7500 East Columbia Street | Contact Mark L. Lemond |
FOR IMMEDIATE RELEASE |
|
SHOE CARNIVAL REPORTS SECOND QUARTER 2007 RESULTS
Evansville, Indiana, August 23, 2007 - Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today announced sales and earnings for the second quarter ended August 4, 2007. Net sales increased 5.4 percent to $154.8 million for the thirteen-week period ended August 4, 2007 compared to sales of $146.9 million for the thirteen-week period ended July 29, 2006. Comparable store sales for the thirteen-week period ended August 4, 2007 decreased 7.1 percent compared to the thirteen-week period last year ended August 5, 2006.
The gross profit margin for the second quarter of 2007 decreased to 26.0 percent compared to 27.8 percent for the second quarter of 2006. As a percentage of sales, the merchandise margin decreased 1.5 percent and buying, distribution and occupancy costs increased 0.3 percent. Selling, general and administrative expenses for the second quarter, as a percentage of sales, increased to 25.9 percent from 24.8 percent in last year's second quarter.
Net earnings for the 13-week second quarter ended August 4, 2007 were $167,000 as compared with net earnings of $2.9 million in the second quarter ended July 29, 2006. Diluted earnings per share were $0.01 per share as compared with $0.21 per share last year.
During the second quarter of fiscal 2007, the Company repurchased 662,000 shares of its outstanding common stock at a cost of $18.9 million. These repurchases are part of a $50.0 million stock buy-back program, which will terminate upon the earlier of the repurchase of the maximum amount or December 31, 2008. As of August 4, 2007, the amount that remained available under the existing repurchase authorization was $30.8 million. All repurchases under this program have been made utilizing available cash on hand.
Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, "Our second quarter sales were significantly affected by a decline in customer traffic. Our comparable store sales and traffic declines through most of the second quarter were similar to those experienced in the first quarter. These declines accelerated towards the tail-end of the second quarter and were significantly affected by the shifting of back-to-school dates and sales tax-free days later in August, particularly in Texas and Florida. While sales fell short of our original expectations for the second quarter, we have been aggressive in the liquidation of spring and summer product. Consequently, per-store inventories at August 4, 2007 were flat compared with inventories as of August 5, 2006."
Net income for the first half of 2007 was $7.5 million, or $0.55 per diluted share, compared with net income of $10.3 million, or $0.75 per diluted share, last year. Net sales for the first six months increased 1.6 percent to $320.5 million from sales of $315.4 million for the same period last year. Comparable store sales for the twenty-six week period ended August 4, 2007 decreased 5.4 percent compared to the twenty-six week period last year ended August 5, 2006. The gross profit margin for the first six months of 2007 decreased to 28.1 percent from 29.3 percent last year. Selling, general and administrative expenses, as a percentage of sales, increased to 24.8 percent in the first six months of 2007 from 24.1 percent last year.
Third Quarter Outlook
Based on recent sales trends, and due in part to the shift in the retail calendar affecting the second and third quarters, net sales for the third quarter are expected to range from $183.0 million to $186.0 million. On a comparable week-for-week basis, the Company now expects comparable store sales to be flat to slightly positive for the third quarter this year. Consequently, earnings in the third quarter are expected to range from $0.44 to $0.48 per diluted share.
Commenting on the third quarter outlook, Mr. Lemond said, "We, along with other retailers, have seen lower customer traffic during the second quarter. Although, we have seen traffic declines moderate in the early back-to-school period, our current sales trend leaves us with an expectation of flat to slightly positive comparable store sales in the third quarter.
"We will continue to manage our inventories and expenses aggressively. Our balance sheet is healthy and will support us as we continue our store expansion program this year and next. We expect to open 25 stores this year and between 30 and 40 stores in 2008."
Store Growth
Store openings and closings by quarter and for the fiscal year are planned as follows:
| New Stores | Stores Closings |
1st Quarter 2007 | 7 | 0 |
2nd Quarter 2007 | 6 | 0 |
3rd Quarter 2007 | 11 | 2 |
4th Quarter 2007 | 1 | 2 |
Fiscal 2007 | 25 | 4 |
The six stores opened during the second quarter included locations in:
City Bismarck, ND Humble, TX Northway, PA Cleveland Heights, OH Sandusky, OH | Market/Total Stores in Market Minot/1 Houston/7 Pittsburgh/2 Cleveland/5 Cleveland/5 |
Conference Call
Today, at 2:00 p.m. Eastern time, the Company will host a conference call to discuss the second quarter results and outlook on the third quarter. 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.
Cautionary Statement Regarding Forward-Looking Information
This press release contains forward-looking statements 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; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; 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 hurricanes or other natural disasters on ou r stores, as well as on consumer confidence and purchasing in general; risks associated with the seasonality of the retail industry; the availability of desirable store locations at acceptable lease terms and our ability to open new stores in a timely and profitable manner; higher than anticipated costs associated with the closing of under-performing 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, a major manufacturer of footwear; and the continued favorable trade relations between the United States and China and 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-l ooking statements contained in this press release to reflect future events or developments.
Shoe Carnival is a chain of 285 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.
Financial Tables Follow
SHOE CARNIVAL, INC.
