Shoe Carnival, Inc. (Nasdaq: SCVL) (the “Company”), a leading
retailer of footwear and accessories for the family, today reported
results for the second quarter ended August 3, 2024.
- Net sales in the quarter exceeded the Company’s expectation,
increasing 12.9 percent versus prior year to $332.7 million.
- EPS also exceeded the Company’s expectation with second quarter
2024 GAAP EPS of $0.82 and Adjusted EPS of $0.83.
- GAAP operating income increased 22.0 percent to $30.1 million
and Adjusted operating income increased 23.7 percent to $30.5
million versus prior year.
- Fiscal 2024 sales guidance range is increased to growth of 5
percent to 6 percent.
“Customer engagement continued to exceed our expectations and
sales momentum accelerated rapidly during our most important
shopping event of the year, the Back-to-School season. We achieved
a net sales record this quarter, surpassing all previous second
quarter sales in our company’s history. Gross profit margin
expanded versus prior year, we gained significant market share, and
we delivered earnings above our guidance in the quarter,” said Mark
Worden, President and Chief Executive Officer.
“Our Back-to-School results were very strong with comparable
sales growth achieved in August, driven by the children’s and
athletic categories. Our long-term strategies to increase sales and
drive profitability are working, and we are well positioned to
further increase shareholder value and execute on our vision to be
the nation’s leading family footwear retailer,” concluded Mr.
Worden.
Second Quarter Operating Results
Net sales in second quarter 2024 were $332.7 million, increasing
12.9 percent compared to second quarter 2023. The total net sales
performance exceeded the Company’s expectation, with double-digit
growth in Shoe Station, continued strengthening trends in Shoe
Carnival and increases in ecommerce. Sales from the February 2024
acquisition of Rogan Shoes, Incorporated (“Rogan’s”) were in line
with the Company’s expectation for the quarter and continue to be
in line with the Company’s full year sales expectation.
Gross profit margin increased 30 basis points to 36.1 percent in
second quarter 2024 primarily on leverage in buying, distribution
and occupancy on the higher sales. Second quarter 2024 marked the
14th consecutive quarter the Company’s gross profit margin exceeded
35 percent.
As a percent of net sales, SG&A expenses in the quarter were
27.1 percent as compared to 27.4 percent in second quarter 2023,
reflecting 30 basis points of leverage on the higher sales. Second
quarter 2024 SG&A included higher expenses primarily related to
the addition of Rogan’s.
Second quarter 2024 operating income totaled $30.1 million and
increased 22.0 percent versus prior year driven by higher net sales
combined with gross profit margin expansion. Operating income in
the quarter included $0.4 million in expenses related to the
Rogan’s acquisition, of which $0.3 million were in cost of sales
and $0.1 million were in SG&A.
Second quarter 2024 net income was $22.6 million, or $0.82 per
diluted share, compared to second quarter 2023 net income of $19.4
million, or $0.71 per diluted share (“EPS”).
EPS growth in second quarter 2024 compared to prior year was
driven by the net sales performance and higher gross profit margin.
On an adjusted basis, excluding the $0.4 million of expenses in the
quarter related to the acquisition of Rogan’s, second quarter
Adjusted EPS was $0.83.
Comparable store sales for the thirteen-week period ended August
3, 2024, declined 2.1 percent compared to the thirteen-week period
ended August 5, 2023, reflecting positive momentum versus first
quarter 2024 and demonstrating flat comp sales results during June
versus prior year.
Merchandise Inventory
Second quarter 2024 inventory totaled $425.5 million, an
increase of approximately $16.1 million versus second quarter 2023.
The increase reflected the impacts of Rogan’s inventory acquired in
February 2024, partially offset by continued inventory efficiencies
in Shoe Carnival and Shoe Station as part of the Company’s on-going
inventory optimization improvement plan.
Consistent with previous guidance, Fiscal 2024 year end
inventory dollars are expected to be lower by approximately $20
million, or 5 percent, versus Fiscal 2023 year end, excluding the
impacts of the Rogan’s acquisition.
Store Count and Planned Store Growth
As of September 5, 2024, the Company operated 430 stores, with
368 Shoe Carnival stores, 34 Shoe Station stores and the 28 Rogan’s
locations acquired in February 2024.
