Shoe Carnival Reports Fourth Quarter and Full Year 2013 Results

Shoe Carnival Reports Fourth Quarter and Full Year 2013 Results

Shoe Carnival, Inc. (Nasdaq: SCVL), a leading retailer of value-priced footwear and accessories, today reported results for the fourth quarter and fiscal year ended February 1, 2014.

The fourth quarter of fiscal 2013 included 13 weeks compared to 14 weeks in the fourth quarter of fiscal 2012 and fiscal year 2013 included 52 weeks compared to 53 weeks in fiscal year 2012.

Fourth Quarter Financial Results

The Company reported net sales of $200.3 million for the 13-week fourth quarter ended February 1, 2014, as compared to net sales of $205.7 million for the 14-week fourth quarter ended February 2, 2013. The net effect of this extra week on the sales comparison for the fourth quarter was approximately $12.7 million. Comparable store sales for the 13-week period ended February 1, 2014 decreased 2.5 percent as compared to the 13-week period ended February 2, 2013.

The gross profit margin for the fourth quarter of fiscal 2013 decreased to 28.5 percent compared to 29.3 percent for the fourth quarter of fiscal 2012. The merchandise margin decreased 0.2 percent while buying, distribution and occupancy expenses increased 0.6 percent as a percentage of sales.

Selling, general and administrative expenses for the fourth quarter increased $1.2 million to $56.1 million. As a percentage of sales, these expenses increased to 28.0 percent compared to 26.7 percent in the fourth quarter of fiscal 2012 primarily due to the deleveraging effect of the decline in comparable store sales.

The Company opened three new stores during the fourth quarter of fiscal 2013 as compared to one store in the fourth quarter of fiscal 2012.

Net earnings for the 13-week fourth quarter ended February 1, 2014 were $0.6 million, or $0.03 per diluted share. For the 14-week fourth quarter ended February 2, 2013, the Company reported net earnings of $3.2 million, or $0.13 per diluted share.

Fiscal Year 2013 Financial Results

Net sales increased 3.5 percent to $884.8 million for fiscal 2013, as compared to net sales of $855.0 million for fiscal 2012. Comparable store sales for the 52-week period ended February 1, 2014 were flat compared to the 52-week period ended February 2, 2013. Net earnings for fiscal 2013 were $26.9 million, or $1.32 per diluted share, compared to net earnings of $29.3 million, or $1.43 per diluted share, in the last fiscal year. The gross profit margin for fiscal 2013 was 29.3 percent compared to 30.1 percent last year. Selling, general and administrative expenses, as a percentage of sales, for fiscal 2013 were unchanged as compared to fiscal 2012. The Company opened 32 stores during fiscal 2013 as compared to 31 stores last year.

Speaking on the results, Cliff Sifford, President and CEO, said, “Unfavorable weather in the fourth quarter negatively impacted our customer traffic, and consequently, our sales and earnings results. In particular, robust traffic and sales in November were followed by significant declines in traffic and sales in December and January. Despite this tough sales environment, we ended fiscal 2013 with inventories in excellent shape and believe we are well positioned with the right assortment of family footwear at the right price to capitalize on the Easter selling season.”

Store Growth

During fiscal 2013, the Company opened 32 new stores and seven were closed to end the year at 376 stores. Three stores were opened and five were closed in the fourth quarter of fiscal 2013. Total retail selling space increased to 4.1 million square feet at the end of fiscal 2013 from 3.8 million square feet at the end of fiscal 2012.

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

                      New Stores  Store Closings 
                      ----------  -------------- 
1(st) quarter 2013        13            0 
2(nd) quarter 2013        8             2 
3(rd) quarter 2013        8             0 
4(th) quarter 2013        3             5 
                      ----------  -------------- 
Fiscal year 2013          32            7

The three new stores opened during the fourth quarter include locations in:

                                        Total Stores in 
City                     Market           the Market 
----------------------   ------------   --------------- 
Altamonte Springs, FL     Orlando               9 
Caguas, PR                Puerto Rico           7 
Smyrna, GA                Atlanta              12

In fiscal 2014, the Company expects to open 30 to 35 new stores, relocate three stores and close one store. For the first quarter of fiscal 2014, the Company will open seven stores, relocate two stores and close one store. In the first quarter of fiscal 2013, the Company opened 13 stores, relocated three stores and no stores were closed.

First Quarter Fiscal 2014 Earnings Outlook

The Company expects first quarter of fiscal 2014 net sales to be in the range of $232 million to $241 million, with comparable store sales in the range of flat to down 3.5 percent. Earnings per diluted share in the first quarter of fiscal 2014 are expected to be in the range of $0.45 to $0.52. In the 13-week first quarter of fiscal 2013, total net sales were $232.3 million, comparable store sales increased 4.3 percent and the Company earned $0.47 per diluted share.

