Shoe Carnival reported sales for the fourth quarter increased 1.1 percent to $181.9 million from $179.9 million a year ago. Comparable store sales decreased 3.0 percent. Net earnings slid 25.0 percent to $3.3 million, or 24 cents per share, from $4.4 million, or 33 cents, a year ago.

The gross profit margin for the fourth quarter of fiscal 2011 decreased to 28.3 percent from 30.0 percent in the fourth quarter of fiscal 2010. The merchandise margin decreased 1.5 percent, while buying, distribution and occupancy costs increased 0.2 percent, as a percentage of sales.

Selling, general and administrative expenses for the fourth quarter decreased $463,000 to $46.6 million. As a percentage of sales, these expenses decreased 0.6 percent as compared to the fourth quarter of fiscal 2010.

Speaking on the results, Mark Lemond, president and chief executive officer, said, “Our fourth quarter sales results were in line with our revised guidance of $181 to $182 million issued early in January. However, we exceeded the high end of our earnings guidance of $0.23 per share by $0.01. Consumer demand for fall footwear, particularly boots, declined significantly as a result of the unseasonably warm weather. Consequently, heavy promotional activity was required during the fourth quarter to effectively sell through this inventory, thus reducing our sales and merchandise margin. The decline in comparable store sales of three percent and the 150 basis point decline in the merchandise margin were attributed to the sales and margin decline in the boot category.”

Fiscal 2011 Results

Net sales increased 3.2 percent to $762.5 million for fiscal 2011, compared to net sales of $739.2 million for fiscal 2010. Comparable store sales increased 0.7 percent in fiscal 2011. Net earnings for fiscal 2011 were $26.4 million, or $1.97 per diluted share, compared to net earnings of $26.8 million, or $2.05 per diluted share in the prior year. The gross profit margin for fiscal 2011 decreased to 29.5 percent from 30.0 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 24.0 percent for fiscal 2011, as compared to 24.3 percent for the prior year.

Lemond continued, “We experienced significant fluctuations in consumer demand during 2011, as compared to 2010 when strong fashion trends aided us in setting record-breaking sales and earnings results. While toning footwear and boots were key drivers of our sales for 2010, sales of this footwear declined substantially in 2011. Toning footwear experienced a yearlong decline in popularity while the sale of fall product never materialized with the same strength as last year. However, I am very pleased with our ability to manage our inventories and control our costs despite the challenges presented by these changes in consumer demand. We achieved $1.97 in earnings per diluted share for 2011, which is second only to the record $2.05 in earnings per diluted share achieved last year.”

Lemond concluded, “We are excited about our growth opportunities as we move into 2012, despite certain continued economic headwinds. We expect to open approximately 30 new stores with over one-third of these stores located in two new major markets – the Dallas/Fort Worth Metroplex and Puerto Rico. These new major markets, coupled with our new e-commerce site launched in the third quarter of 2011, offer Shoe Carnival an opportunity to realize significant additional exposure for our brand.”

First Quarter Fiscal 2012 EPS Outlook

Earnings per diluted share in the first quarter of fiscal 2012 are expected to be in the range of 75 cents to 78 cents. This increase assumes net sales in the range of $219 to $222 million with a comparable store sales increase of 5.5 to 7.0 percent. In the first quarter of fiscal 2011, comparable store sales increased 3.4 percent and earnings per diluted share were 75 cents a share. Included in the company’s first quarter of 2012 earnings guidance is an increase in pre-opening costs, including pre-opening rent expense, of $1.3 million, or 6 cents per diluted share. This is due to the acceleration of store openings in the first quarter of fiscal 2012 (13 store openings compared to four in the first quarter of last year).

Store Growth

During fiscal 2011, the company opened 17 new stores and closed four stores to end the year at 327 stores. One store was opened in the fourth quarter and one was closed. Total retail selling space increased to 3.6 million square feet from 3.4 million square feet at the end of fiscal 2010.

Store openings and closings by quarter and for the fiscal year are as follows:
 




 

New Stores

 

Store Closings

1st Quarter 2011


4


0

2nd Quarter 2011


5


2

3rd Quarter 2011


7


1

4th Quarter 2011


1


1

Fiscal 2011


17


4

 


In fiscal 2012, the company expects to open approximately 30 new stores, relocate ten stores and close five stores. The company has completed the store openings and closings for the first quarter of fiscal 2012 with the opening of 13 new stores, relocating two stores and closing three. This includes the grand opening of six stores in the Dallas/Fort Worth market and one store in El Paso, Texas on March 16, 2012. In the first quarter of last year, four stores were opened, five stores were relocated and none were closed.

SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share)

 


 

Thirteen

 

Thirteen

 

Fifty-two

 

Fifty-two



Weeks Ended


Weeks Ended


Weeks Ended


Weeks Ended



January 28,


January 29,


January 28,


January 29,



2012


2011


2012


2011









 

Net sales


$

181,940



$

179,895



$

762,534



$

739,189


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


 

130,375

 


 

125,885

 


 

537,681

 


 

517,650

 









 

Gross profit



51,565




54,010




224,853




221,539













 

Selling, general and administrative expenses


 

46,556

 


 

47,019

 


 

182,716

 


 

179,154

 









 

Operating income



5,009




6,991




42,137




42,385


Interest income



(13

)



(86

)



(79

)



(165

)

Interest expense


 

66

 


 

62

 


 

266

 


 

258

 









 

Income before income taxes



4,956




7,015




41,950




42,292


Income tax expense


 

1,681

 


 

2,655

 


 

15,568

 


 

15,471

 









 

Net income


$

3,275

 


$

4,360

 


$

26,382

 


$

26,821

 









 

About The Author

Thomas J. Ryan

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

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