UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended |
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or |
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the transition period from to |
Commission File Number: |
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification Number) |
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(Address of principal executive offices) |
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(Zip code) |
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(Registrant’s telephone number, including area code) |
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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 |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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. ☒
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). ☒
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 |
☒ |
☐ Non-accelerated filer |
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).
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 $0.01 per share, outstanding at May 27, 2022 was
SHOE CARNIVAL, INC.
INDEX TO FORM 10-Q
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Part I |
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Item 1. |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II |
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Item 1A. |
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Item 2. |
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Item 6. |
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2
SHOE CARNIVAL, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands, except share data) |
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April 30, 2022 |
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January 29, 2022 |
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May 1, 2021 |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Marketable securities |
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Accounts receivable |
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Merchandise inventories |
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Other |
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Total Current Assets |
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Property and equipment – net |
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Operating lease right-of-use assets |
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Intangible assets |
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Goodwill |
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Deferred income taxes |
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Other noncurrent assets |
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Total Assets |
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$ |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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$ |
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Accrued and other liabilities |
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Current portion of operating lease liabilities |
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Total Current Liabilities |
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Long-term portion of operating lease liabilities |
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Deferred income taxes |
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Deferred compensation |
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Other |
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Total Liabilities |
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Shareholders’ Equity: |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Treasury stock, at cost, |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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$ |
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See notes to Condensed Consolidated Financial Statements.
3
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data) |
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Thirteen |
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Thirteen |
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Net sales |
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$ |
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$ |
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Cost of sales (including buying, distribution |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income |
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Interest income |
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( |
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Interest expense |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average shares: |
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Basic |
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Diluted |
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See notes to Condensed Consolidated Financial Statements.
4
SHOE CARNIVAL, INC.
Unaudited
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Thirteen Weeks Ended |
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Common Stock |
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Additional |
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Retained |
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Treasury |
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(In thousands, except per share data) |
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Issued |
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Treasury |
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Amount |
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Capital |
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Earnings |
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Stock |
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Total |
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Balance at January 29, 2022 |
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( |
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$ |
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$ |
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$ |
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$ |
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$ |
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Dividends declared ($ |
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( |
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( |
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Employee stock purchase plan purchases |
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Stock-based compensation awards |
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( |
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Shares surrendered by employees to pay taxes |
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( |
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( |
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Purchase of common stock for treasury |
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( |
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( |
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Stock-based compensation expense |
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Net income |
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Balance at April 30, 2022 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Balance at January 30, 2021 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Dividends declared ($ |
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( |
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( |
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Employee stock purchase plan purchases |
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Stock-based compensation awards |
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( |
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Shares surrendered by employees to pay taxes |
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( |
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( |
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( |
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Stock-based compensation expense |
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Net income |
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Balance at May 1, 2021 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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See notes to Condensed Consolidated Financial Statements.
5
SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands) |
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Thirteen |
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Thirteen |
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Cash Flows From Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash |
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Depreciation and amortization |
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Stock-based compensation |
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Loss on retirement and impairment of assets, net |
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Deferred income taxes |
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Non-cash operating lease expense |
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Other |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Merchandise inventories |
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( |
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( |
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Operating leases |
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( |
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( |
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Accounts payable and accrued liabilities |
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Other |
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Net cash provided by operating activities |
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Cash Flows From Investing Activities |
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Purchases of property and equipment |
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( |
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( |
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Investments in marketable securities and other |
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( |
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Sales of marketable securities and other |
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Net cash used in investing activities |
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( |
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( |
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Cash Flows From Financing Activities |
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Proceeds from issuance of stock |
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Dividends paid |
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( |
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( |
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Purchase of common stock for treasury |
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( |
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Shares surrendered by employees to pay taxes on stock-based compensation awards |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Net (decrease) increase in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Cash paid during period for interest |
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$ |
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$ |
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Cash paid during period for income taxes |
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$ |
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$ |
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Capital expenditures incurred but not yet paid |
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$ |
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$ |
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Dividends declared but not yet paid |
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$ |
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$ |
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See notes to Condensed Consolidated Financial Statements.
6
SHOE CARNIVAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note 1 – Basis of Presentation
Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers. We offer customers a broad assortment of dress, casual and athletic footwear and accessories for men, women and children with an emphasis on national name brands through our Shoe Carnival and Shoe Station store banners. We are an omnichannel retailer selling footwear and related products through our retail stores located in
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 fairly present 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 as permitted by 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 January 29, 2022.
On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock. The stock split entitled each shareholder of record at the close of business on July 6, 2021 to receive one additional share of common stock for each share of common stock owned as of that date and was paid on July 19, 2021. Upon the completion of the stock split, our outstanding shares increased from approximately
All share and per share amounts in this quarterly report on Form 10-Q give effect to the stock split and have been adjusted retroactively for all periods presented.