Mr. Sifford concluded, “While general consumer economic uncertainty keeps our outlook conservative for the first quarter of fiscal 2014, our Shoe Carnival team remains committed to managing the controllable aspects of our business to best position us for future growth as consumer spending begins to improve. We believe the April launch of our spring creative on national cable television will increase Shoe Carnival brand awareness in new and existing markets and will help to drive customer traffic to our stores and website.”

Conference Call

Today, at 4:30 p.m. Eastern Time, the Company will host a conference call to discuss the fourth quarter and fiscal year 2013 results. Participants can listen to the live webcast of the call by visiting Shoe Carnival’s Investors webpage at While the question-and-answer session will be available to all listeners, questions from the audience will be limited to institutional analysts and investors. A replay of the webcast will be available on the Company’s website beginning approximately two hours after the conclusion of the conference call and will be archived for one year.

First Quarter Fiscal 2014 Cash Dividend

The Company announced today that its Board of Directors has approved the payment of a quarterly cash dividend. The quarterly cash dividend of $0.06 per share will be paid on April 21, 2014, to shareholders of record as of the close of business on April 7, 2014.

Future declarations of dividends are subject to approval of the Board of Directors and will depend on the Company’s results of operations, financial condition, business conditions and other factors deemed relevant by the Board of Directors.

Record Date and Date of Annual Shareholder Meeting

The Company also announced that April 11, 2014 has been set as the shareholder of record date and the Annual Meeting of Shareholders will be held on June 12, 2014.

About Shoe Carnival

Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, offering a broad assortment of value-priced dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. As of March 20, 2014, the Company operates 379 stores in 32 states and Puerto Rico, and offers online shopping at Headquartered in Evansville, IN, Shoe Carnival trades on The NASDAQ Stock Market LLC under the symbol SCVL. Shoe Carnival’s press releases and annual report are available on the Company’s website at

Cautionary Statement Regarding Forward-Looking Information

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, but are not limited to: general economic conditions in the areas of the continental United States and Puerto Rico in which our stores are located; the effects and duration of economic downturns and unemployment rates; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; our ability to generate increased sales at our stores; the potential impact of national and international security concerns on the retail environment; changes in our relationships with key suppliers; the impact of competition and pricing; our ability to successfully manage and execute our marketing initiatives and maintain positive brand perception and recognition; changes in weather patterns, consumer buying trends and our ability to identify and respond to emerging fashion trends; the impact of disruptions in our distribution or information technology operations; the effectiveness of our inventory management; the impact of hurricanes or other natural disasters on our stores, as well as on consumer confidence and purchasing in general; risks associated with the seasonality of the retail industry; the impact of unauthorized disclosure or misuse of personal and confidential information about our customers, vendors and employees; our ability to manage our third-party vendor relationships; our ability to successfully execute our growth strategy, including the availability of desirable store locations at acceptable lease terms, our ability to open new stores in a timely and profitable manner, including our entry into major new markets, and the availability of sufficient funds to implement our growth plans; higher than anticipated costs associated with the closing of

underperforming stores; our ability to successfully grow our e-commerce business; the inability of manufacturers to deliver products in a timely manner; changes in the political and economic environments in China, Brazil, Europe and East Asia, where the primary manufacturers of footwear are located; the impact of regulatory changes in the United States and the countries where our manufacturers are located; the continued favorable trade relations between the United States and China and the other countries which are the major manufacturers of footwear; the resolution of litigation or regulatory proceedings in which we are or may become involved; and our ability to meet our labor needs while controlling costs and other factors described in the Company’s SEC filings, including the Company’s latest Annual Report on Form 10-K.

In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. Forward-looking statements can be identified by, among other things, the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “pro forma,” “anticipates,” “intends” or the negative of any of these terms, or comparable terminology, or by discussions of strategy or intentions. Given these uncertainties, we caution investors not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We disclaim any obligation to update any of these factors or to publicly announce any revisions to the forward-looking statements contained in this press release to reflect future events or developments.

Financial Tables Follow


                         SHOE CARNIVAL, INC. 
                   (In thousands, except per share) 

                      Thirteen   Fourteen   Fifty-two    Fifty-three 
                        Weeks      Weeks      Weeks 
                        Ended      Ended      Ended      Weeks Ended 
                      February   February   February 
                         1,         2,         1,        February 2, 
                        2014       2013       2014           2013 
                       -------    -------    -------       -------- 

Net sales             $200,311   $205,744   $884,785    $   854,998 
Cost of sales 
 (including buying, 
 distribution and 
 occupancy costs)      143,129    145,570    625,468        597,521 
                       -------    -------    -------       -------- 

Gross profit            57,182     60,174    259,317        257,477 

Selling, general and 
 expenses               56,134     54,909    215,650        208,983 
                       -------    -------    -------       -------- 

Operating income         1,048      5,265     43,667         48,494 
Interest income             (4)        (3)       (12)           (32) 
Interest expense            41         70        173            273 
                       -------    -------    -------       -------- 