The Company has a strategic growth roadmap in place to surpass
500 stores in 2028, inclusive of organic growth and strategic
M&A activity.
Share Repurchase Program
As of September 5, 2024, the Company has $50 million available
for future repurchases under its share repurchase program. During
second quarter 2024, the Company did not repurchase any shares.
Capital Management and Cash Flow
The 2023 fiscal year end marked the 19th consecutive year the
Company ended a year with no debt, and through second quarter 2024,
the Company continued funding its operations and growth investments
from operating cash flow and without debt.
Operating cash flow year to date 2024 totaled $40.7 million
compared to $22.4 million in prior year. At the end of second
quarter 2024, the Company had approximately $84.5 million of cash,
cash equivalents and marketable securities, an increase of $37.7
million compared to prior year.
Third Quarter 2024 Update
Sales accelerated during the peak Back-to-School season and
continued through the month of August. The Company achieved
low-single digit comparable store sales growth for Fiscal August
2024, driven by growth of the children’s and athletics
categories.
The Company currently expects third quarter 2024 net sales to be
approximately $320 million. This expectation includes the impact of
the retail calendar shift, which resulted in approximately $20
million in net sales moving out of third quarter 2024 and into
second quarter 2024 as compared to prior year.
The Company currently expects GAAP EPS to be approximately $0.70
in third quarter 2024, with an income tax rate of approximately 25
percent.
Fiscal 2024 Outlook
Based on year-to-date results and the comparable store sales
growth achieved during Back-to-School, the Company is increasing
guidance ranges as follows:
Net Sales: Increased range to $1.23 billion to $1.25
billion, representing growth of 5 percent to 6 percent versus
Fiscal 2023. (Prior guidance range $1.21 billion to $1.25
billion)
Comparable Store Sales: Increased range to down 1.5
percent to up 1 percent versus Fiscal 2023 with expected growth of
flat to up 5 percent for combined Q3 and Q4 of Fiscal 2024 compared
to prior year. (Prior guidance range down 3 percent to up 1
percent)
GAAP EPS: Increased range to $2.55 to $2.70. (Prior
guidance range $2.50 to $2.70)
Non-GAAP EPS (“Adjusted EPS”): Increased range to $2.60
to $2.75. (Prior guidance range $2.55 to $2.75)
The Company notes that its Fiscal 2024 is a 52-week year and
compares to a 53-week year in Fiscal 2023 and, combined with the
impact of the retail calendar shift versus prior year, results in
the loss of approximately $20 million in net sales in fourth
quarter 2024 compared to fourth quarter 2023 with an estimated
negative impact of approximately $0.10 on EPS.
Conference Call
Today, at 9:00 a.m. Eastern Time, the Company will host a
conference call to discuss its 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.
Non-GAAP Financial Measures
The non-GAAP adjusted results for second quarter 2024 and in the
Fiscal 2024 outlook discussed herein exclude purchase accounting
impacts associated with the Company’s acquisition of Rogan’s. These
impacts include the amortization expense included in cost of sales
associated with the fair value adjustment to acquisition inventory
and expenses included in SG&A related to deal formation and
legal and accounting advice and purchase accounting and integration
expenses. These adjusted results are provided to enhance the user's
overall understanding of the Company's historical operations and
financial performance and future projections. Specifically, the
Company believes the adjusted results provide investors with
relevant comparisons of the Company’s core operations. Unaudited
adjusted results are provided in addition to, and not as
alternatives for, the Company’s reported results and guidance
determined in accordance with generally accepted accounting
principles. A reconciliation of these non-GAAP measures to the
Company's GAAP results and guidance appears below in the tables
entitled "Reconciliation of GAAP to Non-GAAP Financial Measures"
and entitled “Reconciliation of GAAP to Non-GAAP Financial Measures
for Fiscal 2024 Outlook” with respect to adjusted EPS in the Fiscal
2024 outlook.
