Shoe Carnival Reports Second Quarter 2016 Results
Company Reports Comparable Store Sales Increase for Eighth Consecutive Quarter
Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of moderately priced footwear and accessories, today reported results for
the second quarter ended July 30, 2016.
Second Quarter Highlights
- Net sales increased $4.1 million to $231.9 million compared to $227.8 million in the second quarter
of fiscal 2015
- Comparable store sales increased 0.5 percent in the second quarter of 2016
- Per-store inventories were down 2.5 percent at the end of the quarter compared to the second quarter
of fiscal 2015
- Repurchased 966,828 shares of common stock at a total cost of $23.6 million under share repurchase
program
“Our non-athletic footwear categories, particularly sandals, performed well in the second quarter. Shoe Perks, our loyalty
program, continued to be a valuable tool for us as we increased shopping frequency and average order value across our most loyal
customers to report an eighth consecutive quarterly increase in comparable store sales,” stated Cliff Sifford, Shoe Carnival’s
President and CEO. “We remain focused on the execution of our multi-channel strategic initiatives to fuel future growth in sales
and profitability. Going forward, we have confidence in our opportunities and our ability to capitalize on them while maintaining
the financial flexibility to continue our commitment of returning value to our shareholders through share repurchases and
consistent dividend payments.”
Second Quarter Financial Results
The Company reported net sales of $231.9 million for the second quarter of fiscal 2016, a 1.8 percent increase compared to net
sales of $227.8 million for the second quarter of fiscal 2015. Comparable store sales increased 0.5 percent in the second quarter
of fiscal 2016.
The gross profit margin for the second quarter of fiscal 2016 decreased to 29.0 percent compared to 29.1 percent in the second
quarter of fiscal 2015. The merchandise margin decreased 0.4 percent. Buying, distribution and occupancy expenses decreased 0.3
percent as a percentage of sales.
Selling, general and administrative expenses for the second quarter of fiscal 2016 increased $2.2 million to $60.6 million. As a
percentage of sales, these expenses increased to 26.1 percent compared to 25.6 percent in the second quarter of fiscal 2015.
The Company opened nine new stores in the second quarter of fiscal 2016 compared to five new stores in the second quarter of
fiscal 2015.
Net earnings for the second quarter of fiscal 2016 were $4.1 million, or $0.22 per diluted share. For the second quarter of
fiscal 2015, the Company reported net earnings of $4.8 million, or $0.24 per diluted share.
Six Month Financial Results
Net sales during the first six months of fiscal 2016 increased $11.8 million to $492.4 million compared to the same period last
year. Comparable store sales for the twenty-six week period ended July 30, 2016, increased 1.6 percent. Net earnings for the first
six months of fiscal 2016 were $14.8 million, or $0.78 per diluted share, compared to net earnings of $15.2 million, or $0.76 per
diluted share, in the first six months of fiscal 2015. The gross profit margin for the first six months of fiscal 2016 was 29.0
percent compared to 29.3 percent in the same period last year. Selling, general and administrative expenses remained flat as a
percentage of sales. The Company opened 12 stores and closed four stores during the first six months of fiscal 2016 compared to 12
store openings and 12 store closings in the first six months of fiscal 2015.
Fiscal 2016 Earnings Outlook
The Company is updating its annual fiscal 2016 sales outlook and is maintaining its diluted earnings per share outlook due to
the positive benefit from the shares repurchased during the first half of the year. Fiscal 2016 net sales are now expected to be in
the range of $1.012 billion to $1.016 billion, with a comparable store sales increase in the range of 1.5 percent to 2.0 percent.
Earnings per diluted share for the fiscal year are expected to be in the range of $1.58 to $1.65. This represents an increase of 9
percent to 14 percent over fiscal 2015 earnings per diluted share of $1.45.
