Shoe Carnival Reports Third Quarter 2012 Results Company Reports Record Quarterly Earnings per Diluted Share Business Wire EVANSVILLE, Ind. -- November 19, 2012 Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today reported results for the third quarter ended October 27, 2012. Third Quarter Highlights *Net sales of $244.4 million, a 13.4 percent increase, compared to the third quarter last year *Comparable store sales increased 6.2 percent *Quarterly earnings per diluted share of $0.60 represented a 15.4% increase over the previous record earnings per diluted share of $0.52, which was achieved in the third quarter of fiscal 2011 *Company opened six new stores, including two additional stores in Puerto Rico “Our team did a great job in positioning us for a highly successful back-to-school season. We achieved comparable store sales at the high end of our guidance and record earnings. Our strong financial performance was the result of a marketing effort that resonated with our core consumer. We showcased the fashion trends currently driving footwear demand and reached additional customers through the opening of stores in new and existing markets,” stated Cliff Sifford, President and CEO. Financial Results The Company reported net sales of $244.4 million for the third quarter of fiscal 2012, a 13.4 percent increase, compared to net sales of $215.5 million in the third quarter of fiscal 2011. Comparable store sales increased 6.2 percent in the third quarter of fiscal 2012. The gross profit margin for the third quarter of fiscal 2012 increased to 31.3 percent compared to 30.2 percent for the third quarter of fiscal 2011. The merchandise margin increased 0.6 percent, while buying, distribution and occupancy costs decreased 0.5 percent as a percentage of sales. Selling, general and administrative expenses for the third quarter increased $7.6 million to $55.9 million; as a percentage of sales, these expenses increased to 22.9 percent compared to 22.4 percent in the third quarter of fiscal 2011. The increase in expense was primarily due to operating more stores and increased incentive compensation versus the third quarter last year. The effective tax rate for the third quarter of fiscal 2012 increased to 40.2 percent from 37.8 percent in the third quarter last year. This increase was attributable to the non-deductibility of executive compensation related to the retirement of our former chief executive officer during the third quarter. The increase in the tax rate reduced earnings per diluted share by approximately 2.5 cents. Net earnings for the third quarter increased to $12.2 million, or $0.60 per diluted share, from net earnings of $10.5 million, or $0.52 per diluted share in the third quarter of last year. Mr. Sifford continued, “As we enter the fourth quarter, we believe Shoe Carnival is well positioned to capitalize on holiday sales, starting with Black Friday. Our team has worked especially hard to deliver to the consumer compelling reasons to visit our stores, and our e-commerce site, on this important retail shopping day. We have increased our hours of operation and we believe we have positioned our ‘door buster’ promotions, giveaways and coupons to be exceptionally competitive. For an early look at our Day-After-Thanksgiving product offerings, please visit www.shoecarnival.com.” Net sales during the first nine months of fiscal 2012 increased $68.7 million to $649.3 million as compared to the same period last year. Comparable store sales increased 5.7 percent. The gross profit margin for the first nine months of fiscal 2012 was 30.4 percent compared to 29.8 percent last year. Selling, general and administrative expenses, as a percentage of sales were 23.7 percent for the first nine months of fiscal 2012 compared to 23.4 percent last year. Net earnings for the first nine months of fiscal 2012 were $26.1 million, or $1.28 per diluted share, compared to net earnings of $23.1 million, or $1.15 per diluted share, in the first nine months of last year. Fourth Quarter Fiscal 2012 Outlook The Company expects fourth quarter net sales to be in the range of $215 to $220 million with a comparable store sales increase in the range of 2 to 4 percent. Earnings per diluted share in the fourth quarter of fiscal 2012 are expected to be in the range of $0.19 to $0.23. In the fourth quarter of fiscal 2011, comparable store sales decreased 3.0 percent and the Company earned $0.16 per diluted share. For fiscal 2012, the Company expects net sales to be in the range of $864 to $869 million with a comparable store sales increase in the range of 4.8 to 5.3 percent. Earnings per diluted share for fiscal 2012 are expected to be in the range of $1.47 to $1.51. For fiscal 2011, comparable store sales increased 0.7 percent and earnings per diluted share were $1.31. The fourth quarter of fiscal 2012 includes 14 weeks compared to 13 weeks in the fourth quarter of fiscal 2011 and the full fiscal year of 2012 