Reports Comparable Store Sales Increase of 4.5 Percent
Raises Fiscal Year 2018 Net Sales and Earnings Per Diluted Share
Outlook
EVANSVILLE, Ind.--(BUSINESS WIRE)--Nov. 15, 2018--
Shoe Carnival, Inc. (Nasdaq: SCVL) (“the Company”), a leading retailer
of moderately priced footwear and accessories, today reported results
for the third quarter and nine months ended November 3, 2018.
Third Quarter Highlights
-
Earnings per diluted share increased 15 percent to $0.76
-
Comparable store sales increased 4.5 percent
-
Due to fiscal 2017 being a 53-week year, approximately $25.1 million
of net sales reported in the third quarter of 2017 shifted into the
second quarter of fiscal 2018, resulting in a net sales decrease of
$18.3 million in the third quarter compared to the same period last
year
-
Repurchased 519,048 shares of common stock at a total cost of $20.0
million under share repurchase program
“We are pleased with our strong third quarter sales results, which
reflect growth in all geographic regions and virtually all of our
product categories,” commented Cliff Sifford, Shoe Carnival’s President
and Chief Executive Officer. “Our third quarter comparable store sales
growth of 4.5 percent was on top of a 4.4 percent increase for the same
quarter last year. On a year-to-date basis, our comparable store sales
have increased 4.2 percent, operating income increased 28.6 percent and
earnings per diluted share increased 71.0 percent. As a result of our
year-to-date performance and outlook for the remainder of fiscal 2018,
we are pleased to raise our annual net sales and earnings guidance.”
Third Quarter Financial Results
Comparable store sales for the thirteen-week period ended November 3,
2018 increased 4.5 percent compared to the thirteen-week period ended
November 4, 2017. Primarily due to the calendar shift, net sales in the
third quarter ended November 3, 2018 decreased 6.4 percent to $269.2
million, compared to net sales of $287.5 million for the third quarter
ended October 28, 2017.
Gross profit margin for the third quarter of fiscal 2018 increased to
30.2 percent compared to 29.8 percent in the third quarter of fiscal
2017. Merchandise margin increased 1.1 percent and buying, distribution
and occupancy expenses increased 0.7 percent as a percentage of net
sales compared to the third quarter of fiscal 2017.
Selling, general and administrative expenses (“SG&A”) for the third
quarter of fiscal 2018 decreased $2.6 million to $65.2 million. The
decrease in expense was primarily due to lower advertising expense,
expense reductions from closed stores and a gain on insurance proceeds
related to stores affected by recent hurricanes, partially offset by an
increase in incentive and equity compensation expense as a result of the
improved financial performance of the Company. As a percentage of net
sales, these expenses increased to 24.3 percent compared to 23.6 percent
in the third quarter of fiscal 2017.
Net income for the third quarter of fiscal 2018 increased 12.6 percent
to $12.0 million, or $0.76 per diluted share. For the third quarter of
fiscal 2017, the Company reported net income of $10.7 million, or $0.66
per diluted share.
Nine Month Financial Results
Comparable store sales for the thirty-nine week period ended November 3,
2018 increased 4.2 percent compared to the thirty-nine week period ended
November 4, 2017. Net sales during the nine months ended November 3,
2018 increased $19.1 million to $795.0 million compared to the nine
months ended October 28, 2017.
The gross profit margin for the first nine months of fiscal 2018 was
30.5 percent compared to 29.1 percent in the same period last year. SG&A
expenses for the first nine months increased $5.5 million to $194.1
million. As a percentage of net sales, these expenses increased to 24.4
percent compared to 24.3 percent in the first nine months of fiscal 2017.
Net earnings for the first nine months of fiscal 2018 increased 61.1
percent to $36.8 million, or $2.36 per diluted share, compared to net
earnings of $22.8 million, or $1.38 per diluted share, in the first nine
months of fiscal 2017.
Store Openings and Closings
The Company opened three stores and closed nine stores during the first
nine months of fiscal 2018 compared to 19 store openings and ten store
closings in the first nine months of fiscal 2017. For the full fiscal
year 2018, the Company expects to open three stores and close 14 stores
compared to opening 19 stores and closing 26 stores during fiscal 2017.