Note 2 - Acquisition of Shoe Station
On December 3, 2021, we acquired the physical stores and substantially all of the other assets and liabilities of Shoe Station, Inc. ("Shoe Station") for total consideration of $
The results of Shoe Station are included in our condensed consolidated financial statements since the acquisition date. We recorded a preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values as of December 3, 2021. There were no material adjustments to our preliminary purchase price allocation recognized during the first quarter of fiscal 2022. The final determination of the fair values and related impacts will be completed as soon as practicable, and within the measurement period of up to
7
Note 3 - Net Income Per Share
The following tables set forth the computation of basic and diluted net income per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:
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Thirteen Weeks Ended |
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April 30, 2022 |
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May 1, 2021 |
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(In thousands, except per share data) |
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Basic Net Income per Share: |
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Net |
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Shares |
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Per Share |
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Net |
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Shares |
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Per Share |
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Net income available for basic common shares |
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$ |
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$ |
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$ |
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$ |
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Diluted Net Income per Share: |
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Net income |
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$ |
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$ |
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Conversion of stock-based compensation |
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Net income available for diluted common |
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$ |
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$ |
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$ |
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$ |
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The computation of basic net income per share of common stock is based on the weighted average number of common shares outstanding during the period. The computation of diluted net income per share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of stock-based compensation arrangements involving restricted stock, restricted stock units and performance stock units. The computation of diluted net income per share for the thirteen weeks ended April 30, 2022 excluded approximately
Note 4 - Fair Value Measurements
The following table presents financial instruments that are measured at fair value on a recurring basis at April 30, 2022, January 29, 2022 and May 1, 2021:
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Fair Value Measurements |
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(In thousands) |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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As of April 30, 2022 |
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Cash equivalents - money market mutual funds |
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$ |
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$ |
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$ |
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$ |
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Marketable securities - mutual funds that fund |
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Total |
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$ |
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$ |
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$ |
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$ |
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As of January 29, 2022 |
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Cash equivalents - money market mutual funds |
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$ |
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$ |
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$ |
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$ |
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Marketable securities - mutual funds that fund |
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Total |
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$ |
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$ |
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$ |
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$ |
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As of May 1, 2021 |
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Cash equivalents - money market mutual funds |
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$ |
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$ |
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$ |
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$ |
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During fiscal 2021, we invested in publicly traded mutual funds with readily determinable fair values. These marketable securities are designed to mitigate volatility in our Condensed Consolidated Statements of Income associated with our non-qualified deferred compensation plan. As of April 30, 2022, these marketable securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan. As of April 30, 2022, the balance in our deferred compensation plan was $
The fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.
8
Long-Lived Asset Impairment Testing
We periodically evaluate our long-lived assets for impairment if events or circumstances indicate that the carrying value may not be recoverable. The carrying value of long-lived assets is considered impaired when the carrying value of the assets exceeds the expected future cash flows to be derived from their use. Assets are grouped, and the evaluation is performed, at the lowest level for which there are identifiable cash flows, which is generally at a store level. Store level asset groupings typically include property and equipment and operating lease right-of-use assets. If the estimated, undiscounted future cash flows for a store are determined to be less than the carrying value of the store’s assets, an impairment loss is recorded for the difference between estimated fair value and carrying value. Assets subject to impairment are adjusted to estimated fair value and, if applicable, an impairment loss is recorded in selling, general and administrative expenses. If the operating lease right-of-use asset is impaired, we would amortize the remaining right-of-use asset on a straight-line basis over the remaining lease term.
We estimate the fair value of our long-lived assets using store specific cash flow assumptions discounted by a rate commensurate with the risk involved with such assets while incorporating marketplace assumptions. Our estimates are derived from an income-based approach considering the cash flows expected over the remaining lease term for each location. These projections are primarily based on management’s estimates of store-level sales, exercise of future lease renewal options and the store’s contribution to cash flows and, by their nature, include judgments about how current initiatives will impact future performance. We estimate the fair value of operating lease right-of-use assets using the market value of rents applicable to the leased asset, discounted using the remaining lease term.
External factors, such as the local environment in which the store is located, including store traffic and competition, are evaluated in terms of their effect on sales trends. Changes in sales and operating income assumptions or unfavorable changes in external factors can significantly impact the estimated future cash flows. An increase or decrease in the projected cash flow can significantly impact the fair value of these assets, which may have an effect on the impairment recorded. If actual operating results or market conditions differ from those anticipated, the carrying value of certain of our assets may prove unrecoverable and we may incur additional impairment charges in the future.
During the thirteen weeks ended May 1, 2021, we recorded impairment charges of $
Note 5 - Stock-Based Compensation
Stock-based compensation includes share-settled awards issued pursuant to our 2017 Plan in the form of restricted stock units, performance stock units, and restricted and other stock awards. Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our Employee Stock Purchase Plan and for cash-settled stock appreciation rights.
(In thousands) |
|
Thirteen |
|
|
Thirteen |
|
||
Share-settled equity awards |
|
$ |
|
|
$ |
|
||
Stock appreciation rights |
|
|
( |
) |
|
|
|
|
Employee stock purchase plan |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
Income tax effect at statutory rates |
|
$ |
( |
) |
|
$ |
( |
) |
Additional income tax benefit on vesting of share-settled awards |
|
$ |
( |
) |
|
$ |