26 Mar Shoe Carnival’s Q4 Earnings Top Expectations
Shoe Carnival Inc. reported net earnings more than doubled in the fourth quarter as same-store sales grew 3.2 percent.
Fourth Quarter and Fiscal Year 2019 Highlights
- Net sales of $239.9 million for the quarter and record sales of $1.037 billion for the fiscal year;
- Net income of $3.5 million for the quarter and record net income of $42.9 million for the fiscal year;
- Record earnings per diluted share of $2.92 for the fiscal year;
- Comparable store sales increased 3.2 percent for the quarter and 1.9 percent for the fiscal year;
- Cash and cash equivalents of $61.9 million with no outstanding debt as of February 1, 2020; and
- Repurchased 1.1 million shares of common stock at a total cost of $37.8 million under the company’s share repurchase program during the fiscal year and paid $5.7 million in quarterly cash dividends during the fiscal year.
“2019 was another record year for Shoe Carnival as we exceeded our sales and earnings expectations while extending our leadership position in the family footwear segment. In addition, we delivered the eleventh consecutive year of comparable same-store sales growth driven in large part by strong performance in non-athletic footwear and accessories,” commented Cliff Sifford, Shoe Carnival’s vice chairman and chief executive officer.
“Last week, we made the difficult decision to close our stores until April 2, 2020. As the COVID-19 pandemic upends our daily lives, the health and safety of our employees, our customers and our communities are our primary concerns. For now, we continue to serve our loyal customers through our website, shoecarnival.com, and our mobile app,” continued Sifford. “From a corporate standpoint, our strong balance sheet and prudent expense management provide us the financial flexibility to keep our steady footing during this challenging economic time. In addition, our long-standing vendor relationships and proven history of good inventory management enable us to remain agile. These are both critical attributes in a dynamic environment. As we look forward, we believe our customer-centric culture and strategic investments to enhance our customers’ experience, leverage technology and ultimately drive overall traffic, will position Shoe Carnival for long-term growth and value creation for our shareholders.”
Fourth Quarter Financial Results
The company reported net sales of $239.9 million for the fourth quarter of fiscal 2019, a 2.2 percent increase compared to net sales of $234.7 million for the fourth quarter of fiscal 2018. Comparable store sales increased 3.2 percent for the fourth quarter of fiscal 2019.
Gross profit margin for the fourth quarter of fiscal 2019 increased to 29.1 percent compared to 28.4 percent in the fourth quarter of fiscal 2018. Merchandise margins increased 0.7 percent and buying, distribution and occupancy expenses remained flat as a percentage of net sales compared to the fourth quarter of fiscal 2018.
Selling, general and administrative expenses for the fourth quarter decreased slightly to $65.1 million compared to the fourth quarter of fiscal 2018. As a percentage of net sales, these expenses decreased to 27.1 percent compared to 27.8 percent in the fourth quarter of fiscal 2018.
Net income for the fourth quarter of fiscal 2019 was $3.5 million, or $0.24 per diluted share. For the fourth quarter of fiscal 2018, the company reported net income of $1.4 million, or $0.09 per diluted share.
Fiscal Year 2019 Financial Results
Net sales during fiscal 2019 increased $6.9 million to a record $1.037 billion. Comparable store sales for fiscal 2019 increased 1.9 percent. Net income for fiscal 2019 was $42.9 million, or $2.92 per diluted share, compared to net income of $38.1 million, or $2.45 per diluted share, in fiscal 2018. Included in fiscal 2019 earnings was a tax benefit in connection with the vesting of equity-based compensation of approximately $1.9 million, or $0.13 per diluted share, that was recorded in the first quarter.
Gross profit margin for fiscal 2019 was 30.1 percent compared to 30.0 percent in fiscal 2018. Selling, general and administrative expenses for fiscal 2019 decreased $1.6 million to $257.7 million. As a percentage of net sales, these expenses decreased to 24.9 percent compared to 25.2 percent in fiscal 2018. The decrease in selling, general and administrative expenses is primarily attributable to the above target incentive and equity compensation earned in fiscal 2018.
Store Openings and Closings
The company opened 1 store and closed 6 stores during fiscal 2019 compared to 3 store openings and 14 store closings in fiscal 2018.
Share Repurchase Program
For the fiscal year ended February 1, 2020, the company repurchased approximately 1.1 million shares of its common stock, at an average price of $33.81 per share, for a total cost of $37.8 million. As of February 1, 2020, the company had purchased approximately 184,000 shares at an aggregate cost of $6.9 million under the new share repurchase program and had $43.1 million available for future repurchases. The company does not anticipate repurchasing any shares in fiscal 2020 but will continue to reevaluate further share repurchases on an ongoing basis.
Fiscal 2020 Earnings Outlook
The company is not providing guidance for fiscal year 2020 due to the uncertainty caused by COVID-19.