Expected store openings and closings by quarter for the fiscal year are
as follows:
|
|
|
|
|
|
New Stores
|
|
Store Closings
|
|
|
|
|
1st quarter 2018
|
|
0
|
|
3
|
|
|
|
|
2nd quarter 2018
|
|
0
|
|
3
|
|
|
|
|
3rd quarter 2018
|
|
3
|
|
3
|
|
|
|
|
4th quarter 2018
|
|
0
|
|
5
|
|
|
|
|
Fiscal year 2018
|
|
3
|
|
14
|
|
|
|
|
|
|
|
|
|
The three new stores opened during the third quarter include locations
in:
|
|
|
|
City
|
|
Market
|
|
Total Stores in the Market
|
|
|
|
|
Cookeville, TN
|
|
Nashville, TN
|
|
8
|
|
|
|
|
Dania, FL
|
|
Miami-Ft. Lauderdale, FL
|
|
3
|
|
|
|
|
Miami Gardens, FL
|
|
Miami-Ft. Lauderdale, FL
|
|
3
|
|
|
|
|
|
|
|
|
|
Fiscal 2018 Outlook
The Company is raising its fiscal 2018 outlook as follows:
-
Net sales in the range of $1.020 billion to $1.022 billion, with
comparable store sales up approximately 3.5 percent;
-
Earnings per diluted share in the range of $2.36 to $2.38. Fiscal 2017
earnings per diluted share were $1.15 and adjusted earnings per
diluted share were $1.49.
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.
Non-GAAP Adjusted Results
The non-GAAP adjusted results for the full year of fiscal 2017 discussed
herein exclude the impact of a gain on insurance proceeds recorded in
cost of sales related to hurricane affected stores, non-cash impairment
charges for underperforming stores and additional stock-based
compensation expense recorded in selling, general and administrative
expenses and additional income tax expense associated with the enactment
of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”).
These adjusted results are provided to enhance the user's overall
understanding of the Company's historical operations and financial
performance. Specifically, the Company believes the adjusted results
provide investors with relevant period-to-period comparisons of the
Company’s core operations. The unaudited adjusted results are provided
in addition to, and not as alternatives for, the Company’s reported
results determined in accordance with generally accepted accounting
principles. A complete reconciliation of actual results to the adjusted
results appears below in the table entitled “Reconciliation of GAAP to
Non-GAAP Financial Measures.”
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 November 15, 2018, the Company operates
402 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 and
hurricane recovery 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;
the impact of the U.S. Tax Cuts and Jobs Act of 2017; 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
|
|
|
Thirty-nine
|
|
|
Thirty-nine
|
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
|
November 3, 2018
|
|
|
October 28, 2017
|
|
|
November 3, 2018
|
|
|
October 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
269,181
|
|
|
|
$
|
287,469
|
|
|
|
$
|
794,992
|
|
|
|
$
|
775,922
|
|
Cost of sales (including buying,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
distribution and occupancy costs)
|
|
|
|
187,963
|
|
|
|
|
201,802
|
|
|
|
|
552,666
|
|
|
|
|
549,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
81,218
|
|
|
|
|
85,667
|
|
|
|
|
242,326
|
|
|
|
|
226,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
|
65,202
|
|
|
|
|
67,787
|
|
|
|
|
194,063
|
|
|
|
|
188,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
16,016
|
|
|
|
|
17,880
|
|
|
|
|
48,263
|
|
|
|
|
37,531
|
|
Interest income
|
|
|
|
(273
|
)
|
|
|
|
(1
|
)
|
|
|
|
(392
|
)
|
|
|
|
(3
|
)
|
Interest expense
|
|
|
|
37
|
|
|
|
|
57
|
|
|
|
|
113
|
|
|
|
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
16,252
|
|
|
|
|
17,824
|
|
|
|
|
48,542
|
|
|
|
|
37,286
|
|
Income tax expense
|
|
|
|
4,206
|
|
|
|
|
7,127
|
|
|
|
|
11,766
|
|
|
|
|
14,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
12,046
|
|
|
|
$
|
10,697
|
|
|
|
$
|
36,776
|
|
|
|
$
|
22,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.80
|
|
|
|
$
|
0.66
|
|
|
|
$
|
2.40
|
|
|
|
$
|
1.38
|
|
Diluted
|
|
|
$
|
0.76
|
|
|
|
$
|
0.66
|
|
|
|
$
|
2.36
|
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
15,071
|
|
|
|
|
15,957
|
|
|
|
|
15,282
|
|
|
|
|
16,287
|
|
Diluted
|
|
|
|
15,812
|
|
|
|
|
15,966
|
|
|
|
|
15,544
|
|
|
|
|
16,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
|
$
|
0.080
|
|
|
|
