EVANSVILLE, Ind.--(BUSINESS WIRE)--Shoe Carnival, Inc. (Nasdaq: SCVL) (“the Company”), a leading retailer of moderately priced footwear and accessories, today reported results for the second quarter and six months ended August 3, 2019.
Second Quarter Highlights
- Comparable store sales increased 1.4 percent
- Earnings per diluted share increased 5.3 percent to $0.80
- Cash and cash equivalents were $37.5 million with no outstanding debt as of August 3, 2019
Cliff Sifford, Shoe Carnival’s President and Chief Executive Officer commented, “We are pleased our financial results for the second quarter were in line with our expectations and we believe we remain well positioned to achieve our annual outlook. Shoe Carnival’s robust assortment of family footwear for back-to-school is resonating with new and existing customers resulting in an acceleration of our August sales. Comparable store sales through the first three weeks of August are up 3.5 percent compared to a 6.5 percent increase for the full month of August last year. Our team continues to focus on the execution of our strategic initiatives in the second half of fiscal 2019 as we build upon our strong foundation for sustainable long term growth and shareholder value creation.”
Second Quarter Financial Results
The Company reported net sales of $268.2 million for the second quarter of fiscal 2019, a 0.1 percent decrease compared to net sales of $268.4 million for the second quarter of fiscal 2018. Comparable store sales increased 1.4 percent for the second quarter of fiscal 2019.
Gross profit margin for the second quarter of fiscal 2019 decreased 0.6 percent to 30.6 percent compared to 31.2 percent in the second quarter of fiscal 2018. Merchandise margin was flat and buying, distribution and occupancy expenses increased 0.6 percent as a percentage of net sales compared to the second quarter of fiscal 2018.
Selling, general and administrative expenses for the second quarter of fiscal 2019 decreased $2.4 million to $66.4 million. As a percentage of net sales, these expenses decreased to 24.8 percent compared to 25.6 percent in the second quarter of fiscal 2018.
Net income for the second quarter of fiscal 2019 was $11.8 million, or $0.80 per diluted share. For the second quarter of fiscal 2018, the Company reported net income of $11.8 million, or $0.76 per diluted share.
Six Month Financial Results
Net sales for the first six months of fiscal 2019 decreased $3.8 million to $522.0 million compared to the first six months of fiscal 2018. Comparable store sales increased 0.6 percent for the first six months of fiscal 2019.
Net earnings for the first six months of fiscal 2019 were $25.7 million, or $1.71 per diluted share, compared to net earnings of $24.7 million, or $1.59 per diluted share, in the first six months of fiscal 2018. Included in the first six months of fiscal 2019 was a tax benefit in connection with the vesting of equity-based compensation of approximately $1.9 million, or $0.13 per diluted share. The gross profit margin for the first six months of fiscal 2019 was 30.1 percent compared to 30.6 percent in the same period last year. Selling, general and administrative expenses for the first six months decreased $2.9 million to $126.0 million. As a percentage of net sales, these expenses decreased to 24.1 percent compared to 24.5 percent in the first six months of fiscal 2018.
Store Openings and Closings
The Company expects to open one store and close six stores during fiscal 2019 compared to opening three stores and closing 14 stores during fiscal 2018.
Expected store openings and closings by quarter for the fiscal year are as follows:
|
New Stores |
Store Closings |
|
First quarter 2019 |
0 |
2 |
|
Second quarter 2019 |
0 |
2 |
|
Third quarter 2019 |
1 |
1 |
|
Fourth quarter 2019 |
0 |
1 |
|
Fiscal year 2019 |
1 |
6 |
Fiscal 2019 Outlook
Based on performance year-to-date, the Company is maintaining the high-end of the annual diluted earnings per share guidance of $2.83 and raising the lower-end of the range to $2.77. This compares to diluted earnings per share of $2.45 in the prior fiscal year. With the first half of the year complete, net sales estimates have been refined while maintaining the comparable store sales guidance for the year of a low single-digit increase. Total net sales for the full fiscal year are expected to be in the range of $1.028 billion to $1.033 billion.
