal 2013 are shifted one week later when compared to fiscal 2012. This one-week shift moved an important week of back-to-school sales from the third quarter of fiscal 2012 into the second quarter this year. The shift accounted for approximately $15.7 million of the Company's net sales increase for the second quarter of fiscal 2013.

The gross profit margin for the second quarter of fiscal 2013 increased to 28.9 percent compared to 28.7 percent for the second quarter of fiscal 2012. The merchandise margin decreased 0.7 percent, while buying, distribution and occupancy costs decreased 0.9 percent as a percentage of sales.

Selling, general and administrative expenses for the second quarter increased $5.3 million to $53.0 million; as a percentage of sales, these expenses decreased to 24.5 percent compared to 26.1 percent in the second quarter of fiscal 2012.

Net earnings for the second quarter were $5.8 million, or $0.29 per diluted share, as compared to net earnings of $2.9 million, or $0.14 per diluted share, in the second quarter last year.

Six Month Financial Results

Net sales during the first six months of fiscal 2013 increased $43.9 million to $448.7 million as compared to the same period last year. Comparable store sales for the twenty-six week period ended August 3, 2013 increased 0.7 percent as compared to the twenty-six week period ended August 4, 2012. Net earnings for the first six months of fiscal 2013 were $15.4 million, or $0.76 per diluted share, compared to net earnings of $13.9 million, or $0.68 per diluted share, in the first six months of last year. The gross profit margin for the first six months of fiscal 2013 was 29.2 percent compared to 29.9 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 23.7 percent for the first six months of fiscal 2013 compared to 24.3 percent last year. The Company opened 21 stores during the first six months of fiscal 2013 as compared to opening 24 stores during the first six months of last year.

Mr. Sifford concluded, "The overall consumer discretionary spending environment remains challenging and we believe it is prudent to have a conservative outlook on our business for the third quarter. With the back-to-school selling period winding down, we expect a comparable store sales increase of approximately 1.0 percent for the fiscal month of August. This is on top of a high single-digit comparable store sales increase during the fiscal month of August last year. We remain confident that our broad selection and value proposition will continue to make Shoe Carnival a destination store for family footwear as our customers transition to fall and winter product."

Third Quarter Fiscal 2013 Earnings Outlook

The Company expects third quarter net sales to be in the range of $236 to $240 million with a comparable store sales increase in the range of 1.0 to 2.5 percent. Earnings per diluted share in the third quarter of fiscal 2013 are expected to be in the range of $0.51 to $0.55. In the third quarter of fiscal 2012, total net sales were $244 million, comparable store sales increased 6.2 percent and the Company earned $0.60 per diluted share. The lower sales and diluted earnings per share projected for the third quarter this year are a result of the calendar shift, which moved an important week of back-to-school from the third quarter of fiscal 2012 into the second quarter this year.

Store Growth

The Company expects to open 32 new stores and close five stores in fiscal 2013. Store openings and closings by quarter are as follows:

 New Stores Store Closings
1st quarter 2013130
2nd quarter 201382
3rd quarter 201380
4th quarter 201333
Fiscal year 2013325
 

The eight new stores opened during the second quarter include locations in:

City Market Total Stores in the Market
Burbank, ILChicago22
Cincinnati, OHCincinnati6
Dubuque, IACedar Rapids3
Lawrenceville, GAAtlanta12
Maplewood, MOSt. Louis13
Mesa, AZPhoenix4
New Bern, NCGreenville6
Okemos, MILansing2
 

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 value priced dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. As of August 29, 2013, the Company operates 370 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 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)

     
ThirteenThirteenTwenty-sixTwenty-six
Weeks EndedWeeks EndedWeeks EndedWeeks Ended
August 3, 2013July 28, 2012August 3, 2013July 28, 2012
 
Net sales$216,417$182,207$448,704$404,820

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

 153,906 129,878 317,580 283,952
 
Gross profit62,51152,329131,124120,868
 

Selling, general and administrative expenses

 52,953 47,637 106,320 98,199
 
Operating income9,5584,69224,80422,669
Interest income(3)(9)(5)(25)
Interest expense 41 66 91 134
 
Income before income taxes9,5204,63524,71822,560
Income tax expense 3,682 1,776 9,361 8,681
 
Net income$5,838$2,859$15,357$13,879
 
Net income per share:
Basic$0.29$0.14$0.76$0.68
Diluted$0.29$0.14$0.76$0.68
 
Weighted average shares:
Basic 19,936 19,934 19,907 19,907
Diluted 19,957 20,010 19,927 19,991
 
Cash dividends declared per share$0.06$0.05$0.12$0.05

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.

 
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

     
August 3,

2013

February 2, 2013

July 28,

2012

 
ASSETS
Current Assets:
Cash and cash equivalents$37,790$45,756$52,895
Accounts receivable2,4592,1521,679
Merchandise inventories321,059272,282294,387
Deferred income taxes2,4982,9142,981
Other 6,655 4,918 5,567
Total Current Assets370,461328,022357,509
Property and equipment - net84,76577,36475,670
Deferred income taxes1,8669990
Other noncurrent assets 582 811 859
Total Assets$457,674$407,196$434,038
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable$94,733$65,026$86,254
Accrued and other liabilities 19,988 16,995 16,424
Total Current Liabilities114,72182,021102,678
Deferred lease incentives20,11918,42615,280
Accrued rent8,3937,4756,858
Deferred income taxes00284
Deferred compensation7,4966,4126,718
Other 482 494 292
Total Liabilities151,211114,828132,110
Total Shareholders' Equity 306,463 292,368 301,928
Total Liabilities and Shareholders' Equity$457,674$407,196$434,038
 
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

   
Twenty-six Weeks Ended August 3, 2013Twenty-six Weeks Ended July 28, 2012
 
Cash Flows From Operating Activities
Net income$15,357$13,879

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization8,4207,763
Stock-based compensation1,8712,888
Loss on retirement and impairment of assets259427
Deferred income taxes(451)(2,131)
Lease incentives2,6023,139
Other577397
Changes in operating assets and liabilities:
Accounts receivable(258)942
Merchandise inventories(48,777)(56,732)
Accounts payable and accrued liabilities32,38530,036
Other (1,744) (3,337)
Net cash provided by (used in) operating activities 10,241  (2,729)
 
Cash Flows From Investing Activities
Purchases of property and equipment(15,429)(16,371)
Proceeds from notes receivable 200  200 
Net cash used in investing activities (15,229) (16,171)
 
Cash Flows From Financing Activities
Proceeds from issuance of stock1841,662
Dividends paid(2,433 Read Full Story

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