Store Growth
The Company expects to open approximately 20 stores, including seven small-market stores, and close approximately ten stores in
fiscal 2016. Store openings and closings by quarter for the fiscal year are as follows:
|
|
|
New Stores |
|
|
Store Closings |
1st quarter 2016 |
|
|
3 |
|
|
4 |
2nd quarter 2016 |
|
|
9 |
|
|
0 |
3rd quarter 2016
|
|
|
2 |
|
|
1 |
4th quarter 2016 |
|
|
6 |
|
|
5 |
Fiscal year 2016 |
|
|
20 |
|
|
10 |
|
|
|
|
|
|
|
The nine new stores opened during the second quarter include locations in:
City |
|
|
Market |
|
|
Total Stores in the Market |
Deptford, NJ |
|
|
Philadelphia |
|
|
9 |
Dover, DE |
|
|
Philadelphia |
|
|
9 |
Grandview, MO |
|
|
Kansas City |
|
|
5 |
Lebanon, IN |
|
|
Indianapolis |
|
|
13 |
Mesquite, TX |
|
|
Dallas |
|
|
11 |
Omaha, NE |
|
|
Omaha |
|
|
3 |
Paris, TN |
|
|
Nashville |
|
|
7 |
Richardson, TX |
|
|
Dallas |
|
|
11 |
Vestal, NY |
|
|
Binghamton |
|
|
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
31, 2016, the Company operates 412 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; 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; 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 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; the impact of unauthorized disclosure or misuse of personal and confidential information about our
customers, vendors and employees; our ability to manage our third-party vendor relationships; 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 or impairment charges associated with the closing of underperforming
stores; our ability to successfully grow our e-commerce sales; 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; 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)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen |
|
|
Thirteen |
|
|
Twenty-six |
|
|
Twenty-six |
|
|
|
|
Weeks Ended |
|
|
Weeks Ended |
|
|
Weeks Ended |
|
|
Weeks Ended |
|
|
|
|
July 30, 2016 |
|
|
August 1, 2015 |
|
|
July 30, 2016 |
|
|
August 1, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
$ |
231,907 |
|
|
$ |
227,822 |
|
|
$ |
492,377 |
|
|
$ |
480,589 |
|
Cost of sales (including buying, distribution and occupancy costs)
|
|
|
|
164,677 |
|
|
|
161,548 |
|
|
|
349,591 |
|
|
|
339,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
67,230 |
|
|
|
66,274 |
|
|
|
142,786 |
|
|
|
140,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
60,570 |
|
|
|
58,397 |
|
|
|
118,841 |
|
|
|
116,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
6,660 |
|
|
|
7,877 |
|
|
|
23,945 |
|
|
|
24,907 |
|
Interest income |
|
|
|
(2 |
) |
|
|
(31 |
) |
|
|
(5 |
) |
|
|
(34
|
) |
Interest expense |
|
|
|
41 |
|
|
|
42 |
|
|
|
84 |
|
|
|
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
|
6,621 |
|
|
|
7,866 |
|
|
|
23,866 |
|
|
|
24,857 |
|
Income tax expense |
|
|
|
2,517 |
|
|
|
3,049 |
|
|
|
9,101 |
|
|
|
9,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
$ |
4,104 |
|
|
$ |
4,817 |
|
|
$ |
14,765 |
|
|
$ |
15,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.22 |
|
|
$ |
0.24 |
|
|
$ |
0.78 |
|
|
$ |
0.76 |
|
Diluted |
|
|
$ |
0.22 |
|
|
$ |
0.24 |
|
|
$ |
0.78 |
|
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
18,277 |
|
|
|
19,593 |
|
|
|
18,526 |
|
|
|
19,590 |
|
Diluted |
|
|
|
18,282 |
|
|
|
19,606 |
|
|
|
18,531 |
|
|
|
19,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
|
|
$ |
0.070 |
|
|
$ |
0.065 |
|
|
$ |
0.135 |
|
|
$ |
0.125 |
|
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)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
