Shoe Carnival, Inc. reported net sales reached $235.8 million for the third quarter ended Nov. 2, compared to $244.4 million for the third quarter ended Oct. 27, 2012. Comparable store sales for the most recent 13-week period increased 0.7 percent as compared to the 13-week period ended Nov. 3, 2012.


As a result of fiscal 2012 consisting of 53 weeks, each of the first three quarters in fiscal 2013 is shifted one week later when compared to fiscal 2012. This one-week shift moved an important week of back-to-school sales from the third quarter of fiscal 2012 into the second quarter this year. This shift negatively affected the company’s net sales comparison for the third quarter of fiscal 2013, reducing sales by approximately $21.2 million.


The gross profit margin for the third quarter of fiscal 2013 decreased to 30.1 percent compared to 31.3 percent for the third quarter of fiscal 2012. The merchandise margin remained unchanged while buying, distribution and occupancy expenses increased 1.2 percent as a percentage of sales. The deleveraging of occupancy expenses was primarily attributable to the shift in the fiscal calendar.

 

 

Selling, general and administrative expenses for the third quarter decreased $2.7 million to $53.2 million; as a percentage of sales, these expenses decreased to 22.5 percent compared to 22.9 percent in the third quarter of fiscal 2012.

 

Net earnings reached $10.9 million, or $0.54 per diluted share, as compared to the company’s expectations provided on Aug. 29, 2013 of $0.51 to $0.55 per diluted share. For the third quarter ended October 27, 2012, the company reported net earnings of $12.2 million, or $0.60 per diluted share.

 

 

The company opened eight new stores during the third quarter of fiscal 2013 as compared to six stores in the third quarter of fiscal 2012.

 

“The arrival of October’s seasonably cool weather and an end to the federal government shutdown was a welcomed relief in the third quarter,” said Cliff Sifford, president and CEO. “October’s mid-single digit comparable store sales gain, together with August’s sales performance, more than offset our negative September sales trend. Higher merchandise margins coupled with lower expenses than were originally projected resulted in earnings at the high-end of our expectations.”

Nine month financial results

Net sales during the first nine months of fiscal 2013 increased $35.2 million to $684.5 million as compared to the same period last year. Comparable store sales for the thirty-nine week period ended Nov. 2, 2013 increased 0.7 percent as compared to the 39-week period ended Nov. 3, 2012. Net earnings for the first nine months of fiscal 2013 were $26.3 million, or $1.29 per diluted share, compared to net earnings of $26.1 million, or $1.28 per diluted share, in the first nine months of last year. The gross profit margin for the first nine months of fiscal 2013 was 29.5 percent compared to 30.4 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 23.3 percent for the first nine months of fiscal 2013 compared to 23.7 percent last year. The company opened 29 stores during the first nine months of fiscal 2013 as compared to opening 30 stores during the first nine months of last year.


“As more seasonable fall weather continued in November, sales of our fall footwear, particularly boots, increased,” said Sifford. “These favorable weather patterns along with our strong Thanksgiving promotional offering led to a comparable store sales increase for Nov. of 7.8 percent. We believe we are well positioned to continue our positive sales trend throughout the remainder of the holiday season which would result in improved year-over-year financial results.”


Fourth quarter fiscal 2013 earnings outlook


The company expects fourth quarter net sales to be in the range of $215 million to $219 million with a comparable store sales increase in the range of 4.0 to 6.0 percent. Earnings per diluted share in the fourth quarter of fiscal 2013 are expected to be in the range of $0.18 to $0.22. In the 14-week fourth quarter of fiscal 2012, total net sales were $205.7 million, comparable store sales increased 0.5 percent and the company earned $0.13 per diluted share. Earnings per diluted share for the fourth quarter of fiscal 2012 included a $0.03 reduction due to the application of the two-class method of computing earnings per share in connection with the company’s $20.4 million special cash dividend paid in December 2012.


Store growth


The company has opened all 32 of their fiscal 2013 new stores at this time and expects to close five additional stores in the fourth quarter for a total of seven store closings for fiscal 2013. Store openings and closings by quarter are as follows:







































New Stores Store Closings
1st quarter 2013 13 0
2nd quarter 2013 8 2
3rd quarter 2013 8 0
4th quarter 2013 3 5
Fiscal year 2013 32 7


The eight new stores opened during the third quarter include locations in:


























































City Market Total Stores in the Market
Fajardo, PR Puerto Rico 6
Flint, MI Flint 2
Fort Worth, TX Dallas 8
Grand Island, NE Lincoln 1
Guaynabo, PR Puerto Rico 6
Helena, MT Helena 1
Minot, ND Minot/Bismarck 2
Salisbury, NC Charlotte 7

 




 




































































































































































































































































































































































































































































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
November 2, 2013 October 27, 2012 November 2, 2013 October 27, 2012
Net sales $ 235,770 $ 244,434 $ 684,474 $ 649,254
Cost of sales (including buying,
distribution and occupancy costs) 164,759 167,999 482,339 451,951
Gross profit 71,011 76,435 202,135 197,303
Selling, general and administrative
expenses 53,196 55,875 159,516 154,074
Operating income 17,815 20,560 42,619 43,229
Interest income (3 ) (4 ) (8 )

(29


)

Interest expense 41 69 132 203
Income before income taxes 17,777 20,495 42,495 43,055
Income tax expense 6,861 8,247 16,222 16,928
Net income $ 10,916 $ 12,248 $ 26,273 $ 26,127
Net income per share:
Basic $ 0.54 $ 0.60 $ 1.30 $ 1.29
Diluted $ 0.54 $ 0.60 $ 1.29 $ 1.28