Shoe Carnival, Inc. reported that net earnings for the first quarter ended May 1 were $4.6 million, or 35 cents per diluted share, compared with net earnings of $5.1 million, 39 cents per diluted share, in the year-ago quarter.
Net sales for the first quarter increased 6.3% to $145.5 million from $136.9 million last year. Comparable store sales decreased 2.2% for the 13-week period.
The gross profit margin for the first quarter of 2004 decreased to 29.2% from 29.9% in the first quarter of 2003 due to the deleveraging effect of lower same store sales and the lower sales productivity of new stores on buying, distribution and occupancy costs. Selling, general and administrative expenses for the first quarter, as a percentage of sales, increased to 23.9 percent from 23.8 percent in last year's first quarter. New store pre-opening costs incurred in the first quarter were $729,000 or 0.5 percent of sales, compared with $772,000 or 0.6 percent of sales last year. The Company opened 11 new stores in the first quarter of 2004 versus opening 13 stores in the first quarter of 2003.
Commenting on the results, Mark Lemond, president and chief executive officer said, “We are clearly disappointed in our results for the first quarter of 2004. In an effort to increase customer traffic during the quarter, we tried new approaches in advertising and merchandise promotions, including a reduction of “buy one get one at half price” promotions. Although it is apparent these strategies were not successful in total, we did gain valuable insights on a market-by-market basis. We have responded by effecting changes to our advertising and merchandise promotions, continuing the media and message that did resonate and changing what did not. While certain of these changes will be implemented in the second quarter, the primary effect will be seen during back-to-school, our next peak selling period.”
Currently, the Company expects to open between 20 to 25 stores in fiscal 2004, net of store closings. Eleven stores were opened in the first quarter and two stores are expected to open in the second quarter. Store openings in the second half of 2004 will occur primarily in the third quarter.
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share)
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
May 1, 2004 May 3, 2003
----------- ------------
Net sales $ 145,462 $ 136,850
Cost of sales (including buying, distribution
and occupancy costs) 103,017 95,969
--------- ----------
Gross profit 42,445 40,881
Selling, general and administrative expenses
34,765 32,587
--------- ----------
Operating income 7,680 8,294
Interest expense 193 166
--------- ----------
Income before income taxes 7,487 8,128
Income tax expense 2,920 3,048
--------- ----------
Net income $ 4,567 $ 5,080
========= ==========
Net income per share:
Basic $ .36 $ .40
========= ==========
Diluted $ .35 $ .39