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 29, 2006 |
| August 4, 2007 |
| July 29, 2006 | ||||||||||
|
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|
|
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|
|
|
|
| |
Net sales |
|
| $ | 154,805 |
|
| $ | 146,886 |
|
| $ | 320,458 |
|
| $ | 315,355 | |
Cost of sales (including buying, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
distribution and occupancy costs) |
|
|
| 114,558 |
|
|
| 106,045 |
|
|
| 230,420 |
|
|
| 223,064 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross profit |
|
|
| 40,247 |
|
|
| 40,841 |
|
|
| 90,038 |
|
|
| 92,291 | |
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
expenses |
|
|
| 40,118 |
|
|
| 36,421 |
|
|
| 79,443 |
|
|
| 76,055 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating income |
|
|
| 129 |
|
|
| 4,420 |
|
|
| 10,595 |
|
|
| 16,236 | |
Interest income |
|
|
| (176 | ) |
|
| (302 | ) |
|
| (510 | ) |
|
| (510 | ) |
Interest expense |
|
|
| 32 |
|
|
| 42 |
|
|
| 64 |
|
|
| 74 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income before income taxes |
|
|
| 273 |
|
|
| 4,680 |
|
|
| 11,041 |
|
|
| 16,672 | |
Income tax expense |
|
|
| 106 |
|
|
| 1,818 |
|
|
| 3,547 |
|
|
| 6,410 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net income |
|
| $ | 167 |
|
| $ | 2,862 |
|
| $ | 7,494 |
|
| $ | 10,262 | |
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| |
Net income per share: |
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|
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|
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|
|
|
| |
Basic |
|
| $ | .01 |
|
| $ | .21 |
|
| $ | 0.56 |
|
| $ | .77 | |
Diluted |
|
| $ | .01 |
|
| $ | .21 |
|
| $ | 0.55 |
|
| $ | .75 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |
Average shares outstanding: |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
| 13,091 |
|
|
| 13,353 |
|
|
| 13,295 |
|
|
| 13,300 | |
Diluted |
|
|
| 13,400 |
|
|
| 13,715 |
|
|
| 13,634 |
|
|
| 13,684 | |
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
| August 4, 2007 |
| February 3, 2007 |
| July 29, |
| |||||
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ASSETS | ||||||||||||
Current Assets: |
|
|
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 15,466 |
| $ | 34,839 |
| $ | 25,407 |
| ||
Accounts receivable |
|
| 1,216 |
|
| 948 |
|
| 1,759 |
| ||
Merchandise inventories | 210,043 | 196,662 | 203,688 | |||||||||
Deferred income tax benefit | 2,304 | 2,088 | 1,154 | |||||||||
Other |
|
| 10,542 |
|
| 2,605 |
|
| 5,486 |
| ||
Total Current Assets |
|
| 239,571 |
|
| 237,142 |
|
| 237,494 |
| ||
Property and equipment-net |
|
| 74,736 |
|
| 74,020 |
|
| 61,822 |
| ||
Total Assets |
| $ | 314,307 |
| $ | 311,162 |
| $ | 299,316 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Current Liabilities: |
|
|
|
|
|
|
|
|
|
| ||
Accounts payable |
| $ | 84,859 |
| $ | 70,352 |
| $ | 75,835 |
| ||
Accrued and other liabilities |
|
| 13,493 |
|
| 14,576 |
|
| 12,629 |
| ||
Total Current Liabilities |
|
| 98,352 |
|
| 84,928 |
|
| 88,464 |
| ||
Deferred lease incentives |
|
| 5,442 |
|
| 6,095 |
|
| 5,819 |
| ||
Accrued rent |
|
| 6,163 |
|
| 6,260 |
|
| 6,356 |
| ||
Deferred income taxes |
|
| 534 |
|
| 781 |
|
| 1,539 |
| ||
Deferred compensation |
|
| 3,543 |
|
| 3,149 |
|
| 2,538 |
| ||
Other |
|
| 795 |
|
| 0 |
|
| 0 |
| ||
Total Liabilities |
|
| 114,829 |
|
| 101,213 |
|
| 104,716 |
| ||
Total Shareholders' Equity |
|
| 199,478 |
|
| 209,949 |
|
| 194,600 |
| ||
Total Liabilities and Shareholders' Equity |
| $ | 314,307 |
| $ | 311,162 |
| $ | 299,316 |
| ||
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Twenty-six |
| Twenty-six | ||||
|
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Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income | $ | 7,494 |
|
| $ | 10,262 |
|
Adjustments to reconcile net income to net |
|
|
|
|
|
|
|
cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
| 7,834 |
|
|
| 7,132 |
|
Stock-based compensation |
| 830 |
|
|
| 966 |
|
Loss on retirement of assets |
| 389 |
|
|
| 127 |
|
Deferred income taxes |
| (216 | ) |
|
| (691 | ) |
Lease incentives |
| 0 |
|
|
| 127 |
|
Other |
| (334 | ) |
|
| (735 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
| (268 | ) |
|
| (1,473 | ) |
Merchandise inventories |
| (13,381 | ) |
|
| (19,695 | ) |
Accounts payable and accrued liabilities |
| 16,739 |
|
|
| 8,617 |
|
Other |
| (8,710 | ) |
|
| (2,876 | ) |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
| 10,377 |
|
|
| 1,761 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchases of property and equipment |
| (11,372 | ) |
|
| (5,787 | ) |
Proceeds from sale of property and equipment |
| 379 |
|
|
| 7,200 |
|
Other |
| 6 |
|
|
| 2 |
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
| (10,987 | ) |
|
| 1,415 |
|
|
|
|
|
|
|
|
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Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of stock |
| 513 |
|
|
| 1,813 |
|
Excess tax benefits from stock-based compensation |
| 290 |
|
|
| 355 |
|
Common stock repurchased |
| (19,566 | ) |
|
| (241 | ) |
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
| (18,763 | ) |
|
| 1,927 |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
| (19,373 | ) |
|
| 5,103 |
|
Cash and cash equivalents at beginning of period |
| 34,839 |
|
|
| 20,304 |
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Period | $ | 15,466 |
|
| $ | 25,407 |
|
|
|
|
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