Shoe Carnival, Inc. reported earnings rose 16.9 percent in the third quarter, to $12.2 million, or 60 cents a share. Sales reached $244.4 million in the third quarter, a 13.4 percent increase, compared to the third quarter last year. Comparable store sales increased 6.2 percent.
The shoe chain noted that its quarterly earnings per diluted share of 60 cents represented a 15.4 percent increase over the previous record earnings per diluted share of 52 cents a share, which was achieved in the third quarter of fiscal 2011
“Our team did a great job in positioning us for a highly successful back-to-school season. We achieved comparable store sales at the high end of our guidance and record earnings. Our strong financial performance was the result of a marketing effort that resonated with our core consumer. We showcased the fashion trends currently driving footwear demand and reached additional customers through the opening of stores in new and existing markets,” stated Cliff Sifford, President and CEO.
Financial Results
The Company reported net sales of $244.4 million for the third quarter of fiscal 2012, a 13.4 percent increase, compared to net sales of $215.5 million in the third quarter of fiscal 2011. Comparable store sales increased 6.2 percent in the third quarter of fiscal 2012.
The gross profit margin for the third quarter of fiscal 2012 increased to 31.3 percent compared to 30.2 percent for the third quarter of fiscal 2011. The merchandise margin increased 0.6 percent, while buying, distribution and occupancy costs decreased 0.5 percent as a percentage of sales.
Selling, general and administrative expenses for the third quarter increased $7.6 million to $55.9 million; as a percentage of sales, these expenses increased to 22.9 percent compared to 22.4 percent in the third quarter of fiscal 2011. The increase in expense was primarily due to operating more stores and increased incentive compensation versus the third quarter last year.
The effective tax rate for the third quarter of fiscal 2012 increased to 40.2 percent from 37.8 percent in the third quarter last year. This increase was attributable to the non-deductibility of executive compensation related to the retirement of our former chief executive officer during the third quarter. The increase in the tax rate reduced earnings per diluted share by approximately 2.5 cents.
Net earnings for the third quarter increased to $12.2 million, or $0.60 per diluted share, from net earnings of $10.5 million, or $0.52 per diluted share in the third quarter of last year.
Sifford continued, “As we enter the fourth quarter, we believe Shoe Carnival is well positioned to capitalize on holiday sales, starting with Black Friday. Our team has worked especially hard to deliver to the consumer compelling reasons to visit our stores, and our e-commerce site, on this important retail shopping day. We have increased our hours of operation and we believe we have positioned our ‘door buster’ promotions, giveaways and coupons to be exceptionally competitive. For an early look at our Day-After-Thanksgiving product offerings, please visit www.shoecarnival.com.”
Net sales during the first nine months of fiscal 2012 increased $68.7 million to $649.3 million as compared to the same period last year. Comparable store sales increased 5.7 percent. The gross profit margin for the first nine months of fiscal 2012 was 30.4 percent compared to 29.8 percent last year. Selling, general and administrative expenses, as a percentage of sales were 23.7 percent for the first nine months of fiscal 2012 compared to 23.4 percent last year. Net earnings for the first nine months of fiscal 2012 were $26.1 million, or $1.28 per diluted share, compared to net earnings of $23.1 million, or $1.15 per diluted share, in the first nine months of last year.
Fourth Quarter Fiscal 2012 Outlook
The Company expects fourth quarter net sales to be in the range of $215 to $220 million with a comparable store sales increase in the range of 2 to 4 percent. Earnings per diluted share in the fourth quarter of fiscal 2012 are expected to be in the range of $0.19 to $0.23. In the fourth quarter of fiscal 2011, comparable store sales decreased 3.0 percent and the Company earned $0.16 per diluted share.
For fiscal 2012, the Company expects net sales to be in the range of $864 to $869 million with a comparable store sales increase in the range of 4.8 to 5.3 percent. Earnings per diluted share for fiscal 2012 are expected to be in the range of $1.47 to $1.51. For fiscal 2011, comparable store sales increased 0.7 percent and earnings per diluted share were $1.31.
The fourth quarter of fiscal 2012 includes 14 weeks compared to 13 weeks in the fourth quarter of fiscal 2011 and the full fiscal year of 2012 includes 53 weeks compared with 52 weeks in the full fiscal year of 2011. The Company’s sales and earnings guidance for the fourth quarter of fiscal 2012 includes the effect of this additional week.
Store Growth
The Company completed its new store openings in early November and expects to close two stores during the fourth quarter to end fiscal 2012 with 351 stores in operation. Store openings and closings by quarter are as follows:
| Fiscal 2012 | New Stores | Store Closings | ||
| 1st quarter | 13 | 3 | ||
| 2nd quarter | 11 | 2 | ||
| 3rd quarter | 6 | 0 | ||
| 4th quarter | 1 | 2 | ||
| Fiscal year | 31 | 7 | ||
The six new stores opened during the third quarter include locations in:
| Total Stores in | ||||
| City | Market | the Market | ||
| Aguadilla, PR | Puerto Rico | 4 | ||
| Carolina, PR | Puerto Rico | 4 | ||
| Greenwood, SC | Greenville | 6 | ||
| St. Charles, MO | St. Louis | 13 | ||
| Warsaw, IN | South Bend | 2 | ||
| Williamsport, PA | Williamsport | 1 | ||
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 27, | October 29, | October 27, | October 29, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net sales | $ | 244,434 | $ | 215,472 | $ | 649,254 | $ | 580,594 | ||||||||
Cost of sales (including buying, distribution and occupancy costs) | 167,999 | 150,317 | 451,951 | 407,306 | ||||||||||||