includes 53 weeks compared with 52 weeks in the full fiscal year of 2011. The Company’s sales and earnings guidance for the fourth quarter of fiscal 2012 includes the effect of this additional week. Store Growth The Company completed its new store openings in early November and expects to close two stores during the fourth quarter to end fiscal 2012 with 351 stores in operation. Store openings and closings by quarter are as follows: Fiscal 2012 New Stores Store Closings 1^st quarter 13 3 2^nd quarter 11 2 3^rd quarter 6 0 4^th quarter 1 2 Fiscal year 31 7 The six new stores opened during the third quarter include locations in: Total Stores in City Market the Market Aguadilla, PR Puerto Rico 4 Carolina, PR Puerto Rico 4 Greenwood, SC Greenville 6 St. Charles, MO St. Louis 13 Warsaw, IN South Bend 2 Williamsport, PA Williamsport 1 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 moderately priced dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. As of November 19, 2012, the Company operates 352 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; 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. SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share) Thirteen Thirteen Thirty-nine Thirty-nine Weeks Ended Weeks Ended Weeks Ended Weeks Ended October 27, October 29, October 27, October 29, 2012 2011 2012 2011 Net sales $ 244,434 $ 215,472 $ 649,254 $ 580,594 Cost of sales (including buying, 167,999 150,317 451,951 407,306 distribution and occupancy costs) Gross profit 76,435 65,155 197,303 173,288 Selling, general and administrative 55,875 48,276 154,074 136,160 expenses Operating income 20,560 16,879 43,229 37,128 Interest income (4 ) (17 ) (29 ) (66 ) Interest expense 69 68 203 200 Income before income 20,495 16,828 43,055 36,994 taxes Income tax expense 8,247 6,355 16,928 13,887 Net income $ 12,248 $ 10,473 $ 26,127 $ 23,107 Net income per share: Basic $ 0.60 $ 0.52 $ 1.29 $ 1.16 Diluted $ 0.60 $ 0.52 $ 1.28 $ 1.15 Weighted average shares: Basic 19,951 19,597 19,922 19,471 Diluted 20,003 19,748 19,996 19,656 Cash dividends $ 0.05 $ 0.00 $ 0.10 $ 0.00 declared per share SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) October 27, January 28, October 29, 2012 2012 2011 ASSETS Current Assets: Cash and cash equivalents $ 67,134 $ 70,602 $ 52,997 Accounts receivable 3,174 2,621 3,029 Merchandise inventories 277,418 237,655 245,131 Deferred income taxes 3,261 2,496 2,830 Other 4,675 2,887 3,664 Total Current Assets 355,662 316,261 307,651 Property and equipment-net 76,907 69,232 67,899 Deferred income taxes 153 0 0 Other noncurrent assets 880 1,069 1,252 Total Assets $ 433,602 $ 386,562 $ 376,802 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 66,326 $ 61,238 $ 54,088 Accrued and other liabilities 24,828 14,522 16,722 Total Current Liabilities 91,154 75,760 70,810 Deferred lease incentives 16,355 12,964 11,576 Accrued rent 7,100 6,029 5,759 Deferred income taxes 0 1,930 1,566 Deferred compensation 5,957 6,054 5,791 Other 402 141 892 Total Liabilities 120,968 102,878 96,394 Total Shareholders' Equity 312,634 283,684 280,408 Total Liabilities and Shareholders' $ 433,602 $ 386,562 $ 376,802 Equity SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Thirty-nine Thirty-nine Weeks Ended Weeks Ended October 27, 2012 October 29, 2011 Cash flows from operating activities: Net income $ 26,127 $ 23,107 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,800 10,737 Stock-based compensation 3,557 2,413 Loss on retirement and impairment of 485 532 assets Deferred income taxes (2,848 ) 2,342 Lease incentives 4,692 4,128 Other (734 ) (426 ) Changes in operating assets and liabilities: Accounts receivable (552 ) (1,379 ) Merchandise inventories (39,763 ) (32,202 ) Accounts payable and accrued liabilities 14,653 1,283 Other 760 (430 ) Net cash provided by operating 18,177 10,105 activities Cash flows from investing activities: Purchases of property and equipment (20,844 ) (17,794 ) Proceeds from sale of property and 0 5 equipment Proceeds from notes receivable 200 100 Net cash used in investing activities (20,644 ) (17,689 ) Cash flows from financing activities: Proceeds from issuance of stock 2,149 1,751 Dividends paid (2,045 ) 0 Excess tax benefits from stock-based 770 1,274 compensation Purchase of common stock for treasury (1,859 ) 0 Shares surrendered by employees to pay (16 ) (2,637 ) taxes on restricted stock Net cash (used in) provided by financing (1,001 ) 388 activities Net decrease in cash and cash (3,468 ) (7,196 ) equivalents Cash and cash equivalents at beginning 70,602 60,193 of period Cash and Cash Equivalents at End of $ 67,134 $ 52,997 Period Contact: Shoe Carnival, Inc. 812-867-6471 Cliff Sifford President, Chief Executive Officer and Chief Merchandising Officer or W. Kerry Jackson Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer www.shoecarnival.com
Shoe Carnival Reports Third Quarter 2012 Results
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