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 investors and analysts. 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 name brands. As of August 28, 2019, the Company operates 393 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: 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; 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; 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; 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 natural disasters on our stores, 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; our ability to meet our labor needs while controlling costs; and 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,” “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 data) (Unaudited) |
||||||||||||||||
|
|
Thirteen |
|
Thirteen |
|
Twenty-six |
|
Twenty-six |
||||||||
|
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
||||||||
|
|
August 3, 2019 |
|
August 4, 2018 |
|
August 3, 2019 |
|
August 4, 2018 |
||||||||
Net sales |
|
$ |
268,221 |
|
|
$ |
268,366 |
|
|
$ |
522,031 |
|
|
$ |
525,811 |
|
Cost of sales (including buying, distribution and occupancy costs) |
|
|
186,126 |
|
|
|
184,585 |
|
|
|
364,796 |
|
|
|
364,703 |
|
Gross profit |
|
|
82,095 |
|
|
|
83,781 |
|
|
|
157,235 |
|
|
|
161,108 |
|
Selling, general and administrative expenses |
|
|
66,421 |
|
|
|
68,850 |
|
|
|
125,953 |
|
|
|
128,861 |
|
Operating income |
|
|
15,674 |
|
|
|
14,931 |
|
|
|
31,282 |
|
|
|
32,247 |
|
Interest income |
|
|
(86 |
) |
|
|
(117 |
) |
|
|
(417 |
) |
|
|
(119 |
) |
Interest expense |
|
|
85 |
|
|
|
36 |
|
|
|
121 |
|
|
|
76 |
|
Income before income taxes |
|
|
15,675 |
|
|
|
15,012 |
|
|
|
31,578 |
|
|
|
32,290 |
|
Income tax expense |
|
|
3,843 |
|
|
|
3,237 |
|
|
|
5,873 |
|
|
|
7,560 |
|
Net income |
|
$ |
11,832 |
|
|
$ |
11,775 |
|
|
$ |
25,705 |
|
|
$ |
24,730 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.81 |
|
|
$ |
0.77 |
|
|
$ |
1.76 |
|
|
$ |
1.60 |
|
Diluted |
|
$ |
0.80 |
|
|
$ |
0.76 |
|
|
$ |
1.71 |
|
|
$ |
1.59 |
|
Weighted average shares: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
14,615 |
|
|
|
15,249 |
|
|
|
14,614 |
|
|
|
15,387 |
|
Diluted |
|
|
14,736 |
|
|
|
15,367 |
|
|
|
14,964 |
|
|
|
15,446 |
|
Cash dividends declared per share |
|
$ |
0.085 |
|
|
$ |
0.080 |
|
|
$ |
0.165 |
|
|
$ |
0.155 |
|
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
|||||||||||||||
|
|
August 3, 2019 |
|
February 2, 2019 |
|
August 4, 2018 |
|||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
||||||
Current Assets: |
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
|
|
37,458 |
|
$ |
|
|
67,021 |
|
$ |
|
|
38,405 |
Accounts receivable |
|
|
2,414 |
|
|
1,219 |
|
|
3,918 |
||||||
Merchandise inventories |
|
|
336,919 |
|
|
257,539 |
|
|
336,907 |
||||||
Other |
|
|
10,887 |
|
|
11,534 |
|
|
12,094 |
||||||
Total Current Assets |
|
|
387,678 |
|
|
337,313 |
|
|
391,324 |
||||||
Property and equipment – net |
|
|
70,855 |
|
|
70,605 |
|
|
77,254 |
||||||
Deferred income taxes |
|
|
7,020 |
|
|
9,622 |
|
|
8,384 |
||||||
Other noncurrent assets |
|
|
4,284 |
|
|
459 |
|
|
343 |
||||||
Operating lease right-of-use assets |
|
|
223,536 |
|
|
0 |
|
|
0 |
||||||
