10-Q 1 scvl-20240803.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

For the quarterly period ended August 3, 2024

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) 867-4034

(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 August 28, 2024 was 27,173,695.

 


 

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

15

 

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 5.

Other Information

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, 2024

 

 

February 3, 2024

 

 

July 29, 2023

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

71,633

 

 

$

99,000

 

 

$

34,562

 

Marketable securities

 

 

12,831

 

 

 

12,247

 

 

 

12,218

 

Accounts receivable

 

 

5,519

 

 

 

2,593

 

 

 

3,961

 

Merchandise inventories

 

 

425,462

 

 

 

346,442

 

 

 

409,342

 

Other

 

 

21,651

 

 

 

21,056

 

 

 

25,281

 

Total Current Assets

 

 

537,096

 

 

 

481,338

 

 

 

485,364

 

Property and equipment – net

 

 

170,717

 

 

 

168,613

 

 

 

159,186

 

Operating lease right-of-use assets

 

 

337,926

 

 

 

333,851

 

 

 

339,598

 

Intangible assets

 

 

40,990

 

 

 

32,600

 

 

 

32,600

 

Goodwill

 

 

15,376

 

 

 

12,023

 

 

 

12,023

 

Other noncurrent assets

 

 

12,922

 

 

 

13,600

 

 

 

14,433

 

Total Assets

 

$

1,115,027

 

 

$

1,042,025

 

 

$

1,043,204

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

73,916

 

 

$

58,274

 

 

$

77,429

 

Accrued and other liabilities

 

 

30,204

 

 

 

16,620

 

 

 

19,999

 

Current portion of operating lease liabilities

 

 

55,870

 

 

 

52,981

 

 

 

57,335

 

Total Current Liabilities

 

 

159,990

 

 

 

127,875

 

 

 

154,763

 

Long-term portion of operating lease liabilities

 

 

304,578

 

 

 

301,355

 

 

 

307,326

 

Deferred income taxes

 

 

15,187

 

 

 

17,341

 

 

 

14,631

 

Deferred compensation

 

 

12,564

 

 

 

11,639

 

 

 

10,596

 

Other

 

 

4,213

 

 

 

426

 

 

 

369

 

Total Liabilities

 

 

496,532

 

 

 

458,636

 

 

 

487,685

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 50,000,000 shares authorized and
   
41,049,190 shares issued in each period, respectively

 

 

410

 

 

 

410

 

 

 

410

 

Additional paid-in capital

 

 

86,208

 

 

 

83,738

 

 

 

81,151

 

Retained earnings

 

 

746,996

 

 

 

714,647

 

 

 

683,875

 

Treasury stock, at cost, 13,875,495 shares, 13,919,326
   shares and
13,689,493 shares, respectively

 

 

(215,119

)

 

 

(215,406

)

 

 

(209,917

)

Total Shareholders’ Equity

 

 

618,495

 

 

 

583,389

 

 

 

555,519

 

Total Liabilities and Shareholders’ Equity

 

$

1,115,027

 

 

$

1,042,025

 

 

$

1,043,204

 

 

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, 2024

 

 

Thirteen
Weeks Ended
 July 29, 2023

 

 

Twenty-six
Weeks Ended
 August 3, 2024

 

 

Twenty-six
Weeks Ended
 July 29, 2023

 

Net sales

 

$

332,696

 

 

$

294,615

 

 

$

633,061

 

 

$

575,799

 

Cost of sales (including buying, distribution
   and occupancy costs)

 

 

212,753

 

 

 

189,150

 

 

 

406,318

 

 

 

371,817

 

Gross profit

 

 

119,943

 

 

 

105,465

 

 

 

226,743

 

 

 

203,982

 

Selling, general and administrative expenses

 

 

89,864

 

 

 

80,803

 

 

 

174,157

 

 

 

158,381

 

Operating income

 

 

30,079

 

 

 

24,662

 

 

 

52,586

 

 

 

45,601

 

Interest income

 

 

(672

)

 

 

(433

)

 

 

(1,475

)

 

 

(911

)

Interest expense

 

 

137

 

 

 

71

 

 

 

273

 

 

 

137

 

Income before income taxes

 

 

30,614

 

 

 

25,024

 

 

 

53,788

 

 

 

46,375

 

Income tax expense

 

 

8,041

 

 

 

5,583

 

 

 

13,929

 

 

 

10,408

 

Net income

 

$

22,573

 

 

$

19,441

 

 

$

39,859

 

 

$

35,967

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.83

 

 

$

0.71

 

 

$

1.47

 

 

