10-Q 1 scvl-10q_20190803.htm 10-Q scvl-10q_20190803.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended August 3, 2019

or

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from                                     to                                      

 

Commission File Number:

0-21360

 

 

Shoe Carnival, Inc.

(Exact name of registrant as specified in its charter)

 

Indiana

 

35-1736614

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification Number)

 

 

 

7500 East Columbia Street

Evansville, IN

 

47715

(Address of principal executive offices)

 

(Zip code)

 

(812) 867-6471

(Registrant’s telephone number, including area code)

 

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

SCVL

 

The Nasdaq Stock Market, LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No

 

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Number of Shares of Common Stock, par value $0.01 per share, outstanding at September 4, 2019 was 14,671,840.

 

 


SHOE CARNIVAL, INC.

INDEX TO FORM 10-Q

 

 

 

 

Page

Part I

Financial Information

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

Condensed Consolidated Statements of Income

4

 

 

Condensed Consolidated Statements of Shareholders’ Equity

5

 

 

Condensed Consolidated Statements of Cash Flows

6

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

 

 

 

 

 

Item 4.

Controls and Procedures

22

 

 

 

Part II

Other Information

 

 

 

 

 

 

Item 1A.

Risk Factors

23

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

 

 

 

 

 

Item 6.

Exhibits

23

 

 

 

 

Signature

24

2


SHOE CARNIVAL, INC.
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

 

(In thousands, except share data)

 

August 3, 2019

 

 

February 2, 2019

 

 

August 4, 2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

37,458

 

 

$

67,021

 

 

$

38,405

 

Accounts receivable

 

 

2,414

 

 

 

1,219

 

 

 

3,918

 

Merchandise inventories

 

 

336,919

 

 

 

257,539

 

 

 

336,907

 

Other

 

 

10,887

 

 

 

11,534

 

 

 

12,094

 

Total Current Assets

 

 

387,678

 

 

 

337,313

 

 

 

391,324

 

Property and equipment – net

 

 

70,855

 

 

 

70,605

 

 

 

77,254

 

Deferred income taxes

 

 

7,020

 

 

 

9,622

 

 

 

8,384

 

Other noncurrent assets

 

 

4,284

 

 

 

459

 

 

 

343

 

Operating lease right-of-use assets

 

 

223,536

 

 

0

 

 

 

0

 

Total Assets

 

$

693,373

 

 

$

417,999

 

 

$

477,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

108,410

 

 

$

48,715

 

 

$

90,928

 

Accrued and other liabilities

 

 

20,179

 

 

 

22,069

 

 

 

25,659

 

Current portion of operating lease liabilities

 

 

46,783

 

 

 

0

 

 

 

0

 

Total Current Liabilities

 

 

175,372

 

 

 

70,784

 

 

 

116,587

 

Long-term portion of operating lease liabilities

 

 

199,592

 

 

 

0

 

 

 

0

 

Deferred lease incentives

 

 

0

 

 

 

22,171

 

 

 

25,006

 

Accrued rent

 

 

0

 

 

 

8,436

 

 

 

9,124

 

Deferred compensation

 

 

13,751

 

 

 

12,108

 

 

 

12,074

 

Other

 

 

1,098

 

 

 

67

 

 

 

750

 

Total Liabilities

 

 

389,813

 

 

 

113,566

 

 

 

163,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.01 par value, 50,000,000 shares authorized,

   20,527,905 shares, 20,529,227 shares and 20,529,227 shares issued,

   respectively

 

 

205

 

 

 

205

 

 

 

205

 

Additional paid-in capital

 

 

77,374

 

 

 

75,631

 

 

 

68,892

 

Retained earnings

 

 

381,012

 

 

 

360,443

 

 

 

349,549

 

Treasury stock, at cost, 5,821,887 shares, 5,154,243

   shares and 4,440,129 shares, respectively

 

 

(155,031

)

 

 

(131,846

)

 

 

(104,882

)

Total Shareholders’ Equity

 

 

303,560

 

 

 

304,433

 

 

 

313,764

 

Total Liabilities and Shareholders’ Equity

 

$

693,373

 

 

$

417,999

 

 

$

477,305

 

 

See notes to Condensed Consolidated Financial Statements.

3


SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

 

(In thousands, except per share data)

 

Thirteen

Weeks Ended

August 3, 2019

 

 

Thirteen

Weeks Ended

August 4, 2018

 

 

Twenty-six

Weeks Ended

August 3, 2019

 

 

Twenty-six

Weeks Ended

August 4, 2018

 

Net sales

 

$

268,221

 

 

$

268,366

 

 

$

522,031

 

 

$

525,811

 

Cost of sales (including buying, distribution

   and occupancy costs)

 

 

186,126

 

 

 

184,585

 

 

 

364,796

 

 

 

364,703

 

Gross profit

 

 

82,095

 

 

 

83,781

 

 

 

157,235

 

 

 

161,108

 

Selling, general and administrative expenses

 

 

66,421

 

 

 

68,850

 

 

 

125,953

 

 

 

128,861

 

Operating income

 

