Shoe Carnival, Inc. saw net income for the third quarter jump 17% to $8.4 million from $7.2 million in the same quarter last year. Diluted earnings per share increased 15% to 61 cents per share compared with 53 cents per share last year.
Net sales for the quarter increased 3.5% to $189.1 million from $182.7 million last year. Comparable store sales increased 2.9% for the 13-week period. This sales increase was on top of an 8.3% increase in the third quarter of 2005.
The gross profit margin for the third quarter of 2006 increased to 30.0% compared to 29.5% for the third quarter of 2005. Selling, general and administrative expenses for the third quarter, as a percentage of sales, decreased to 22.9% from 23.1% in last year's third quarter. Consequently, the company's operating margin increased to 7.1% from 6.4% in the same period last year.
Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, “The combination of the comparable store sales increase, an expanding gross profit margin and effective expense controls once again resulted in the highest sales and net earnings for any quarter in the Company's history. Additionally, our year-to-date sales and net earnings were the highest we have ever achieved for the first nine months of a fiscal year. It is also important to note that the third quarter results represent the Company's eighth consecutive increase in year-over-year quarterly earnings per share.”
“Our customers have responded well to our fall season dress and casual merchandise assortment, particularly in our women's footwear where we have seen the strongest momentum. Our women's dress and casual sales increased 10 percent on a comparable store basis in the third quarter, which was on top of a 21 percent increase in the third quarter of last year. We attribute our increases in both sales and gross margin to our continued efforts to provide fashionable footwear at the most competitive prices in the family footwear industry.”
Net income for the first nine months of 2006 was $18.6 million, or $1.36 per diluted share, compared with net income of $15.8 million, or $1.18 per diluted share, last year. Net sales increased 2.5% to $504.4 million for the first nine months from sales of $492.1 million last year. Comparable store sales increased 2.3% for the nine-month period. Gross profit margin for the first nine months of 2006 increased to 29.5% from 29.1% last year. Selling, general and administrative expenses, as a percentage of sales, decreased to 23.7% in the first nine months of 2006 from 23.8% last year.
2006 EPS Outlook
Earnings per diluted share in the fourth quarter of fiscal 2006 are expected to range from 36 cents to 38 cents compared to 22 cents for the fourth quarter of 2005. This assumes comparable store sales will be flat to up 1% for the fourth quarter.
For the full year of 2006, we expect diluted earnings per share to range from $1.72 to $1.74.
Store Growth
During the first nine months of 2006, 12 new stores were opened and five were closed. Eight stores were opened in the third quarter, and two additional stores have opened in the fourth quarter. The company closed three stores in the third quarter and expects to close an additional store during the last quarter of this year.
Store openings and closings by quarter and for the year are as follows:
New Stores Stores Closed
------------------ ----------------
1st Quarter 2006 0 0
2nd Quarter 2006 4 2
3rd Quarter 2006 8 3
4th Quarter 2006 2 1
------------------ ----------------
Fiscal 2006 14 6
The eight stores opened during the third quarter included locations in:
City Market/Total Stores in Market
-------------------------- ----------------------------------
Montgomery, AL Montgomery/2
Bryant, AR Little Rock/5
Orlando, FL Orlando/7
Pittsburgh, PA Pittsburgh/1
Columbia, SC Columbia/3
Round Rock, TX Austin/4
Conroe, TX Houston/6
Houston, TX Houston/6
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 28, October 29, October 28, October 29,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $ 189,086 $ 182,697 $ 504,441 $ 492,068
Cost of sales
(including buying,
distribution and
occupancy costs) 132,349 128,815 355,413 349,089
----------- ----------- ----------- -----------
Gross profit 56,737 53,882 149,028 142,979
Selling, general and
administrative
expenses 43,275 42,180 119,330 117,024
----------- ----------- ----------- -----------
Operating income 13,462 11,702 29,698 25,955
Interest income (353) (18) (863) (53)
Interest expense 33 118 107 414
----------- ----------- ----------- -----------
Income before income
taxes 13,782 11,602 30,454 25,594
Income tax expense 5,406 4,452 11,816 9,819
----------- ----------- ----------- -----------
Net income $ 8,376 $ 7,150 $ 18,638 $ 15,775
----------- ----------- ----------- -----------
Net income per share:
Basic $ .62 $ .54 $ 1.40 $ 1.21
----------- ----------- ----------- -----------
Diluted $ .61 $ .53 $ 1.36 $ 1.18
----------- ----------- ----------- -----------
Average shares
outstanding:
Basic 13,414 13,229 13,338 13,088
----------- ----------- ----------- -----------
Diluted 13,751 13,455 13,706 13,410
----------- ----------- ----------- -----------