$

1.32

 

Diluted

 

$

0.82

 

 

$

0.71

 

 

$

1.45

 

 

$

1.31

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,159

 

 

 

27,336

 

 

 

27,151

 

 

 

27,280

 

Diluted

 

 

27,500

 

 

 

27,410

 

 

 

27,452

 

 

 

27,449

 

 

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, except per share data)

 

Issued

 

 

Treasury

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance at May 4, 2024

 

 

41,049

 

 

 

(13,891

)

 

$

410

 

 

$

84,576

 

 

$

728,175

 

 

$

(215,357

)

 

$

597,804

 

Dividends declared ($0.135 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,752

)

 

 

 

 

 

(3,752

)

Employee stock purchase plan purchases

 

 

 

 

 

3

 

 

 

 

 

 

13

 

 

 

 

 

 

40

 

 

 

53

 

Stock-based compensation awards

 

 

 

 

 

13

 

 

 

 

 

 

(198

)

 

 

 

 

 

198

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

1,817

 

 

 

 

 

 

 

 

 

1,817

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,573

 

 

 

 

 

 

22,573

 

Balance at August 3, 2024

 

 

41,049

 

 

 

(13,875

)

 

$

410

 

 

$

86,208

 

 

$

746,996

 

 

$

(215,119

)

 

$

618,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at April 29, 2023

 

 

41,049

 

 

 

(13,714

)

 

$

410

 

 

$

80,361

 

 

$

667,196

 

 

$

(210,287

)

 

$

537,680

 

Dividends declared ($0.10 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,762

)

 

 

 

 

 

(2,762

)

Employee stock purchase plan purchases

 

 

 

 

 

2

 

 

 

 

 

 

12

 

 

 

 

 

 

41

 

 

 

53

 

Stock-based compensation awards

 

 

 

 

 

23

 

 

 

 

 

 

(329

)

 

 

 

 

 

329

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

1,107

 

 

 

 

 

 

 

 

 

1,107

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,441

 

 

 

 

 

 

19,441

 

Balance at July 29, 2023

 

 

41,049

 

 

 

(13,689

)

 

$

410

 

 

$

81,151

 

 

$

683,875

 

 

$

(209,917

)

 

$

555,519

 

 

 

 

 

Twenty-six Weeks Ended

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

(In thousands, except per share data)

 

Issued

 

 

Treasury

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance at February 3, 2024

 

 

41,049

 

 

 

(13,919

)

 

$

410

 

 

$

83,738

 

 

$

714,647

 

 

$

(215,406

)

 

$

583,389

 

Dividends declared ($0.27 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,510

)

 

 

 

 

 

(7,510

)

Employee stock purchase plan purchases

 

 

 

 

 

4

 

 

 

 

 

 

32

 

 

 

 

 

 

60

 

 

 

92

 

Stock-based compensation awards

 

 

 

 

 

59

 

 

 

 

 

 

(915

)

 

 

 

 

 

915

 

 

 

0

 

Shares surrendered by employees to pay taxes
   on stock-based compensation awards

 

 

 

 

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

(688

)

 

 

(688

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

3,353

 

 

 

 

 

 

 

 

 

3,353

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39,859

 

 

 

 

 

 

39,859

 

Balance at August 3, 2024

 

 

41,049

 

 

 

(13,875

)

 

$

410

 

 

$

86,208

 

 

$

746,996

 

 

$

(215,119

)

 

$

618,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 28, 2023

 

 

41,049

 

 

 

(13,884

)

 

$

410

 

 

$

83,423

 

 

$

653,450

 

 

$

(211,715

)

 

$

525,568

 

Dividends declared ($0.20 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,542

)

 

 

 

 

 

(5,542

)

Employee stock purchase plan purchases

 

 

 

 

 

5

 

 

 

 

 

 

29

 

 

 

 

 

 

81

 

 

 

110

 

Stock-based compensation awards

 

 

 

 

 

305

 

 

 

 

 

 

(4,644

)

 

 

 

 

 

4,644

 

 

 

0

 

Shares surrendered by employees to pay taxes
   on stock-based compensation awards

 

 

 

 

 

(115

)

 

 

 

 

 

 

 

 

 

 

 

(2,927

)

 

 

(2,927

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

2,343

 

 

 

 

 

 

 

 

 

2,343

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,967

 

 

 

 

 

 

35,967

 

Balance at July 29, 2023

 

 

41,049

 

 

 

(13,689

)

 

$

410

 

 

$

81,151

 

 

$

683,875

 

 

$

(209,917

)

 

$

555,519

 

