Shoe Carnival’s Earnings Climb 21%

Shoe Carnival reported sales for the third quarter of 2010 increased 6.7% to $204.4 million from $191.5 million a year ago. Comps grew 7.2%.
Net earnings for the third quarter increased 21% to $9.1 million, or 70 cents a share, compared to $7.5 million, or 59 cents, a year earlier.

The gross profit margin for the third quarter increased 0.3% to 30.1% compared to 29.8% for the third quarter of the prior year. The merchandise margin decreased 0.2%. The company's buying, distribution and occupancy costs decreased 0.5%, as a percentage of sales, due to the leverage associated with comparable store sales increases.

Selling, general and administrative expenses for the third quarter increased $2.2 million to $47.1 million; however, as a percentage of sales, these expenses decreased to 23.0% compared to 23.4% in the third quarter of 2009.

Speaking on the results, Mark Lemond, president and chief executive officer, said, “Fiscal 2010 is proving to be a remarkable year for Shoe Carnival. We reported significant sales and earnings gains in the first two quarters and we were able to continue to capitalize on this positive momentum to achieve record third quarter earnings. The Shoe Carnival team worked together to improve our key financial metrics and produced results above our expectations, even though we were up against a record 10.2% comparable store sales increase in the third quarter of the prior year.”

Net sales during the first nine months of 2010 increased $47.7 million to $559.3 million as compared to the same period last year. This sales increase was driven primarily by a comparable store sales increase of 9.4%. Net earnings for the first nine months of 2010 were $22.5 million, or $1.73 per diluted share, compared with net earnings of $12.6 million, or $1.00 per diluted share, in the first nine months of last year. The gross profit margin for the first nine months of 2010 was 29.9% compared to 28.3% last year. Selling, general and administrative expenses, as a percentage of sales, were 23.6% for the first nine months of 2010 as compared to 24.3% in the first nine months of 2009.

Lemond concluded, “We remain positive in regards to the opportunities for the fourth quarter, particularly with respect to our fashion boots. As a result, we are increasing our fiscal 2010 sales and earnings guidance. Our management team continues to focus on managing the controllable aspects of our business and we are confident in our ability to deliver sustainable increases in profitability and cash flow.”

Fourth Quarter and Fiscal 2010 Earnings Outlook

The company expects fourth quarter net sales to be in the range of $178 to $182 million and comparable store sales to increase in the range of 4 to 6%. Earnings per diluted share in the fourth quarter of 2010 are expected to be in the range of 30 cents to 32 cents. Earnings per diluted share in the fourth quarter of fiscal 2009 were $0.20.

For fiscal 2010, the company expects net sales to be in the range of $737 to $741 million and comparable store sales to increase in the range of 8.1 to 8.6%. Earnings per diluted share for fiscal 2010 are expected to be in the range of $2.03 to $2.05 compared to previous expectations for earnings per diluted share in the range of $1.89 to $1.95. Earnings per diluted share for fiscal 2009 were $1.20.

Store Growth

The Company opened ten new stores and expects to close seven stores in fiscal 2010. Four new stores were opened during the third quarter of fiscal 2010 and one store was closed.

The four stores opened during the third quarter included locations in: