Shoe Carnival, Inc. reported a sharp decrease in net earnings for the thirteen-week fourth quarter to $1.1 million from $5.1 million in the fourteen-week fourth quarter ended February 3, 2007. Diluted earnings per share were 9 cents per share compared to 37 cents per share last year. The extra week included in the fourth quarter of fiscal 2006, increased diluted earnings per share in that quarter by approximately 5 cents.
Sales for the thirteen-week period ended February 2, 2008, were $164.3 million compared to sales of $177.2 million for the year-ago quarter. Sales of approximately $11.5 million were recorded in the extra week of the fourth quarter of fiscal 2006. Comparable store sales for the thirteen-week period ended February 2, 2008, decreased 5.7%.
The gross profit margin for the fourth quarter of 2007 was 27.5% compared to 28.1% for the fourth quarter of 2006. As a percentage of sales, the merchandise margin remained unchanged from last year's fourth quarter, while buying, distribution and occupancy costs increased 0.6%. The increase in buying, distribution and occupancy costs, as a percentage of sales, was due primarily to the deleveraging effect of lower sales.
Selling, general and administrative expenses for the fourth quarter were $43.6 million, or 26.5% of sales, compared to $41.8 million, or 23.6% of sales, in the fourth quarter of 2006. The increase in selling, general and administrative expenses was due to operating an additional 20 stores during the quarter compared to same period last year and recording a non-cash impairment charge to assets for certain stores management has committed to close.
Operating income for the fourth quarter was $1.6 million compared to $7.9 million in the fourth quarter of 2006. Operating margin for the fourth quarter was 1.0% compared to 4.5% in the same period last year.
Fiscal 2007 Results
Net sales were $658.7 million for the fiscal year compared to net sales of $681.7 million last year. Comparable store sales for the 52-week period ended February 2, 2008, decreased 5.2% compared with the 52-week period ended February 3, 2007.
Net earnings for fiscal 2007 were $12.8 million, or 97 cents per diluted share, compared to net earnings of $23.8 million, or $1.73 per diluted share, last year.
Commenting on the results, Mark Lemond, chief executive officer and president said, “Fiscal 2007 proved to be a difficult period for us and footwear retailers in general. The challenging economic environment continued to directly affect our targeted moderate income consumer, and consequently, had a negative impact on both traffic and sales.”
“Our merchandising and store operations teams did a commendable job of maintaining our merchandise margins in the fourth quarter and for the full fiscal year. Importantly, we ended fiscal 2007 with inventories on a per store basis almost 5 percent lower than last year.”
“We anticipate the retail environment will again be challenging in fiscal 2008. However, we believe our strong brand name in our core markets along with a cost efficient operating model provides us with opportunities for growth in market share and improved profitability. For fiscal 2008, our primary focus will be on enhancing store performance metrics and continuing our efforts to provide long-term earnings growth to our shareholders.”
Store Growth
During fiscal 2007, 25 new stores were opened and five were closed to end the year at 291 stores. One store was opened in the fourth quarter and three were closed. Our retail selling space increased 176,000 square feet during fiscal 2007 bringing our total retail selling space to 3.2 million square feet.
Store openings and closings by quarter and for the year are as follows:
| New Stores | Stores Closed | ||||||||||||||
| 1st Quarter 2007 | 7 | 0 | |||||||||||||
| 2nd Quarter 2007 | 6 | 0 | |||||||||||||
| 3rd Quarter 2007 | 11 | 2 | |||||||||||||
| 4th Quarter 2007 | 1 | 3 | |||||||||||||
| Fiscal 2007 | 25 | 5 |
| SHOE CARNIVAL, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(In thousands, except per share) | ||||||||||||||||
| Thirteen Weeks Ended | Fourteen Weeks Ended | Fifty-two Weeks Ended | Fifty-three Weeks Ended | ||||||||||||
| Net sales | $ | 164,341 | $ | 177,221 | $ | 658,680 | $ | 681,662 | ||||||||
Cost of sales (including buying, distribution and occupancy costs) | 119,091 | 127,475 | 472,831 | 482,888 | ||||||||||||
| Gross profit | 45,250 | 49,746 | 185,849 | 198,774 | ||||||||||||
| Selling, general and administrative expenses | 43,647 | 41,814 | 166,717 | 161,144 | ||||||||||||
| Operating income | 1,603 | 7,932 | 19,132 | 37,630 | ||||||||||||
| Interest income | (79 | ) | (372 | ) | (690 | ) | (1,235 | ) | ||||||||
| Interest expense | 85 | 45 | 264 | 152 | ||||||||||||
| Income before income taxes | 1,597 | 8,259 | 19,558 | 38,713 | ||||||||||||
| Income tax expense | 470 | 3,133 | 6,751 | 14,949 | ||||||||||||
| Net income | $ | 1,127 | $ | 5,126 | $ | 12,807 | $ | 23,764 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.09 | $ | 0.38 | $ | 0.99 | $ | 1.78 | ||||||||
| Diluted | $ | 0.09 | $ | 0.37 | $ | 0.97 | $ | |||||||||