Income before income 
 taxes                   1,011      5,198     43,506         48,253 
Income tax expense         413      1,987     16,635         18,915 
                       -------    -------    -------       -------- 

Net income            $    598   $  3,211   $ 26,871    $    29,338 
                       =======    =======    =======       ======== 

Net income per 
   Basic              $   0.03   $   0.13   $   1.33    $      1.44 
                       =======    =======    =======       ======== 
   Diluted            $   0.03   $   0.13   $   1.32    $      1.43 
                       =======    =======    =======       ======== 

Weighted average 
   Basic                19,949     19,878     19,926         19,911 
                       =======    =======    =======       ======== 
   Diluted              19,949     19,878     19,947         19,972 
                       =======    =======    =======       ======== 

Cash dividends 
 declared per share   $   0.06   $   1.05   $   0.24    $      1.15 
                       =======    =======    =======       ======== 

Financial Note: 

Per share amounts for net income purposes are computed independently 
for each quarter of the fiscal year. The sum of the quarters may not 
equal the total year due to the impact of changes in weighted shares 
outstanding and differing applications of earnings under the two-class 
method. Additionally, there was a $0.03 reduction in earnings per 
diluted share in the fourth quarter of fiscal 2012 due to the 
application of the two-class method in connection with the $1.00 per 
share special cash dividend paid in December 2012. 

                           SHOE CARNIVAL, INC. 
                              (In thousands) 

                                               February 1,    February 2, 
                                                  2014           2013 
                                              -------------  ------------- 

Current Assets: 
   Cash and cash equivalents                   $     48,253   $     45,756 
      Accounts receivable                             4,337          2,152 
      Merchandise inventories                       284,801        272,282 
      Deferred income taxes                           1,208          2,914 
      Other                                           3,916          4,918 
                                                  ---------      --------- 
Total Current Assets                                342,515        328,022 
Property and equipment - net                         90,193         77,364 
Deferred income taxes                                 3,426            999 
Other noncurrent assets                                 717            811 
                                                  ---------      --------- 
Total Assets                                   $    436,851   $    407,196 
                                                  =========      ========= 

Current Liabilities: 
   Accounts payable                            $     62,671   $     65,026 
   Accrued and other liabilities                     14,988         16,995 
                                                  ---------      --------- 
Total Current Liabilities                            77,659         82,021 
Deferred lease incentives                            24,430         18,426 
Accrued rent                                          9,224          7,475 
Deferred compensation                                 8,232          6,412 
Other                                                   434            494 
                                                  ---------      --------- 
Total Liabilities                                   119,979        114,828 
Total Shareholders' Equity                          316,872        292,368 
                                                  ---------      --------- 
Total Liabilities and Shareholders' Equity     $    436,851   $    407,196 
                                                  =========      ========= 

                          SHOE CARNIVAL, INC. 
                             (In thousands) 

                                            Fifty-two      Fifty-three 
                                           Weeks Ended     Weeks Ended 
                                           February 1,     February 2, 
                                                2014           2013 
                                              --------       -------- 

Cash Flows From Operating Activities 
   Net income                              $    26,871    $    29,338 
   Adjustments to reconcile net income 
    to net cash provided by operating 
      Depreciation and amortization             17,428         15,955 
      Stock-based compensation                   3,295          4,049 
      Loss on retirement and impairment 
       of assets                                 1,180            628 
      Deferred income taxes                       (721)        (3,347) 
      Lease incentives                           8,112          7,189 
      Other                                        405           (566) 
      Changes in operating assets and 
         Accounts receivable                    (2,135)           470 
         Merchandise inventories               (12,519)       (34,627) 
         Accounts payable and accrued 
          liabilities                           (4,158)         9,269 
         Other                                     862         (2,508) 
                                              --------       -------- 
Net cash provided by operating 
 activities                                     38,620         25,850 
                                              --------       -------- 

Cash Flows From Investing Activities 
   Purchases of property and equipment         (30,966)       (25,977) 
   Proceeds from notes receivable                  200            200 
                                              --------       -------- 
Net cash used in investing activities          (30,766)       (25,777) 
                                              --------       -------- 

Cash Flows From Financing Activities 
   Proceeds from issuance of stock                 278          2,420 
   Dividends paid                               (4,867)       (23,460) 
   Excess tax benefits from stock-based 
    compensation                                   185            837 
   Purchase of common stock for treasury             0         (4,675) 
   Shares surrendered by employees to
    pay taxes on restricted stock                 (953)           (41) 
                                              --------       -------- 
Net cash used in financing activities           (5,357)       (24,919) 
                                              --------       -------- 
Net increase (decrease) in cash and cash 
 equivalents                                     2,497        (24,846) 
Cash and cash equivalents at beginning 
 of period                                      45,756         70,602 
                                              --------       -------- 
Cash and Cash Equivalents at End of 
 Period                                    $    48,253    $    45,756 
                                              ========       ========