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering a broad assortment of dress, casual
and athletic footwear for men, women and children with emphasis on
national name brands. As of September 5, 2024, the Company operates
430 stores in 36 states and Puerto Rico under its Shoe Carnival and
Shoe Station banners and offers shopping at www.shoecarnival.com
and www.shoestation.com. Headquartered in Evansville, IN, Shoe
Carnival, Inc. trades on The Nasdaq Stock Market LLC under the
symbol SCVL. Press releases and annual reports are available on the
Company's website at www.shoecarnival.com.
Cautionary Statement Regarding Forward-Looking
Information
As used herein, “we”, “our” and “us” refer to Shoe Carnival,
Inc. 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, such as
statements about our future growth, operations, cash flows and
shareholder returns, as well as our growth strategy and profit
transformation.
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: our ability to control costs and meet our
labor needs in a rising wage, inflationary, and/or supply chain
constrained environment; the impact of competition and pricing,
including our ability to maintain current promotional intensity
levels; the effects and duration of economic downturns and
unemployment rates; our ability to achieve expected operating
results from, and planned growth of, our Shoe Station banner, which
includes the recently acquired stores and operations of Rogan’s,
within expected time frames, or at all; the potential impact of
national and international security concerns, including those
caused by war and terrorism, on the retail environment; general
economic conditions in the areas of the continental United States
and Puerto Rico where our stores are located; changes in the
overall retail environment and more specifically in the apparel and
footwear retail sectors; our ability to successfully utilize the
e-commerce sales channel and its impact on traffic and transactions
in our physical stores; the success of the open-air shopping
centers where many of our stores are located and the impact on our
ability to attract customers to our stores; our ability to attract
customers to our e-commerce platform and to successfully grow our
omnichannel sales; the effectiveness of our inventory management,
including our ability to manage key merchandise vendor
relationships and direct-to-consumer initiatives; changes in our
relationships with other 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; our ability to successfully manage and execute our
marketing initiatives and maintain positive brand perception and
recognition; our ability to successfully manage our current real
estate portfolio and leasing obligations; changes in weather,
including patterns impacted by climate change; changes in 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 including at our distribution
center located in Evansville, IN; the impact of natural disasters,
public health and political crises, civil unrest, and other
catastrophic events on our operations and the operations of our
suppliers, as well as on consumer confidence and purchasing in
general; the duration and spread of a public health crisis and the
mitigating efforts deployed, including the effects of government
stimulus on consumer spending; 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
cybersecurity breach; our ability to effectively integrate Rogan’s,
retain Rogan’s employees, and achieve the expected operating
results, synergies, efficiencies and other benefits from the
Rogan’s acquisition within the expected time frames, or at all;
risks that the Rogan’s acquisition may disrupt our current plans
and operations or negatively impact our relationship with our
vendors and other suppliers; our ability to successfully execute
our business strategy, including the availability of desirable
store locations at acceptable lease terms, our ability to identify,
consummate or effectively integrate future acquisitions, our
ability to implement and adapt to new technology and systems, 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; an increase in the cost, or a disruption in the
