Quarterly Sales Increase at High End of Guidance – Company Exceeds Quarterly Earnings per Share Guidance
EVANSVILLE, Ind.–Shoe Carnival, Inc., a leading retailer of value-priced footwear and accessories, today reported results for the second quarter ended July 28, 2012.
Second Quarter Highlights
• Net sales of $182.2 million, a 9.3 percent increase compared to the second quarter last year
• Growth in comparable store sales of 3.0 percent
• Earnings per diluted share of $0.14, flat with the prior year comparative period
• Company opened 11 new stores, including its first two stores in Puerto Rico. Pre-opening expenses were $1.2 million, a $795,000 increase when compared to the second quarter last year. This increase in expense equates to approximately $0.025 in diluted earnings per share.
Mark Lemond, President and CEO, commented, “We are in the midst of a strong athletic footwear cycle and customers continue to respond well to our athletic product assortment, generating sales at the high end of our guidance. Our sales increase combined with a consistent emphasis on controlling inventory helped us generate a higher than anticipated merchandise margin for the quarter. This resulted in our second quarter earnings exceeding the high end of our guidance.”
Financial Results and Payment of Quarterly Dividend
The Company reported net sales of $182.2 million for the second quarter of fiscal 2012, a 9.3 percent increase over net sales of $166.7 million in the second quarter of fiscal 2011. Comparable store sales increased 3.0 percent in the second quarter of fiscal 2012. Net earnings for the second quarter of fiscal 2012 increased 5.3 percent to $2.9 million over net earnings of $2.7 million in the second quarter of fiscal 2011. Due to a slight increase in diluted shares outstanding in fiscal 2012, earnings per diluted share were $0.14 in both quarters.
The gross profit margin for the second quarter of fiscal 2012 increased to 28.7 percent compared to 27.8 percent for the second quarter of fiscal 2011. The merchandise margin increased 0.7 percent, while buying, distribution and occupancy costs decreased 0.2 percent as a percentage of sales. Selling, general and administrative expenses for the second quarter increased $5.4 million to $47.6 million; as a percentage of sales these expenses increased to 26.1 percent compared to 25.3 percent in the second quarter of 2011. The increase in expense was primarily due to operating more stores, higher pre-opening expenses for new stores and increased incentive compensation. Total pre-opening expenses included in both cost of sales and selling, general and administrative expenses increased $795,000 in the second quarter to $1.2 million. These expenses increased primarily as a result of opening 11 new stores as compared to opening five stores in the second quarter last year.
Mr. Lemond continued, “The back-to-school season represents a key sales period for us. Comparable store sales have increased approximately 6 percent to-date in the third quarter as compared to the same period last year. With this strong start, we are optimistic about our sales and earnings prospects for the entire third quarter. The Shoe Carnival model, with its broad assortment of trend-right, value-priced footwear, continues to resonate well with today’s consumer.”
Also during the second quarter of fiscal 2012, the Board of Directors for Shoe Carnival, Inc. approved the payment of a quarterly cash dividend to shareholders. The initial quarterly cash dividend of $0.05 per share was paid on July 16, 2012, to shareholders of record as of the close of business on July 2, 2012. Future declarations of dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change.
Net sales during the first six months of fiscal 2012 increased $39.7 million to $404.8 million as compared to the same period last year. Comparable store sales increased 5.4 percent. Net earnings for the first half of fiscal 2012 were $13.9 million, or $0.68 per diluted share, compared to net earnings of $12.6 million, or $0.63 per diluted share, in the first half of last year. The gross profit margin for the first six months of fiscal 2012 was 29.9 percent compared to 29.6 percent last year. Selling, general and administrative expenses, as a percentage of sales was 24.3 percent for the first six months fiscal 2012 compared to 24.0 percent last year. The Company has opened 24 stores during the first six months of fiscal 2012 as compared to opening nine stores during the first half of last year. Total pre-opening expenses included in both cost of sales and selling, general and administrative expenses increased $1.9 million in the first half of fiscal 2012 to $2.9 million. This increase equates to a reduction of approximately $0.06 in diluted earnings per share.
Third Quarter Fiscal 2012 Earnings Outlook
The Company expects third quarter net sales to be in the range of $240 to $245 million with a comparable store sales increase in the range of 4 to 6 percent. Earnings per diluted share in the third quarter of fiscal 2012 are expected to be in the range of $0.55 to $0.60. In the third quarter of fiscal 2011, the Company earned $0.52 per diluted share. Included in this guidance is an increase in pre-opening costs of $670,000, or $0.02 per diluted share, over the third quarter of fiscal 2011.
The Company expects to open 31 new stores and close six stores in fiscal 2012. Store openings and closings by quarter are as follows:
Fiscal 2012 New Stores/Store Closings
1st quarter 13/3
2nd quarter 11/2
3rd quarter 0/0
4th quarter 7/1
Fiscal year 31/6