 

15,674

 

 

 

14,931

 

 

 

31,282

 

 

 

32,247

 

Interest income

 

 

(86

)

 

 

(117

)

 

 

(417

)

 

 

(119

)

Interest expense

 

 

85

 

 

 

36

 

 

 

121

 

 

 

76

 

Income before income taxes

 

 

15,675

 

 

 

15,012

 

 

 

31,578

 

 

 

32,290

 

Income tax expense

 

 

3,843

 

 

 

3,237

 

 

 

5,873

 

 

 

7,560

 

Net income

 

$

11,832

 

 

$

11,775

 

 

$

25,705

 

 

$

24,730

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.81

 

 

$

0.77

 

 

$

1.76

 

 

$

1.60

 

Diluted

 

$

0.80

 

 

$

0.76

 

 

$

1.71

 

 

$

1.59

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,615

 

 

 

15,249

 

 

 

14,614

 

 

 

15,387

 

Diluted

 

 

14,736

 

 

 

15,367

 

 

 

14,964

 

 

 

15,446

 

Cash dividends declared per share

 

$

0.085

 

 

$

0.080

 

 

$

0.165

 

 

$

0.155

 

 

See notes to Condensed Consolidated Financial Statements.

4


SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Unaudited

 

 

 

Thirteen Weeks Ended

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

(In thousands)

 

Issued

 

 

Treasury

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance at May 4, 2019

 

 

20,528

 

 

 

(5,837

)

 

$

205

 

 

$

76,282

 

 

$

370,453

 

 

$

(155,437

)

 

$

291,503

 

Dividends declared ($0.085 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,273

)

 

 

 

 

 

 

(1,273

)

Employee stock purchase plan purchases

 

 

 

 

 

 

2

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

46

 

 

 

41

 

Restricted stock awards

 

 

 

 

 

 

13

 

 

 

 

 

 

 

(360

)

 

 

 

 

 

 

360

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,457

 

 

 

 

 

 

 

 

 

 

 

1,457

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,832

 

 

 

 

 

 

 

11,832

 

Balance at August 3, 2019

 

 

20,528

 

 

 

(5,822

)

 

$

205

 

 

$

77,374

 

 

$

381,012

 

 

$

(155,031

)

 

$

303,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 5, 2018

 

 

20,529

 

 

 

(4,453

)

 

$

205

 

 

$

67,410

 

 

$

339,073

 

 

$

(105,178

)

 

$

301,510

 

Dividends declared ($0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,302

)

 

 

 

 

 

 

(1,302

)

Employee stock purchase plan purchases

 

 

 

 

 

 

2

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

36

 

 

 

42

 

Restricted stock awards

 

 

 

 

 

 

11

 

 

 

 

 

 

 

(260

)

 

 

 

 

 

 

260

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,736

 

 

 

 

 

 

 

 

 

 

 

1,736

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

3

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,775

 

 

 

 

 

 

 

11,775

 

Balance at August 4, 2018

 

 

20,529

 

 

 

(4,440

)

 

$

205

 

 

$

68,892

 

 

$

349,549

 

 

$

(104,882

)

 

$

313,764

 

 

 

 

Twenty-Six Weeks Ended

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

(In thousands)

 

Issued

 

 

Treasury

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance at February 2, 2019

 

 

20,529

 

 

 

(5,154

)

 

$

205

 

 

$

75,631

 

 

$

360,443

 

 

$

(131,846

)

 

$

304,433

 

Adoption of Accounting Standards Codification

   842 (see Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,649

)

 

 

 

 

 

 

(2,649

)

Dividends declared ($0.165 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,487

)

 

 

 

 

 

 

(2,487

)

Employee stock purchase plan purchases

 

 

 

 

 

 

4

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

103

 

 

 

104

 

Restricted stock awards

 

 

(1

)

 

 

60

 

 

 

 

 

 

 

(1,664

)

 

 

 

 

 

 

1,664

 

 

 

0

 

Shares surrendered by employees to pay taxes

   on restricted stock

 

 

 

 

 

 

(321

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,940

)

 

 

(10,940

)

Purchase of common stock for treasury

 

 

 

 

 

 

(411

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,012

)

 

 

(14,012

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,406

 

 

 

 

 

 

 

 

 

 

 

3,406

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,705

 

 

 

 

 

 

 

25,705

 

Balance at August 3, 2019

 

 

20,528

 

 

 

(5,822

)

 

$

205

 

 

$

77,374

 

 

$

381,012

 

 

$

(155,031

)

 

$

303,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at February 3, 2018

 

 

20,529

 

 

 

(3,582

)

 

$

205

 

 

$

65,458

 

 

$

326,738

 

 

$

(85,099

)

 

$

307,302

 

Adoption of Accounting Standards

   Codification 606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

623

 

 

 

 

 

 

 

623

 

Dividends declared ($0.155 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,542

)

 

 

 

 

 

 

(2,542

)

Employee stock purchase plan purchases

 

 

 

 

 

 

5

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

112

 

 

 

107

 

Restricted stock awards

 

 

 

 

 

 

(41

)

 

 

 

 

 

 

577

 

 

 

 

 

 

 

(577

)

 

 

0

 

Shares surrendered by employees to pay taxes

   on restricted stock

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(275

)

 

 

(275

)

Purchase of common stock for treasury

 

 

 

 

 

 

(811

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,043

)

 

 

(19,043

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,862

 

 

 

 

 

 

 

 

 

 

 

2,862

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,730

 

 

 

 

 

 

 

24,730

 

Balance at August 4, 2018

 

 

20,529

 

 

 

(4,440

)

 

$

205

 

 

$

68,892

 

 

$

349,549

 

 

$

(104,882

)

 

$

313,764

 

 

See notes to Condensed Consolidated Financial Statements.