 

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, 2024

 

 

Twenty-six
Weeks Ended
July 29, 2023

 

Cash Flows From Operating Activities

 

 

 

 

 

 

Net income

 

$

39,859

 

 

$

35,967

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

15,116

 

 

 

13,822

 

Stock-based compensation

 

 

3,574

 

 

 

2,326

 

Loss on retirement and impairment of assets, net

 

 

215

 

 

 

59

 

Deferred income taxes

 

 

(486

)

 

 

2,787

 

Non-cash operating lease expense

 

 

28,307

 

 

 

27,627

 

Other

 

 

810

 

 

 

251

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(561

)

 

 

(909

)

Merchandise inventories

 

 

(37,177

)

 

 

(18,952

)

Operating leases

 

 

(29,223

)

 

 

(27,181

)

Accounts payable and accrued liabilities

 

 

20,498

 

 

 

(927

)

Other

 

 

(190

)

 

 

(12,518

)

Net cash provided by operating activities

 

 

40,742

 

 

 

22,352

 

Cash Flows From Investing Activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(15,722

)

 

 

(30,629

)

Investments in marketable securities

 

 

(35

)

 

 

(41

)

Acquisition, net of cash acquired

 

 

(44,384

)

 

 

0

 

Net cash used in investing activities

 

 

(60,141

)

 

 

(30,670

)

Cash Flows From Financing Activities

 

 

 

 

 

 

Proceeds from issuance of stock

 

 

92

 

 

 

110

 

Dividends paid

 

 

(7,372

)

 

 

(5,675

)

Shares surrendered by employees to pay taxes on stock-based compensation awards

 

 

(688

)

 

 

(2,927

)

Net cash used in financing activities

 

 

(7,968

)

 

 

(8,492

)

Net decrease in cash and cash equivalents

 

 

(27,367

)

 

 

(16,810

)

Cash and cash equivalents at beginning of period

 

 

99,000

 

 

 

51,372

 

Cash and cash equivalents at end of period

 

$

71,633

 

 

$

34,562

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid during period for interest

 

$

269

 

 

$

138

 

Cash paid during period for income taxes

 

$

11,570

 

 

$

12,732

 

Capital expenditures incurred but not yet paid

 

$

671

 

 

$

2,730

 

Dividends declared but not yet paid

 

$

417

 

 

$

183

 

Contingent consideration related to business acquisition

 

$

3,600

 

 

$

0

 

 

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 omnichannel family footwear retailers, selling footwear and related products through our retail stores located in 36 states within the continental United States and in Puerto Rico, as well as through our e-commerce sales channels. We offer customers a broad assortment of primarily branded dress and casual shoes, sandals, boots 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 Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996. References to “we,” “us,” “our” and the “Company” in this Quarterly Report on Form 10-Q refer to Shoe Carnival, Inc. and its subsidiaries.

Our consolidated financial statements include the accounts of Shoe Carnival, Inc. and its wholly-owned subsidiaries Rogan Shoes, Incorporated, SCHC, Inc. and Shoe Carnival Ventures, LLC, and SCLC, Inc., a wholly-owned subsidiary of SCHC, Inc. All intercompany accounts and transactions have been eliminated. 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 February 3, 2024.

 

Note 2 - Acquisition of Rogan Shoes

On February 13, 2024, we acquired all of the stock of Rogan Shoes, Incorporated, a privately-held 53-year-old work and family footwear company incorporated in Wisconsin (“Rogan’s”) for an adjusted preliminary purchase price of $44.8 million, net of $2.2 million of cash acquired, of which $44.4 million has been paid to date from cash on hand. The adjusted preliminary purchase price is subject to customary adjustments. Additional consideration of up to $5.0 million may be paid by the Company subject to the achievement of three-year performance targets. At the time of the acquisition, Rogan’s operated 28 store locations in Wisconsin, Minnesota and Illinois. The Rogan’s acquisition advanced our strategy to be the nation’s leading family footwear retailer. It immediately positioned us as the market leader in Wisconsin, and it established a store base in Minnesota, creating additional expansion opportunities.

Rogan’s results were included in our consolidated financial statements since the acquisition date. Net Sales from our newly acquired Rogan’s operations totaled $22.0 million in the thirteen weeks ended August 3, 2024 and $41.6 million from February 13, 2024 through August 3, 2024. For the thirteen and twenty-six weeks ended August 3, 2024, acquisition-related costs of $97,000 and $418,000, respectively, were expensed as incurred and were included in Selling, General and Administrative Expenses.

