Shoe Carnival, Inc. reported net sales increased 18.8 percent in the second quarter to $216.4 million, benefiting from the one-week shift in the
calendar due to fiscal 2012 being a 53-week year. Comparable store sales increased 2.6 percent. Earnings jumped 104.2 percent to $5.8 million, or 29 a share, from $2.9 million, or 15 cents, a year ago.

Cliff Sifford, President and CEO, stated, “In the second quarter, our selection of women’s seasonal and children’s footwear drove our comparable store sales increase. We are pleased our sales increase, when combined with our team’s focus on managing the controllable aspects of our business, enabled us to achieve earnings towards the high-end of our guidance.”

In reporting first-quarter results in mid-May, Shoe Carnival projected Q2 revenues would land in the range of $217 to $220 million with a comparable store sales increase in the range of 3.0 to 5.0 percent. EPS was expected to be in the range of 26 to 30 cents a share.

Second Quarter Financial Results

The Company reported net sales of $216.4 million for the second quarter ended August 3, 2013, an 18.8 percent increase, as compared to net sales of $182.2 million for the second quarter ended July 28, 2012. Comparable store sales for the thirteen-week period ended August 3, 2013 increased 2.6 percent as compared to the thirteen-week period ended August 4, 2012.

As a result of fiscal 2012 consisting of 53 weeks, each of the first three quarters in fiscal 2013 are 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. The shift accounted for approximately $15.7 million of the Company’s net sales increase for the second quarter of fiscal 2013.

The gross profit margin for the second quarter of fiscal 2013 increased to 28.9 percent compared to 28.7 percent for the second quarter of fiscal 2012. The merchandise margin decreased 0.7 percent, while buying, distribution and occupancy costs decreased 0.9 percent as a percentage of sales.

Selling, general and administrative expenses for the second quarter increased $5.3 million to $53.0 million; as a percentage of sales, these expenses decreased to 24.5 percent compared to 26.1 percent in the second quarter of fiscal 2012.

Net earnings for the second quarter were $5.8 million, or 29 cents per diluted share, as compared to net earnings of $2.9 million, or 14 cents per diluted share, in the second quarter last year.

Six Month Financial Results

Net sales during the first six months of fiscal 2013 increased $43.9 million to $448.7 million as compared to the same period last year. Comparable store sales for the twenty-six week period ended August 3, 2013 increased 0.7 percent as compared to the twenty-six week period ended August 4, 2012. Net earnings for the first six months of fiscal 2013 were $15.4 million, or $0.76 per diluted share, compared to net earnings of $13.9 million, or $0.68 per diluted share, in the first six months of last year.

The gross profit margin for the first six months of fiscal 2013 was 29.2 percent compared to 29.9 percent last year.

Selling, general and administrative expenses, as a percentage of sales,  were 23.7 percent for the first six months of fiscal 2013 compared to 24.3 percent last year. The Company opened 21 stores during the first six months of fiscal 2013 as compared to opening 24 stores during the first six months of last year.

Sifford concluded, “The overall consumer discretionary spending environment remains challenging and we believe it is prudent to have a conservative outlook on our business for the third quarter. With the back-to-school selling period winding down, we expect a comparable store sales increase of approximately 1.0 percent for the fiscal month of August. This is on top of a high single-digit comparable store sales increase during the fiscal month of August last year. We remain confident that our broad selection and value proposition will continue to make Shoe Carnival a destination store for family footwear as our customers transition to fall and winter product.”

Third Quarter Fiscal 2013 Earnings Outlook

The Company expects third quarter net sales to be in the range of $236 to $240 million with a comparable store sales increase in the range of 1.0 to 2.5 percent. Earnings per diluted share in the third quarter of fiscal 2013 are expected to be in the range of $0.51 to $0.55.

In the third quarter of fiscal 2012, total net sales were $244 million, comparable store sales increased 6.2 percent and the Company earned $0.60 per diluted share. The lower sales and diluted earnings per share projected for the third quarter this year are a result of the calendar shift, which moved an important week of back-to-school from the third quarter of fiscal 2012 into the second quarter this year.

Store Growth



The Company expects to open 32 new stores and close five stores in
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


3

Fiscal year 2013


32


5





 



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


City

 

Market

 

Total Stores in the Market

Burbank, IL


Chicago


22

Cincinnati, OH


Cincinnati


6

Dubuque, IA


Cedar Rapids


3

Lawrenceville, GA


Atlanta


12

Maplewood, MO


St. Louis


13

Mesa, AZ


Phoenix


4

New Bern, NC


Greenville


6

Okemos, MI


Lansing


2

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(In thousands, except per share)



 

 



 



 



 





Thirteen



Thirteen



Twenty-six



Twenty-six




Weeks Ended



Weeks Ended



Weeks Ended



Weeks Ended




August 3, 2013



July 28, 2012



August 3, 2013



July 28, 2012

















 

Net sales



$

216,417



$

182,207



$

448,704



$

404,820


Cost of sales (including buying, distribution and occupancy costs)




 

153,906



 

129,878



 

317,580



 

283,952

















 

Gross profit




62,511




52,329




131,124




120,868

















 


Selling, general and administrative expenses




 

52,953



 

47,637



 

106,320



 

98,199

















 

Operating income




9,558




4,692




24,804




22,669

Interest income




(3

)



(9

)



(5

)



(25

)

Interest expense



 

41



 

66



 

91



 

134

















 

Income before income taxes




9,520




4,635




24,718




22,560

Income tax expense



 

3,682



 

1,776



 

9,361



 

8,681

















 

Net income



$

5,838



$

2,859



$

15,357



$

13,879

















 

Net income per share:

















Basic



$

0.29



$

0.14