Total Assets |
|
$ |
|
|
693,373 |
|
$ |
|
|
417,999 |
|
$ |
|
|
477,305 |
|
|
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities: |
|
|
|
|
|
|
|
|
|
||||||
Accounts payable |
|
$ |
|
|
108,410 |
|
$ |
|
|
48,715 |
|
$ |
|
|
90,928 |
Accrued and other liabilities |
|
|
20,179 |
|
|
22,069 |
|
|
25,659 |
||||||
Current portion of operating lease liabilities |
|
|
46,783 |
|
|
0 |
|
|
0 |
||||||
Total Current Liabilities |
|
|
175,372 |
|
|
70,784 |
|
|
116,587 |
||||||
Long-term portion of operating lease liabilities |
|
|
199,592 |
|
|
0 |
|
|
0 |
||||||
Deferred lease incentives |
|
|
0 |
|
|
22,171 |
|
|
25,006 |
||||||
Accrued rent |
|
|
0 |
|
|
8,436 |
|
|
9,124 |
||||||
Deferred compensation |
|
|
13,751 |
|
|
12,108 |
|
|
12,074 |
||||||
Other |
|
|
1,098 |
|
|
67 |
|
|
750 |
||||||
Total Liabilities |
|
|
389,813 |
|
|
113,566 |
|
|
163,541 |
||||||
Total Shareholders’ Equity |
|
|
303,560 |
|
|
304,433 |
|
|
313,764 |
||||||
Total Liabilities and Shareholders’ Equity |
|
$ |
|
|
693,373 |
|
$ |
|
|
417,999 |
|
$ |
|
|
477,305 |
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
|||||||
|
Twenty-six |
Twenty-six |
|||||
|
Weeks Ended |
Weeks Ended |
|||||
|
August 3, 2019 |
August 4, 2018 |
|||||
Cash Flows From Operating Activities |
|
|
|
|
|||
Net income |
$ |
25,705 |
|
$ |
24,730 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|||
Depreciation and amortization |
|
8,395 |
|
|
11,219 |
|
|
Stock-based compensation |
|
3,440 |
|
|
3,403 |
|
|
Loss on retirement and impairment of assets, net |
|
205 |
|
|
(227 |
) |
|
Deferred income taxes |
|
2,602 |
|
|
(202 |
) |
|
Non-cash operating lease expense |
|
20,352 |
|
|
0 |
|
|
Lease incentives |
|
0 |
|
|
170 |
|
|
Other |
|
1,643 |
|
|
(4,577 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|||
Accounts receivable |
|
(1,194 |
) |
|
2,587 |
|
|
Merchandise inventories |
|
(79,380 |
) |
|
(76,407 |
) |
|
Operating lease liabilities |
|
(23,346 |
) |
|
0 |
|
|
Accounts payable and accrued liabilities |
|
59,565 |
|
|
58,562 |
|
|
Other |
|
(7,970 |
) |
|
(5,125 |
) |
|
Net cash provided by operating activities |
|
10,017 |
|
|
14,133 |
|
|
|
|
|
|
|
|||
Cash Flows From Investing Activities |
|
|
|
|
|||
Purchases of property and equipment |
|
(11,490 |
) |
|
(2,661 |
) |
|
Proceeds from sales of property and equipment |
|
8 |
|
|
0 |
|
|
Other |
|
0 |
|
|
283 |
|
|
Net cash used in investing activities |
|
(11,482 |
) |
|
(2,378 |
) |
|
|
|
|
|
|
|||
Cash Flow From Financing Activities |
|
|
|
|
|||
Borrowings under line of credit |
|
20,000 |
|
|
0 |
|
|
Payments on line of credit |
|
(20,000 |
) |
|
0 |
|
|
Proceeds from issuance of stock |
|
104 |
|
|
107 |
|
|
Dividends paid |
|
(3,250 |
) |
|
(2,393 |
) |
|
Purchase of common stock for treasury |
|
(14,012 |
) |
|
(19,043 |
) |
|
Shares surrendered by employees to pay taxes on restricted stock |
|
(10,940 |
) |
|
(275 |
) |
|
Net cash used in financing activities |
|
(28,098 |
) |
|
(21,604 |
) |
|
Net decrease in cash and cash equivalents |
|
(29,563 |
) |
|
(9,849 |
) |
|
Cash and cash equivalents at beginning of period |
|
67,021 |
|
|
48,254 |
|
|
Cash and cash equivalents at end of period |
$ |
37,458 |
|
$ |
38,405 |
|
|