5


SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

 

(In thousands)

 

Twenty-six

Weeks Ended

August 3, 2019

 

 

Twenty-six

Weeks Ended

August 4, 2018

 

Cash Flows From Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

25,705

 

 

$

24,730

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,395

 

 

 

11,219

 

Stock-based compensation

 

 

3,440

 

 

 

3,403

 

Loss/(gain) on retirement and impairment of assets

 

 

205

 

 

 

(227

)

Deferred income taxes

 

 

2,602

 

 

 

(202

)

Non-cash operating lease expense

 

 

20,352

 

 

 

0

 

Lease incentives

 

 

0

 

 

 

170

 

Other

 

 

1,643

 

 

 

(4,577

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,194

)

 

 

2,587

 

Merchandise inventories

 

 

(79,380

)

 

 

(76,407

)

Operating lease liabilities

 

 

(23,346

)

 

 

0

 

Accounts payable and accrued liabilities

 

 

59,565

 

 

 

58,562

 

Other

 

 

(7,970

)

 

 

(5,125

)

Net cash provided by operating activities

 

 

10,017

 

 

 

14,133

 

Cash Flows From Investing Activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(11,490

)

 

 

(2,661

)

Proceeds from sales of property and equipment

 

 

8

 

 

 

0

 

Other

 

 

0

 

 

 

283

 

Net cash used in investing activities

 

 

(11,482

)

 

 

(2,378

)

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

Borrowings under line of credit

 

 

20,000

 

 

 

0

 

Payments on line of credit

 

 

(20,000

)

 

 

0

 

Proceeds from issuance of stock

 

 

104

 

 

 

107

 

Dividends paid

 

 

(3,250

)

 

 

(2,393

)

Purchase of common stock for treasury

 

 

(14,012

)

 

 

(19,043

)

Shares surrendered by employees to pay taxes on restricted stock

 

 

(10,940

)

 

 

(275

)

Net cash used in financing activities

 

 

(28,098

)

 

 

(21,604

)

Net decrease in cash and cash equivalents

 

 

(29,563

)

 

 

(9,849

)

Cash and cash equivalents at beginning of period

 

 

67,021

 

 

 

48,254

 

Cash and cash equivalents at end of period

 

$

37,458

 

 

$

38,405

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during period for interest

 

$

121

 

 

$

76

 

Cash paid during period for income taxes

 

$

4,915

 

 

$

7,367

 

Capital expenditures incurred but not yet paid

 

$

990

 

 

$

152

 

 

See notes to Condensed Consolidated Financial Statements.

6


SHOE CARNIVAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1 - Basis of Presentation

In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements and notes have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and contain all normal recurring adjustments necessary to present fairly our financial position and the results of our operations and our cash flows for the periods presented. Certain information and disclosures normally included in the notes to Condensed Consolidated Financial Statements have been condensed or omitted according to the rules and regulations of the SEC, although we believe that the disclosures are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

Note 2 - Net Income Per Share

The following tables set forth the computation of basic and diluted earnings per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

 

 

 

Thirteen Weeks Ended

 

 

 

August 3, 2019

 

 

August 4, 2018

 

 

 

 

 

 

 

(In thousands, except per share data)

 

 

 

 

 

Basic Earnings per Share:

 

Net

Income

 

 

Shares

 

 

Per Share

Amount

 

 

Net

Income

 

 

Shares

 

 

Per Share

Amount

 

Net income

 

$

11,832

 

 

 

 

 

 

 

 

 

 

$

11,775

 

 

 

 

 

 

 

 

 

Amount allocated to participating securities

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

(44

)

 

 

 

 

 

 

 

 

Net income available for basic common shares and

   basic earnings per share

 

$

11,821

 

 

 

14,615

 

 

$

0.81

 

 

$

11,731

 

 

 

15,249

 

 

$

0.77

 

Diluted Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11,832

 

 

 

 

 

 

 

 

 

 

$

11,775

 

 

 

 

 

 

 

 

 

Amount allocated to participating securities

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

(44

)

 

 

 

 

 

 

 

 

Adjustment for dilutive potential common shares

 

 

0

 

 

 

121

 

 

 

 

 

 

 

0

 

 

 

118

 

 

 

 

 

Net income available for diluted common shares and

   diluted earnings per share

 

$

11,821

 

 

 

14,736

 

 

$