flow, of imported goods; the impact of regulatory changes in the
United States, including minimum wage laws and regulations, and the
countries where our manufacturers are located; the resolution of
litigation or regulatory proceedings in which we are or may become
involved; continued volatility and disruption in the capital and
credit markets; 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,” “aims,” “on track,” “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
data)
(Unaudited)
Thirteen
Thirteen
Twenty-six
Twenty-six
Weeks Ended
Weeks Ended
Weeks Ended
Weeks Ended
August 3, 2024
July 29, 2023
August 3, 2024
July 29, 2023
Net sales
$
332,696
$
294,615
$
633,061
$
575,799
Cost of sales (including buying,
distribution and occupancy costs)
212,753
189,150
406,318
371,817
Gross profit
119,943
105,465
226,743
203,982
Selling, general and administrative
expenses
89,864
80,803
174,157
158,381
Operating income
30,079
24,662
52,586
45,601
Interest income
(672
)
(433
)
(1,475
)
(911
)
Interest expense
137
71
273
137
Income before income taxes
30,614
25,024
53,788
46,375
Income tax expense
8,041
5,583
13,929
10,408
Net income
$
22,573
$
19,441
$
39,859
$
35,967
Net income per share:
Basic
$
0.83
$
0.71
$
1.47
$
1.32
Diluted
$
0.82
$
0.71
$
1.45
$
1.31
Weighted average shares:
Basic
27,159
27,336
27,151
27,280
Diluted
27,500
27,410
27,452
27,449
Cash dividends declared per share
$
0.135
$
0.100
$
0.270
$
0.200
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
August 3,
February 3,
July 29,
2024
2024
2023
ASSETS
Current Assets:
Cash and cash equivalents
$
71,633
$
99,000
$
34,562
Marketable securities
12,831
12,247
12,218
Accounts receivable
5,519
2,593
3,961
Merchandise inventories
425,462
346,442
409,342
Other
21,651
21,056
25,281
Total Current Assets
537,096
481,338
485,364
Property and equipment – net
170,717
168,613
159,186
Operating lease right-of-use assets
337,926
333,851
339,598
Intangible assets
40,990
32,600
32,600
Goodwill
15,376
12,023
12,023
Other noncurrent assets
12,922
13,600
14,433
Total Assets
$
1,115,027
$
1,042,025
$
1,043,204
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable
$
73,916
$
58,274
$
77,429
Accrued and other liabilities
30,204
16,620
19,999
Current portion of operating lease
liabilities
55,870
52,981
57,335
Total Current Liabilities
159,990
127,875
154,763
Long-term portion of operating lease
liabilities
304,578
301,355
307,326
Deferred income taxes
15,187
17,341
14,631
Deferred compensation
12,564
11,639
10,596
Other
4,213
426
369
Total Liabilities
496,532
458,636
487,685
Total Shareholders’ Equity
618,495
583,389
555,519
Total Liabilities and Shareholders’
Equity
$
1,115,027
$
1,042,025
$
1,043,204
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twenty-six
Twenty-six
Weeks Ended
Weeks Ended
August 3, 2024
July 29, 2023
Cash Flows From Operating Activities
Net income
$
39,859
$
35,967
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
15,116
13,822
Stock-based compensation
3,574
2,326
Loss on retirement and impairment of
assets, net
215
59
Deferred income taxes
(486
)
2,787
Non-cash operating lease expense
28,307
27,627
Other
810
251
Changes in operating assets and
liabilities:
Accounts receivable
(561
)
(909
)
Merchandise inventories
(37,177
)
(18,952
)
Operating leases
(29,223
)
(27,181
)
Accounts payable and accrued
liabilities
20,498
(927
)
Other
(190
)
(12,518
)
Net cash provided by operating
activities
40,742
22,352
Cash Flows From Investing Activities
Purchases of property and equipment
(15,722
)
(30,629
)
Investments in marketable securities
(35
)
(41
)
Acquisition, net of cash acquired
(44,384
)
0
Net cash used in investing activities
(60,141
)
(30,670
)
Cash Flow From Financing Activities
Proceeds from issuance of stock
92
110
Dividends paid
(7,372
)
(5,675
)
Shares surrendered by employees to pay
taxes on stock-based compensation awards
(688
)
(2,927
)
Net cash used in financing activities
(7,968
)
(8,492
)
Net decrease in cash and cash
equivalents
(27,367
)
(16,810
)
Cash and cash equivalents at beginning of
period
99,000
51,372
Cash and cash equivalents at end of
period
$
71,633
$
34,562
SHOE CARNIVAL, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share
data)
(Unaudited)
