01 Dec Shoe Carnival’s Q3 Profits Improve
Shoe Carnival Inc. reported earnings slid 13.2 percent in the third quarter as same-store sales expanded 6.0 percent.
Third Quarter Highlights
Net sales increased $15.0 million to $269.7 million, compared to $254.7 million in the third quarter of fiscal 2014
Comparable store sales increased 6.0 percent in the third quarter of fiscal 2015
Earnings per diluted share for the third quarter were $0.47
Per-store inventories were up 0.3 percent at the end of the quarter, compared to the third quarter last year
Repurchased 429,000 shares of common stock at a total cost of $10.2 million under the current share repurchase program
Cliff Sifford, president and CEO, stated, “We experienced strong athletic and women’s fashion boot sales throughout the third quarter which helped drive our fifth consecutive quarter of positive comparable store sales and on-plan earnings performance. We also benefited from our multi-channel sales initiatives which drove higher quarterly conversion rates, average sales per transaction and units per transaction.”
Sifford continued, “As we enter the fourth quarter, unseasonably warm weather has impacted our boot sales and overall comparable store sales, however, we are confident as more seasonal weather arrives, we will once again see positive reaction to our strong assortment of boots for the entire family.”
Third Quarter Financial Results
The company reported net sales of $269.7 million for the third quarter of fiscal 2015, a 5.9 percent increase, compared to net sales of $254.7 million for the third quarter of fiscal 2014. Comparable store sales increased 6.0 percent in the third quarter of fiscal 2015.
The gross profit margin for the third quarter of fiscal 2015 was 30.1 percent, which was unchanged compared to the third quarter of fiscal 2014. The merchandise margin decreased 0.7 percent. Buying, distribution and occupancy expenses decreased 0.7 percent as a percentage of sales.
Selling, general and administrative expenses for the third quarter of fiscal 2015 increased $7.2 million to $66.1 million. As a percentage of sales, these expenses increased to 24.5 percent compared to 23.1 percent in the third quarter of fiscal 2014. The majority of the increase in selling, general and administrative expenses was due to a $2.5 million increase in advertising in August 2015 and a $2.4 million increase in equity compensation in the third quarter of 2015 compared to the prior year. A shift in the back-to-school tax-free calendar resulted in a sales and expense shift out of the last week of the second quarter last year and into the first week of the third quarter this year. In the third quarter of fiscal 2014, certain performance-based restricted stock grants were deemed not likely to vest and a reduction of $2.3 million in equity compensation expense was recorded. This reduction in expense last year is primarily attributable to the increase in equity compensation expense in the third quarter this year.
Net earnings for the third quarter of fiscal 2015 were $9.4 million, or $0.47 per diluted share. For the third quarter of fiscal 2014, the company reported net earnings of $10.8 million, or $0.54 per diluted share.
Nine Month Financial Results
Net sales during the first nine months of fiscal 2015 increased $37.8 million to $750.3 million compared to the same period last year. Comparable store sales for the thirty-nine week period ended October 31, 2015 increased 3.3 percent. Net earnings for the first nine months of fiscal 2015 were $24.6 million, or $1.23 per diluted share, compared to net earnings of $22.6 million, or $1.12 per diluted share, in the first nine months of last year. The gross profit margin for the first nine months of fiscal 2015 was 29.6 percent compared to 29.3 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 24.3 percent for the first nine months of fiscal 2015 compared to 24.1 percent last year. The company opened 18 stores and closed 14 stores during the first nine months of fiscal 2015 compared to opening 30 stores and closing two stores during the first nine months of fiscal 2014.
Share Repurchase Program
In the third quarter of fiscal 2015, the company repurchased approximately 429,000 shares of its common stock at an average price of $23.71 per share for a total cost of $10.2 million. As of October 31, 2015, the company had $14.8 million available for future stock repurchases under its $25 million stock repurchase authorization.
Fiscal 2015 Earnings Outlook
The company expects fiscal 2015 net sales to be in the range of $980 million to $987 million, with a comparable store sales increase of approximately 3.0 percent. Earnings per diluted share for the fiscal year are expected to be in the range of $1.38 to $1.43. This represents an increase of 9 percent to 13 percent over fiscal 2014 earnings per diluted share of $1.27.
Store Growth
The company expects to open 20 new stores and close 15 stores in fiscal 2015. Store openings and closings by quarter for the fiscal year are as follows:
