Shoe Carnival Reports Third Quarter 2013 Results

Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today reported results for the third quarter ended November 2, 2013.

Third Quarter Financial Results

The Company reported net earnings for the third quarter ended November 2, 2013 of $10.9 million, or $0.54 per diluted share, as compared to the Company’s expectations provided on August 29, 2013 of $0.51 to $0.55 per diluted share. For the third quarter ended October 27, 2012, the Company reported net earnings of $12.2 million, or $0.60 per diluted share.

As a result of fiscal 2012 consisting of 53 weeks, each of the first three quarters in fiscal 2013 is 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. This shift negatively affected the Company’s net sales comparison for the third quarter of fiscal 2013, reducing sales by approximately $21.2 million.

Net sales were $235.8 million for the third quarter ended November 2, 2013, as compared to net sales of $244.4 million for the third quarter ended October 27, 2012. Comparable store sales for the thirteen-week period ended November 2, 2013 increased 0.7 percent as compared to the thirteen-week period ended November 3, 2012.

The gross profit margin for the third quarter of fiscal 2013 decreased to 30.1 percent compared to 31.3 percent for the third quarter of fiscal 2012. The merchandise margin remained unchanged while buying, distribution and occupancy expenses increased 1.2 percent as a percentage of sales. The deleveraging of occupancy expenses was primarily attributable to the shift in the fiscal calendar.

Selling, general and administrative expenses for the third quarter decreased $2.7 million to $53.2 million; as a percentage of sales, these expenses decreased to 22.5 percent compared to 22.9 percent in the third quarter of fiscal 2012.

The Company opened eight new stores during the third quarter of fiscal 2013 as compared to six stores in the third quarter of fiscal 2012.

Speaking on the results, Cliff Sifford, President and CEO, stated, “The arrival of October’s seasonably cool weather and an end to the federal government shutdown was a welcomed relief in the third quarter. October’s mid-single digit comparable store sales gain, together with August’s sales performance, more than offset our negative September sales trend. Higher merchandise margins coupled with lower expenses than were originally projected resulted in earnings at the high-end of our expectations.”

Nine Month Financial Results

Net sales during the first nine months of fiscal 2013 increased $35.2 million to $684.5 million as compared to the same period last year. Comparable store sales for the thirty-nine week period ended November 2, 2013 increased 0.7 percent as compared to the thirty-nine week period ended November 3, 2012. Net earnings for the first nine months of fiscal 2013 were $26.3 million, or $1.29 per diluted share, compared to net earnings of $26.1 million, or $1.28 per diluted share, in the first nine months of last year. The gross profit margin for the first nine months of fiscal 2013 was 29.5 percent compared to 30.4 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 23.3 percent for the first nine months of fiscal 2013 compared to 23.7 percent last year. The Company opened 29 stores during the first nine months of fiscal 2013 as compared to opening 30 stores during the first nine months of last year.

Mr. Sifford concluded, “As more seasonable fall weather continued in November, sales of our fall footwear, particularly boots, increased. These favorable weather patterns along with our strong Thanksgiving promotional offering led to a comparable store sales increase for November of 7.8 percent. We believe we are well positioned to continue our positive sales trend throughout the remainder of the holiday season which would result in improved year-over-year financial results.”

Fourth Quarter Fiscal 2013 Earnings Outlook

The Company expects fourth quarter net sales to be in the range of $215 to $219 million with a comparable store sales increase in the range of 4.0 to 6.0 percent. Earnings per diluted share in the fourth quarter of fiscal 2013 are expected to be in the range of $0.18 to $0.22. In the fourteen-week fourth quarter of fiscal 2012, total net sales were $205.7 million, comparable store sales increased 0.5 percent and the Company earned $0.13 per diluted share. Earnings per diluted share for the fourth quarter of fiscal 2012 included a $0.03 reduction due to the application of the two-class method of computing earnings per share in connection with the Company’s $20.4 million special cash dividend paid in December 2012.

Store Growth

The Company has opened all 32 of their fiscal 2013 new stores at this time and expects to close five additional stores in the fourth quarter for a total of seven store closings for fiscal 2013. Store openings and closings by quarter are as follows:

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

Conference Call

Today, at 4:30 p.m. Eastern Time, the Company will host a conference call to discuss the third 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 December 2, 2013, the Company operates 381 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; the continued favorable trade relations between the United States and China and the other countries which are the major manufacturers of footwear; 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.

Financial Note:

Per share amounts for net income purposes 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.