41,549 |
|
$ |
68,814 |
|
$ |
39,503 |
Accounts receivable |
|
|
3,185 |
|
|
2,131 |
|
|
2,449 |
Merchandise inventories |
|
|
351,220 |
|
|
292,878 |
|
|
349,037 |
Deferred income taxes |
|
|
2,680 |
|
|
1,061 |
|
|
1,154 |
Other |
|
|
7,991 |
|
|
5,193 |
|
|
9,093 |
Total Current Assets |
|
|
406,625 |
|
|
370,077 |
|
|
401,236 |
Property and equipment - net |
|
|
103,363 |
|
|
103,386 |
|
|
105,817 |
Deferred income taxes |
|
|
7,045 |
|
|
7,158 |
|
|
7,003 |
Other noncurrent assets |
|
|
1,053 |
|
|
472 |
|
|
381 |
Total Assets |
|
$ |
518,086 |
|
$ |
481,093 |
|
$ |
514,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
116,989 |
|
$ |
72,086 |
|
$ |
95,934 |
Accrued and other liabilities |
|
|
19,759 |
|
|
15,848 |
|
|
20,740 |
Total Current Liabilities |
|
|
136,748 |
|
|
87,934 |
|
|
116,674 |
Deferred lease incentives |
|
|
30,634 |
|
|
31,971 |
|
|
30,411 |
Accrued rent |
|
|
11,407 |
|
|
11,224 |
|
|
11,137 |
Deferred compensation |
|
|
10,022 |
|
|
9,612 |
|
|
10,313 |
Other |
|
|
811 |
|
|
550 |
|
|
370 |
Total Liabilities |
|
|
189,622 |
|
|
141,291 |
|
|
168,905 |
Total Shareholders' Equity |
|
|
328,464 |
|
|
339,802 |
|
|
345,532 |
Total Liabilities and Shareholders' Equity |
|
$ |
518,086 |
|
$ |
481,093 |
|
$ |
514,437 |
|
SHOE CARNIVAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
Twenty-six Weeks Ended July 30, 2016 |
|
Twenty-six Weeks Ended August 1, 2015 |
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
Net income |
|
$ |
14,765 |
|
|
$ |
15,213 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
Depreciation and amortization |
|
|
11,773 |
|
|
|
11,378 |
|
Stock-based compensation |
|
|
2,123 |
|
|
|
1,752 |
|
Loss on retirement and impairment of assets |
|
|
59 |
|
|
|
422 |
|
Deferred income taxes |
|
|
(1,506 |
) |
|
|
(2,973 |
) |
Lease incentives |
|
|
898 |
|
|
|
2,628 |
|
Other |
|
|
(1,973 |
) |
|
|
(1,804 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(1,054 |
) |
|
|
230 |
|
Merchandise inventories |
|
|
(58,341 |
) |
|
|
(61,160 |
) |
Accounts payable and accrued liabilities |
|
|
49,229 |
|
|
|
34,369 |
|
Other |
|
|
(3,381 |
) |
|
|
(3,116 |
) |
Net cash provided by (used in) operating activities |
|
|
12,592 |
|
|
|
(3,061 |
) |
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
Purchases of property and equipment |
|
|
(11,910 |
) |
|
|
(16,679 |
) |
Proceeds from notes receivable |
|
|
0 |
|
|
|
250 |
|
Net cash used in investing activities |
|
|
(11,910 |
) |
|
|
(16,429 |
) |
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
Proceeds from issuance of stock |
|
|
133 |
|
|
|
128 |
|
Dividends paid |
|
|
(2,533 |
) |
|
|
(2,497 |
) |
Excess tax benefits from stock-based compensation |
|
|
2 |
|
|
|
32 |
|
Purchase of common stock for treasury |
|
|
(25,238 |
) |
|
|
0 |
|
Shares surrendered by employees to pay taxes on restricted stock |
|
|
(311 |
) |
|
|
(46 |
) |
Net cash used in financing activities |
|
|
(27,947 |
) |
|
|
(2,383 |
) |
Net decrease in cash and cash equivalents |
|
|
(27,265 |
) |
|
|
(21,873 |
) |
Cash and cash equivalents at beginning of period |
|
|
68,814 |
|
|
|
61,376 |
|
Cash and Cash Equivalents at End of Period |
|
$ |
41,549 |
|
|
$ |
39,503 |
|
Shoe Carnival
Cliff Sifford
President and Chief Executive Officer
or W. Kerry Jackson
Senior Executive Vice President,
Chief Operating and Financial Officer and Treasurer
812-867-6471
www.shoecarnival.com
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