Shoe Carnival Inc. reported earnings rose 7.1 percent in the first quarter to $13.9 million, or 91 cents a share. Comps in the quarter dipped 0.2 percent due to the later tax refund season as well as inclement weather impacting February, but the combined months of March and April increased 3.6 percent.
First Quarter Highlights
- Earnings per diluted share increased 9.6 percent to $0.91
- Included in earnings was a tax benefit in connection with the vesting of equity-based compensation during the quarter of approximately $1.9 million, or 13 cents per diluted share
- Repurchased 411,168 shares of common stock at a total cost of $14.0 million under the company’s share repurchase program
- Total inventory was down $6.6 million and was up 0.3 percent on a per-store basis
Cliff Sifford, Shoe Carnival’s president and chief executive officer, commented, “After a difficult February due to the later tax refund season as well as inclement weather, we experienced a positive change in sales for the Easter time period of March and April. Comparable store sales for the combined months of March and April increased 3.6 percent. Our merchants once again did a great job of controlling inventories while maintaining margin. As we look ahead, we believe we have identified a strong assortment of key items and a great product mix and we remain on-track to achieve our outlook for the fiscal year.”
First Quarter Financial Results
The company reported net sales of $253.8 million for the first quarter of fiscal 2019, a 1.4 percent decrease compared to net sales of $257.4 million for the first quarter of fiscal 2018. Comparable store sales decreased 0.2 percent in the first quarter of fiscal 2019.
Gross profit margin for the first quarter of fiscal 2019 decreased 0.4 percent to 29.6 percent compared to 30.0 percent in the first quarter of fiscal 2018. Merchandise margin increased 0.1 percent and buying, distribution and occupancy expenses increased 0.5 percent as a percentage of net sales compared to the first quarter of fiscal 2018.
Selling, general and administrative expenses for the first quarter of fiscal 2019 decreased $0.5 million to $59.5 million. As a percentage of net sales, these expenses increased to 23.4 percent compared to 23.3 percent in the first quarter of fiscal 2018.
Net income for the first quarter of fiscal 2019 was $13.9 million, or $0.91 per diluted share. Included in the first quarter of 2019 was a tax benefit in connection with the vesting of equity-based compensation of approximately $1.9 million, or $0.13 per diluted share. For the first quarter of fiscal 2018, the company reported net income of $13.0 million, or $0.83 per diluted share.
Store Openings and Closings
The company expects to open one store and close seven to ten stores during fiscal 2019 compared to opening three stores and closing 14 stores during fiscal 2018.
Share Repurchase Program
For the first quarter of fiscal 2019, the company repurchased 411,168 shares of its common stock, at an average price of $34.08 per share, for a total cost of $14.0 million. The company has $36 million remaining under its existing $50 million share repurchase program as of May 4, 2019.
Fiscal 2019 Outlook
The company is reiterating its net sales and raising its earnings per diluted share outlook to reflect the tax benefit recognized in first quarter of fiscal 2019 as follows:
- Net sales in the range of $1.035 billion to $1.043 billion, with comparable store sales up low single digits;
- Earnings per diluted share in the range of $2.73 to $2.83 compared to its previous range of $2.60 to $2.70. Fiscal 2018 earnings per diluted share were $2.45.
Photo courtesy Shoe Carnival