Thirteen Weeks Ended August 3,
2024
% of Net Sales
Thirteen Weeks Ended July 29,
2023
% of Net Sales
Reported gross profit
$
119,943
36.1%
$
105,465
35.8%
Amortization expense related to fair value
adjustment to acquisition inventory
333
0.1%
0
0.0%
Adjusted gross profit, pre-tax
$
120,276
36.2%
$
105,465
35.8%
Reported selling, general and
administrative expenses
$
89,864
27.1%
$
80,803
27.4%
Acquisition related fees and expenses
(97
)
0.0%
0
0.0%
Adjusted selling, general and
administrative expenses, pre-tax
$
89,767
27.1%
$
80,803
27.4%
Reported operating income
$
30,079
9.0%
$
24,662
8.4%
Amortization expense related to fair value
adjustment to acquisition inventory
333
0.1%
0
0.0%
Acquisition related fees and expenses
97
0.0%
0
0.0%
Adjusted operating income, pre-tax
$
30,509
9.1%
$
24,662
8.4%
Reported income tax expense
$
8,041
2.4%
$
5,583
1.9%
Tax effect of amortization of acquisition
inventory fair value adjustment and acquisition related fees and
expenses
105
0.0%
0
0.0%
Adjusted income tax expense
$
8,146
2.4%
$
5,583
1.9%
Reported net income
$
22,573
6.8%
$
19,441
6.6%
Amortization expense related to fair value
adjustment to acquisition inventory
333
0.1%
0
0.0%
Acquisition related fees and expenses
97
0.0%
0
0.0%
Tax effect of acquisition related fees and
expenses
(105
)
0.0%
0
0.0%
Adjusted net income
$
22,898
6.9%
$
19,441
6.6%
Reported net income per diluted share
$
0.82
$
0.71
Amortization expense related to fair value
adjustment to acquisition inventory
0.01
0.00
Acquisition related fees and expenses
0.00
0.00
Tax effect of acquisition related fees and
expenses
0.00
0.00
Adjusted diluted net income per share
$
0.83
$
0.71
SHOE CARNIVAL, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share
data)
(Unaudited)
Twenty-six Weeks Ended August 3,
2024
% of Net Sales
Twenty-six Weeks Ended July 29,
2023
% of Net Sales
Reported gross profit
$
226,743
35.8%
$
203,982
35.4%
Amortization expense related to fair value
adjustment to acquisition inventory
497
0.1%
0
0.0%
Adjusted gross profit, pre-tax
$
227,240
35.9%
$
203,982
35.4%
Reported selling, general and
administrative expenses
$
174,157
27.5%
$
158,381
27.5%
Acquisition related fees and expenses
(417
)
-0.1%
0
0.0%
Adjusted selling, general and
administrative expenses, pre-tax
$
173,740
27.4%
$
158,381
27.5%
Reported operating income
$
52,586
8.3%
$
45,601
7.9%
Amortization expense related to fair value
adjustment to acquisition inventory
497
0.1%
0
0.0%
Acquisition related fees and expenses
417
0.1%
0
0.0%
Adjusted operating income, pre-tax
$
53,500
8.5%
$
45,601
7.9%
Reported income tax expense
$
13,929
2.2%
$
10,408
1.8%
Tax effect of amortization of acquisition
inventory fair value adjustment and acquisition related fees and
expenses
222
0.1%
0
0.0%
Adjusted income tax expense
$
14,151
2.3%
$
10,408
1.8%
Reported net income
$
39,859
6.3%
$
35,967
6.3%
Amortization expense related to fair value
adjustment to acquisition inventory
497
0.1%
0
0.0%
Acquisition related fees and expenses
417
0.1%
0
0.0%
Tax effect of acquisition related fees and
expenses
(222
)
-0.1%
0
0.0%
Adjusted net income
$
40,551
6.4%
$
35,967
6.3%
Reported net income per diluted share
$
1.45
$
1.31
Amortization expense related to fair value
adjustment to acquisition inventory
0.02
0.00
Acquisition related fees and expenses
0.02
0.00
Tax effect of acquisition related fees and
expenses
(0.01
)
0.00
Adjusted diluted net income per share
$
1.48
$
1.31
SHOE CARNIVAL, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
FOR FISCAL 2024
OUTLOOK
(Unaudited)
Low End of Fiscal 2024
Outlook
High End of Fiscal 2024
Outlook
Net income per diluted share (GAAP)
$
2.55
$
2.70
Amortization expense related to fair value
adjustment to acquisition inventory and acquisition related fees
and expenses
0.07
0.07
Tax effect of amortization of acquisition
inventory fair value adjustment and acquisition related fees and
expenses
(0.02
)
(0.02
)
Adjusted diluted net income per share
$
2.60
$
2.75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240905470646/en/
Steve R. Alexander Shoe Carnival Vice President Investor
Relations (812) 867-4034
Shoe Carnival (NASDAQ:SCVL)
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