Shoe Carnival's net income for the second quarter of fiscal 2005 increased 39% to $2.7 million compared with net income of $1.9 million in the second quarter of fiscal 2004. Diluted earnings per share increased 33% to 20 cents per share from 15 cents per share last year.
Net sales for the second quarter of 2005 increased 7.6% to $148.7 million from $138.1 million last year. Comparable store sales increased by 2.9%.
Gross profit margins for the second quarter of 2005 increased to 27.9 percent from 27.7 percent last year. Selling, general and administrative expenses, as a percentage of sales, decreased to 24.9 percent from 25.3 percent in the second quarter of 2004.
The Company incurred $369,000, or 0.2 percent of sales, in store closing costs in the second quarter of 2005 for stores to be closed in fiscal 2005. This is compared with store closing costs of $47,000 recorded in the second quarter of 2004. New store pre-opening costs incurred in the second quarter of 2005 were $296,000, or 0.2 percent of sales, compared with $147,000, or 0.1 percent of sales last year. Shoe Carnival opened seven stores in the second quarter this year, versus two stores in the second quarter of 2004.
Mark Lemond, president and chief executive officer stated, “Once again we have delivered excellent earnings growth for the quarter. Our net income increased almost 40 percent over the second quarter of last year and diluted earnings per share were up 33 percent. An increase in our gross margin and a decrease in our expenses as a percentage of sales resulted in a 0.6 percent increase in operating margin for the quarter.”
“Our customers have responded well to the increased fashion content of our women's and men's non-athletic merchandise. Both of these categories have shown strong comparable sales increases for the second quarter and the year-to-date period. We are making significant progress towards our long-term goal of increasing our women's non-athletic sales to 28 to 30 percent of our total sales. For the second quarter of this year, 26.2 percent of our total sales were attributable to our women's non-athletic product, up from 23.5 percent in the second quarter of 2004.”
Net income for the first half of 2005 was $8.6 million, or $0.64 per diluted share, compared with net income of $6.5 million, or $0.49 per diluted share, last year. Net sales increased 9.1 percent to $309.4 million for the first six months from sales of $283.6 million last year. Comparable store sales increased 4.3 percent for the six-month period. Gross profit margin for the first six months of 2005 increased to 28.8 percent from 28.4 percent last year. Selling, general and administrative expenses, as a percentage of sales, decreased to 24.2 percent in the first six months of 2005 from 24.6 percent last year.
In the first half of 2005, store closing costs were $511,000, or 0.2 percent of sales, compared with store closing costs of $100,000 recorded in the first half of 2004. Pre-opening costs for first six months of 2005 were $489,000, or 0.2 percent of sales, as compared to $876,000, or 0.3 percent of sales, in the first half of 2004. Interest expense in the first half of 2005 decreased to $261,000 from $373,000 in the same period in 2004, primarily due to lower average borrowings.
Mr. Lemond continued “Sales in the first three weeks of the back-to-school season, beginning with the last week of the second quarter, were disappointing. However, beginning in the third week of August, sales have been meeting our expectations. In our southern regions, where schools tend to start earlier, sales have been exceeding our expectations. It appears that consumers are shopping closer to the back-to-school date, or even after school starts, more than they have in recent years. We saw a similar trend last year when our comparable store sales increases accelerated in the second half of August and the first half of September.”
Shoe Carnival now anticipates an increase in comparable store sales for the third quarter of 1 to 3 percent. Diluted earnings per share are expected to be between $0.43 and $0.45 for the third quarter compared to $0.38 for the third quarter of 2004. Diluted earnings per share for the full year of 2005 are anticipated to be between $1.20 and $1.25.
During the first half of 2005 12 new stores were opened, 7 of which were opened in the second quarter and 1 store was closed. An additional 3 stores are expected to open in the second half of 2005. The Company expects to close 7 stores during the last two quarters of this year, two of which will be closed in the last week of the fiscal year.
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share)
(Unaudited)
Thirteen Twenty-six
Weeks Ended Weeks Ended
Thirteen July 31, 2004 Twenty-six July 31, 2004
Weeks Ended (as Weeks Ended (as
July 30, 2005 restated)(1) July 30, 2005 restated)(1)
------------- ------------- ------------- -------------
Net sales $148,658 $138,130 $309,371 $283,592
Cost of sales
(including
buying,
distribution
and occupancy
costs) 107,200 99,866 220,274 202,973
------------- ------------- ------------- -------------
Gross profit 41,458 38,264 89,097 80,619
Selling,
general and
administrative
expenses 36,980 34,896 74,844 69,661
------------- ------------- ------------- -------------
Operating
income 4,478 3,368 14,253 10,958
Interest
expense-net 128 179 261 373
------------- ------------- ------------- -------------
Income before
income taxes 4,350 3,189 13,992 10,585
Income tax
expense 1,646 1,244 5,367 4,128
------------- ------------- ------------- -------------
Net income $ 2,704 $ 1,945 $ 8,625 $ 6,457
============= ============= ============= =============
Net income per
share:
Basic $ .21 $ .15 $ .66 $ .50
============= ============= ============= =============
Diluted $ .20 $ .15 $ .64 $ .49
============= ============= ============= =============
Average shares
outstanding:
Basic 13,112 12,818 13,018 12,803
Diluted 13,511 13,052 13,394 13,076
