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| 8-K - CURRENT REPORT - SHOE CARNIVAL INC | shoecarnival_8k.htm |
| 7500 East Columbia Street Evansville, IN 47715 www.shoecarnival.com (812) 867-6471 |
Contact Mark L. Lemond
President and Chief Executive Officer or W. Kerry Jackson Executive Vice President, Chief Financial Officer and
Treasurer
|
| FOR IMMEDIATE RELEASE |
SHOE CARNIVAL REPORTS RECORD
RESULTS
FOR SECOND QUARTER 2010
FOR SECOND QUARTER 2010
Reports Net Sales of $165.4 Million
and Diluted Earnings Per Share of $0.32
Board of Directors Authorizes $25
Million Share Repurchase Program
Evansville, Indiana, August 25, 2010 - Shoe
Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and
accessories, today announced net sales and earnings for the second quarter ended
July 31, 2010.
Net sales for the second quarter of
2010 increased 8.2 percent to $165.4 million from $152.8 million for the second
quarter of 2009. Comparable store sales for the thirteen-week period ended July
31, 2010 increased 8.3 percent.
Net earnings for the second quarter
increased 319 percent to $4.1 million compared to $982,000 for the second
quarter of 2009. Diluted earnings per share for the quarter increased to $0.32
compared to $0.08 in the prior year second quarter. Included in the $0.32 per
diluted share was a $0.04 benefit resulting from a favorable resolution of a
state tax position.
The gross profit margin for the
second quarter increased 1.5 percent to 28.3 percent compared to 26.8 percent
for the second quarter of the prior year. The merchandise margin increased 1.0
percent. The Company’s buying, distribution and occupancy costs decreased 0.5
percent, as a percentage of sales, due to the leverage associated with
comparable store sales increases.
Selling, general and administrative
expenses for the second quarter increased $1.7 million to $40.8 million;
however, as a percentage of sales, these expenses decreased to 24.7 percent
compared to 25.6 percent in the second quarter of 2009.
Speaking on the results, Mark Lemond,
president and chief executive officer said, "I am pleased to report that in the
second quarter we were able to take advantage of consumer demand across each
broad merchandise category and in every operations region. Our strong quarterly
sales performance, when combined with a higher gross profit margin and
controlled expenses, resulted in record second quarter earnings. While toning
footwear was a key driver of our sales for the quarter, our non-athletic
footwear, particularly sandals and other types of casual footwear for the family
were also significant drivers of our sales increase."
Mr.
Lemond continued, "Our continued strong financial performance and today’s
positive footwear industry trends give us the confidence to remain optimistic
about our outlook for the back-to-school sales season, which is traditionally
our most important sales and earnings period. Comparable store sales for the
first three weeks of August have increased approximately 6 percent, on top of an
increase of 11 percent for the same period last year."
Net
sales during the first six months of 2010 increased $34.7 million to $354.9
million as compared to the same period last year. This sales increase was driven
primarily by a comparable store sales increase of 10.8 percent. Net earnings for
the first half of 2010 were $13.4 million, or $1.04 per diluted share, compared
with net earnings of $5.1 million, or $0.41 per diluted share, in the first half
of last year. Included in the diluted earnings per share for the first six
months this year was a $0.06 charge for store closing and impairment costs and a
$0.04 benefit resulting from a favorable resolution of a state tax position. The
gross profit margin for the first six months of 2010 was 29.9 percent compared
to 27.4 percent last year. Selling, general and administrative expenses, as a
percentage of sales, were 24.0 percent for the first six months of 2010 as
compared to 24.7 percent in the first six months of 2009.
Third Quarter and Fiscal 2010
Earnings Outlook
The
Company expects third quarter net sales to be in the range of $196 to $202
million and comparable store sales to increase in the range of 3 to 6 percent.
Earnings per diluted share in the third quarter of 2010 are expected to be in
the range of $0.63 to $0.66. Earnings per diluted share in the third quarter of
fiscal 2009 were $0.59.
For
fiscal 2010, the Company expects net sales to be in the range of $728 to $737
million and comparable store sales to increase in the range of 6.5 to 8 percent.