$
|
0.075
|
|
|
|
$
|
0.235
|
|
|
|
$
|
0.220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
November 3,
2018
|
|
February 3, 2018
|
|
October 28,
2017
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
36,699
|
|
$
|
48,254
|
|
$
|
21,050
|
Accounts receivable
|
|
|
2,322
|
|
|
6,270
|
|
|
7,365
|
Merchandise inventories
|
|
|
300,510
|
|
|
260,500
|
|
|
302,935
|
Other
|
|
|
11,762
|
|
|
5,562
|
|
|
6,883
|
Total Current Assets
|
|
|
354,293
|
|
|
320,586
|
|
|
338,233
|
Property and equipment - net
|
|
|
74,471
|
|
|
86,276
|
|
|
93,041
|
Deferred income taxes
|
|
|
8,866
|
|
|
8,182
|
|
|
10,769
|
Other noncurrent assets
|
|
|
389
|
|
|
536
|
|
|
663
|
Total Assets
|
|
$
|
438,019
|
|
$
|
415,580
|
|
$
|
442,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
56,270
|
|
$
|
41,739
|
|
$
|
59,355
|
Accrued and other liabilities
|
|
|
28,094
|
|
|
15,045
|
|
|
21,933
|
Total Current Liabilities
|
|
|
84,364
|
|
|
56,784
|
|
|
81,288
|
Deferred lease incentives
|
|
|
23,478
|
|
|
29,024
|
|
|
29,297
|
Accrued rent
|
|
|
8,808
|
|
|
10,132
|
|
|
10,689
|
Deferred compensation
|
|
|
11,811
|
|
|
11,372
|
|
|
10,974
|
Other
|
|
|
806
|
|
|
966
|
|
|
884
|
Total Liabilities
|
|
|
129,267
|
|
|
108,278
|
|
|
133,132
|
Total Shareholders' Equity
|
|
|
308,752
|
|
|
307,302
|
|
|
309,574
|
Total Liabilities and Shareholders' Equity
|
|
$
|
438,019
|
|
$
|
415,580
|
|
$
|
442,706
|
|
|
|
|
|
|
|
|
|
|
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
Thirty-nine Weeks Ended November 3, 2018
|
|
Thirty-nine Weeks Ended October 28, 2017
|
|
|
|
|
Cash Flows From Operating Activities
|
|
|
|
Net income
|
$
|
36,776
|
|
|
$
|
22,824
|
|
Adjustments to reconcile net income to net
|
|
|
|
cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
|
16,551
|
|
|
|
17,944
|
|
Stock-based compensation
|
|
7,604
|
|
|
|
2,073
|
|
Loss on retirement and impairment of assets
|
|
(1,412
|
)
|
|
|
1,831
|
|
Deferred income taxes
|
|
(684
|
)
|
|
|
(1,169
|
)
|
Lease incentives
|
|
298
|
|
|
|
3,515
|
|
Other
|
|
(6,882
|
)
|
|
|
(5,212
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
Accounts receivable
|
|
4,218
|
|
|
|
(2,047
|
)
|
Merchandise inventories
|
|
(40,010
|
)
|
|
|
(23,289
|
)
|
Accounts payable and accrued liabilities
|
|
23,330
|
|
|
|
(8,446
|
)
|
Other
|
|
(2,009
|
)
|
|
|
940
|
|
Net cash provided by operating activities
|
|
37,780
|
|
|
|
8,964
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
Purchases of property and equipment
|
|
(5,021
|
)
|
|
|
(16,708
|
)
|
Other
|
|
1,489
|
|
|
|
0
|
|
Net cash used in investing activities
|
|
(3,532
|
)
|
|
|
(16,708
|
)
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
Borrowings under line of credit
|
|
0
|
|
|
|
88,600
|
|
Payments on line of credit
|
|
0
|
|
|
|
(88,600
|
)
|
Proceeds from issuance of stock
|
|
148
|
|
|
|
196
|
|
Dividends paid
|
|
(3,593
|
)
|
|
|
(3,603
|
)
|
Purchase of common stock for treasury
|
|
(39,046
|
)
|
|
|
(29,798
|
)
|
Shares surrendered by employees to pay taxes on restricted stock
|
|
(312
|
)
|
|
|
(945
|
)
|
Net cash used in financing activities
|
|
(42,803
|
)
|
|
|
(34,150
|
)
|
Net decrease in cash and cash equivalents
|
|
(8,555
|
)
|
|
|
(41,894
|
)
|
Cash and cash equivalents at beginning of period
|
|
48,254
|
|
|
|
62,944
|
|
Cash and Cash Equivalents at End of Period
|
$
|
39,699
|
|
|
$
|
21,050
|
|
|
|
|
|
|
|
|
|
SHOE CARNIVAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
Fifty-three Weeks Ended February 3, 2018
|
|
|
|
Reported net income per diluted share
|
|
$ 1.15
|
Gain on insurance proceeds
|
|
(0.21)
|
Non-cash impairment charges
|
|
0.21
|
Additional stock-based compensation expense associated with the Tax
Act
|
|
0.12
|
Tax effect of gain on insurance proceeds, non-cash impairment
charges and stock-based compensation expense
|
|
(0.05)
|
Additional income tax expense on re-measurement of deferred tax
assets and liabilities
|
|
0.27
|
Adjusted diluted earnings per share
|
|
$ 1.49
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181115005999/en/
Source: Shoe Carnival, Inc.
Cliff Sifford
President and Chief Executive Officer, or
W.
Kerry Jackson
Senior Executive Vice President, Chief Operating and
Financial Officer and Treasurer
www.shoecarnival.com
(812)
867-6471