Shoe Carnival Q3 Profits Climb 15.1 Percent

Net earnings for the quarter ended Oct. 29 were $10.5 million or 78 cents per share, as compared to net earnings of $9.1 million, or 70 cents, for the third quarter last year.

The gross profit margin for the third quarter of fiscal 2011 was 30.2 percent compared to 30.1 percent for the third quarter of fiscal 2010. The merchandise margin remained flat as a percentage of sales. Buying, distribution and occupancy costs decreased 0.1 percent as a percentage of sales.

Selling, general and administrative expenses for the third quarter increased $1.2 million to $48.3 million; however as a percentage of sales, these expenses decreased to 22.4 percent compared to 23.0 percent in the third quarter of last year due to the leverage associated with the comparable store sales increase.

Speaking on the results, Mark Lemond, president and chief executive officer, said, “While our third quarter performance was in the middle of our earnings expectations, it still represents the highest quarterly sales and earnings in our company’s history. Positive sales results early in the back-to-school season were partially offset by lower than expected store traffic trends in late September and throughout October. We believe the change in sales trends throughout the third quarter reflects the impact of an unusually warm fall sales season as compared to last year. As a result, we expect our sales trends will strengthen throughout the fourth quarter as the weather becomes more seasonal.”

Lemond concluded, “As we progress through the holiday sales season, we believe Shoe Carnival is well positioned with a compelling assortment of family footwear and we expect our competitive pricing will resonate well with value oriented consumers. Going forward, we will continue to conservatively manage our cost structure and inventory to help generate further increases in profitability long-term.”

Net sales during the first nine months of fiscal 2011 increased $21.3 million to $580.6 million as compared to the same period last year. Comparable store sales increased 1.9 percent. Net earnings for the first nine months of 2011 were $23.1 million, or $1.72 per diluted share, compared to net earnings of $22.5 million, or $1.73 per diluted share, in the first nine months of last year. The gross profit margin for the first nine months of 2011 was 29.8 percent compared to 29.9 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 23.4 percent for the first nine months of 2011 compared to 23.6 percent for the first nine months of 2010.

Fourth Quarter and Fiscal 2011 Earnings Outlook

The company expects fourth quarter net sales to be in the range of $186 to $190 million with comparable store sales in the range of positive 1.0 to negative 1.0 percent. Earnings per diluted share in the fourth quarter of fiscal 2011 are expected to be in the range of $0.33 to $0.36. In the fourth quarter of 2010, comparable store sales increased 4.6 percent and earnings per diluted share were $0.33.

For fiscal 2011, the company expects net sales to be in the range of $767 to $770 million and comparable store sales to increase in the range of 1.2 to 1.7 percent. Earnings per diluted share for fiscal 2011 are expected to be in the range of $2.05 to $2.08. For fiscal 2010, comparable store sales increased 8.2 percent and earnings per diluted share were $2.05.

Store Growth

The company expects to open 17 new stores and close four stores in fiscal 2011. Store openings and closings by quarter are as follows:
          New Stores           Store Closings     
1st Quarter 2011         4         0     
2nd Quarter 2011         5         2     
3rd Quarter 2011         7         1     
4th Quarter 2011         1         1     
Fiscal 2011         17         4     
                    

The seven stores opened during the third quarter include locations in:
      City           Market/Total Stores in Market
    American Fork, UT         Salt Lake City/7
    D’Iberville, MS         Biloxi-Gulfport/2
    Hanover, PA         Harrisburg-Lancaster-Lebanon-York/3
    Houston, TX         Houston/11
    Nampa, ID         Boise/3
    Raleigh, NC         Raleigh-Durham (Fayetteville)/7
    Russellville, AR         Little Rock-Pine Bluff/6
            
Shoe Carnival is a chain of 327 footwear stores located in the Midwest, South and Southeast.