Earnings per diluted share for fiscal 2010 are expected to range from $1.89 to
$1.95. Earnings per diluted share for fiscal 2009 were
$1.20.
Store
Growth
The
Company expects to open 10 new stores and close seven stores in fiscal 2010.
Three new stores were opened during the second quarter of fiscal 2010 and one
store was closed.
| New Stores | Stores Closings | ||||||
| 1st Quarter 2010 | 3 | 3 | |||||
| 2nd Quarter 2010 | 3 | 1 | |||||
| 3rd Quarter 2010 | 0 | 1 | |||||
| 4th Quarter 2010 | 4 | 2 | |||||
| Fiscal 2010 | 10 | 7 | |||||
The
three stores opened during the second quarter included locations
in:
| City | Market/Total Stores in Market | |
| Barboursville, WV | Charleston/2 | |
| Cary, NC | Raleigh/6 | |
| Hoover, AL | Birmingham/4 |
Mr. Lemond concluded, "Our new store growth
this year and last was slower than we would have liked due to a difficult
economy and the lack of available real estate. However, we are seeing increased
access to viable store locations for next year. In fiscal 2011, we expect to
accelerate our new store openings and currently expect to open approximately 20
new stores and close approximately six stores. Looking forward, we are
optimistic that fiscal 2012 will yield even greater new store growth
opportunities. "
Share Repurchase Program
Authorization
On August 23, 2010, in view of the
Company's current cash position and anticipated future operating cash flows, the
Company's Board of Directors approved a share repurchase program for up to $25
million of its outstanding common stock. The purchases may be made in the open
market or in privately negotiated transactions, from time-to-time through
December 31, 2011 and in accordance with applicable laws, rules and regulations.
The program may be amended, suspended or discontinued at any time and does not
commit the Company to repurchase shares of its common stock. The Company intends
to fund the share repurchase program from cash on hand and any shares acquired
will be available for stock-based compensation awards and other corporate
purposes. The actual number and value of the shares to be purchased will depend
on the performance of the Company's stock price and other market
conditions.
Conference
Call
Today, at 4:30 p.m. Eastern time, the
Company will host a conference call to discuss the second quarter results. The
public can listen to the live webcast of the call by visiting Shoe Carnival's
Investor Relations page 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 our website beginning approximately two hours after the conclusion
of the conference call and will be archived for one year.
About Shoe
Carnival
Shoe Carnival is a chain of 313 footwear
stores located in the Midwest, South and Southeast. Combining value pricing with
an entertaining store format, Shoe Carnival is a leading retailer of name brand
and private label footwear for the entire family. 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 United States in which our
stores are located; the effects and duration of the current economic downturn
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 and the availability of sufficient
funds to implement our growth plans; higher than anticipated costs associated
with the closing of underperforming stores; the inability of manufacturers to
deliver products in a timely manner; changes in the political and economic
environments in the People’s Republic of China, Brazil, Spain 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.
