Shoe Carnival net sales for the third quarter decreased 8.0% to $173.9 million from sales of $189.1 million in the same quarter of 2006. Comparable store sales declined 5.0%. Net income
was $4.2 million as compared with net income of $8.4 million in the
third quarter ended October 28, 2006. Diluted earnings per share were 33 cents per share as compared with 61 cents per share last year.
The gross profit margin for the third quarter of 2007 decreased to 29.1 percent compared to 30.0 percent for the third quarter of 2006. As a percentage of sales, the merchandise margin increased 0.5 percent due to continued emphasis on inventory management. However, due to the decrease in sales, buying, distribution and occupancy costs increased 1.4 percent as a percentage of sales. By controlling expenses, selling, general and administrative expenses increased only $352,000 despite operating an additional 23 stores during the quarter as compared to third quarter last year. As a percentage of sales, selling, general and administrative expenses increased to 25.1 percent from 22.9 percent in last year's third quarter.
Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, “We believe the current challenging economic environment continues to directly affect our target consumer, and consequently, had a negative impact on both traffic and sales throughout the third quarter. Additionally, an extraordinarily warm fall selling season has suppressed the sales of traditional fall and winter product, especially boots. We continue to aggressively manage both the composition and level of our inventories; consequently, at the end of the third quarter, inventories on a per-store basis were down approximately 1.5 percent from the third quarter of last year.”
Net income for the first nine months of 2007 was $11.7 million, or $0.87 per diluted share, compared with net income of $18.6 million, or $1.36 per diluted share, last year. Net sales for the first nine months decreased 2.0 percent to $494.3 million from sales of $504.4 million for the same period last year. Comparable store sales for the thirty-nine week period ended November 3, 2007 decreased 5.0 percent compared to the thirty-nine week period last year ended November 4, 2006. The gross profit margin for the first nine months of 2007 decreased to 28.5 percent from 29.5 percent last year. Selling, general and administrative expenses, as a percentage of sales, increased to 24.9 percent in the first nine months of 2007 from 23.7 percent last year.
Fourth Quarter Outlook
Taking into consideration last year's 53rd week and our recent sales trend, net sales for the fourth quarter are expected to range from $167 million to $169 million. On a comparable week-for-week basis, the Company expects comparable store sales to decline 4 to 5 percent for the fourth quarter this year. Utilizing these sales projections, earnings in the fourth quarter are expected to range from $0.10 to $0.13 per diluted share.
Commenting further, Mr. Lemond said, “Looking beyond the fourth quarter, we believe the investments we have made over the past year to our infrastructure and information systems will continue to drive improvements in the way we execute our concept and put us in a stronger position when the economy rebounds. We are optimistic with regards to the viability of our concept and remain committed to our long-term growth strategy.”
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share)
|Weeks Ended||Weeks Ended|
|November 3, 2007||October 28, 2006||November 3, 2007||October 28, 2006|
|Cost of sales (including buying, distribution and occupancy costs)|
|Selling, general and administrative expenses|
|Income before income taxes||6,920||13,782||17,961||30,454|
|Income tax expense||2,734||5,406||6,281||11,816|
|Net income per share:|