Financial Tables Follow
SHOE CARNIVAL,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share)
| Thirteen | Thirteen | Twenty-six | Twenty-six | |||||||||||||
| Weeks Ended | Weeks Ended | Weeks Ended | Weeks Ended | |||||||||||||
| July 31, 2010 | August 1, 2009 | July 31, 2010 | August 1, 2009 | |||||||||||||
| Net sales | $ | 165,394 | $ | 152,840 | $ | 354,851 | $ | 320,109 | ||||||||
| Cost of sales (including buying, | ||||||||||||||||
| distribution and occupancy costs) | 118,647 | 111,916 | 248,832 | 232,545 | ||||||||||||
| Gross profit | 46,747 | 40,924 | 106,019 | 87,564 | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| expenses | 40,758 | 39,020 | 85,039 | 79,076 | ||||||||||||
| Operating income | 5,989 | 1,904 | 20,980 | 8,488 | ||||||||||||
| Interest income | (28 | ) | (1 | ) | (51 | ) | (4 | ) | ||||||||
| Interest expense | 63 | 42 | 132 | 84 | ||||||||||||
| Income before income taxes | 5,954 | 1,863 | 20,899 | 8,408 | ||||||||||||
| Income tax expense | 1,836 | 881 | 7,534 | 3,294 | ||||||||||||
| Net income | $ | 4,118 | $ | 982 | $ | 13,365 | $ | 5,114 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | .32 | $ | .08 | $ | 1.05 | $ | .41 | ||||||||
| Diluted | $ | .32 | $ | .08 | $ | 1.04 | $ | .41 | ||||||||
| Average shares outstanding: | ||||||||||||||||
| Basic | 12,720 | 12,487 | 12,704 | 12,483 | ||||||||||||
| Diluted | 12,898 | 12,569 | 12,887 | 12,543 | ||||||||||||
SHOE CARNIVAL,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| July 31, | January 30, | August 1, | |||||||
| 2010 | 2010 | 2009 | |||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and cash equivalents | $ | 40,560 | $ | 44,168 | $ | 17,673 | |||
| Accounts receivable | 1,684 | 746 | 1,948 | ||||||
| Merchandise inventories | 238,147 | 197,452 | 216,728 | ||||||
| Deferred income tax benefit | 3,342 | 3,255 | 2,424 | ||||||
| Other | 3,403 | 2,480 | 7,540 | ||||||
| Total Current Assets | 287,136 | 248,101 | 246,313 | ||||||
| Property and equipment-net | 61,503 | 62,162 | 66,054 | ||||||
| Other | 1,205 | 1,378 | 1,627 | ||||||
| Total Assets | $ | 349,844 | $ | 311,641 | $ | 313,994 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 79,016 | $ | 57,235 | $ | 73,475 | |||
| Accrued and other liabilities | 15,345 | 14,353 | 13,712 | ||||||
| Total Current Liabilities | 94,361 | 71,588 | 87,187 | ||||||
| Deferred lease incentives | 6,774 | 6,501 | 5,791 | ||||||
| Accrued rent | 5,164 | 5,115 | 5,155 | ||||||
| Deferred income taxes | 20 | 1,052 | 905 | ||||||
| Deferred compensation | 4,156 | 3,548 | 3,187 | ||||||
| Other | 1,374 | 2,008 | 1,858 | ||||||
| Total Liabilities | 111,849 | 89,812 | 104,083 | ||||||
| Total Shareholders' Equity | 237,995 | 221,829 | 209,911 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 349,844 | $ | 311,641 | $ | 313,994 | |||
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Twenty-six | Twenty –six | |||||||
| Weeks Ended | Weeks Ended | |||||||
| July 31, 2010 | August 1, 2009 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 13,365 | $ | 5,114 | ||||
| Adjustments to reconcile net income to net | ||||||||
| Cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 6,815 | 7,590 | ||||||
| Stock-based compensation | 2,398 | 220 | ||||||
| Loss on retirement of assets and impairments | 1,223 | 57 | ||||||
| Deferred income taxes | (1,119 | ) | (358 | ) | ||||
| Lease incentives | 981 | 715 | ||||||
| Other | (899 | ) | (320 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (938 | ) | (241 | ) | ||||
| Merchandise inventories | (40,695 | ) | (27,234 | ) | ||||
| Accounts payable and accrued liabilities | 22,196 | 15,045 | ||||||
| Other | (1,336 | ) | (2,538 | ) | ||||
| Net cash provided by (used in) operating activities | 1,991 | (1,950 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (6,565 | ) | (5,474 | ) | ||||
| Proceeds from sale of property and equipment | 311 | 8 | ||||||
| Proceeds from Notes Receivable | 100 | 100 | ||||||
| Net cash used in investing activities | (6,154 | ) | (5,366 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of stock | 415 | 106 | ||||||
| Excess tax benefits from stock-based compensation | 419 | 66 | ||||||
| Purchase of treasury stock | (279 | ) | 0 | |||||
| Net cash provided by financing activities | 555 | 172 | ||||||
| Net decrease in cash and cash equivalents | (3,608 | ) | (7,144 | ) | ||||
| Cash and cash equivalents at beginning of period | 44,168 | 24,817 | ||||||
| Cash and Cash Equivalents at End of Period | $ | 40,560 | $ | 17,673 | ||||