The following table summarizes the preliminary purchase price and the allocation of the preliminary purchase price to the fair value of the assets acquired and liabilities assumed. We measured these fair values using Level 3 inputs. The excess purchase price over the fair value of net assets acquired was allocated to Goodwill. The allocation of the purchase price shown in the table below is preliminary and subject to change based on the finalization of our detailed valuations and any subsequent change in the purchase price. 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 one year from the acquisition date.

7


 

 

(In thousands)

 

 

 

Preliminary purchase price:

 

 

 

Cash consideration, net of cash acquired

 

$

44,828

 

Fair value of contingent consideration

 

 

3,600

 

Total preliminary purchase price

 

$

48,428

 

 

 

 

 

Fair value of identifiable assets and liabilities:

 

 

 

Accounts receivable

 

$

2,365

 

Merchandise inventories

 

 

42,340

 

Other assets

 

 

3,763

 

Operating lease right-of-use assets

 

 

16,891

 

Identifiable intangible assets

 

 

8,400

 

Goodwill

 

 

3,352

 

Total assets

 

$

77,111

 

Accounts payable

 

 

6,308

 

Operating lease liabilities

 

 

19,843

 

Accrued and other liabilities

 

 

2,532

 

Total liabilities

 

$

28,683

 

 

 

 

 

Total fair value allocation of preliminary purchase price

 

$

48,428

 

 

Our fair value estimate of the Merchandise Inventories for Rogan’s was determined using the Comparative Sales and Replacement Cost methods. Our fair value estimate of the contingent consideration for the Rogan’s acquisition was determined using a Monte Carlo simulation and other methods that account for the probabilities of various outcomes and was recorded in Other long-term liabilities. Significant assumptions used for the valuation include the discount rate, projected cash flows and calculated volatility. Our fair value estimate related to the identified intangible asset of Rogan’s trade name was determined using the Relief from Royalty method, and the significant assumptions used for the valuation include the royalty rate, estimated projected revenues, long-term growth rate and the discount rate. Our fair value estimates related to Rogan’s customer relationships were determined using the Multi-Period Excess Earnings method, and the significant assumptions used for the valuation include projected cash flows, the discount rate and customer attrition rate.

 

Identifiable intangible assets include Rogan’s trade name and customer relationships. We assigned an indefinite life to Rogan’s trade name; therefore, Goodwill and Rogan’s trade name will be charged to expense only if impaired. Impairment reviews will be conducted at least annually and involve a comparison of fair value to the carrying amount. If fair value is less than the carrying amount, an impairment loss would be recognized in Selling, General and Administrative Expenses. Customer relationships are subject to amortization and will be amortized over a period of 20 years. Goodwill and the acquisition-related Intangible Assets will not be deductible for tax purposes.

Note 3 - Net Income Per Share

The following table sets forth the computation of Basic and Diluted Net Income per Share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

 

 

 

Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

(In thousands, except per share data)

 

 

 

 

Basic Net Income per Share:

 

Net
Income

 

 

Shares

 

 

Per Share
Amount

 

 

Net
Income

 

 

Shares

 

 

Per Share
Amount

 

Net income available for basic common shares
   and basic net income per share

 

$

22,573

 

 

 

27,159

 

 

$

0.83

 

 

$

19,441

 

 

 

27,336

 

 

$

0.71

 

Diluted Net Income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,573

 

 

 

 

 

 

 

 

$

19,441

 

 

 

 

 

 

 

Conversion of stock-based compensation
   arrangements

 

 

0

 

 

 

341

 

 

 

 

 

 

0

 

 

 

74

 

 

 

 

Net income available for diluted common
   shares and diluted net income per share

 

$

22,573

 

 

 

27,500

 

 

$

0.82

 

 

$

19,441

 

 

 

27,410

 

 

$

0.71

 

 

8


 

 

 

Twenty-six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

(In thousands, except per share data)

 

 

 

 

Basic Net Income per Share:

 

Net
Income

 

 

Shares

 

 

Per Share
Amount

 

 

Net
Income

 

 

Shares

 

 

Per Share
Amount

 

Net income available for basic common shares
   and basic net income per share

 

$

39,859

 

 

 

27,151

 

 

$

1.47

 

 

$

35,967

 

 

 

27,280

 

 

$

1.32

 

Diluted Net Income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

39,859

 

 

 

 

 

 

 

 

$

35,967

 

 

 

 

 

 

 

Conversion of stock-based compensation
   arrangements

 

 

0

 

 

 

301

 

 

 

 

 

 

0

 

 

 

169

 

 

 

 

Net income available for diluted common
   shares and diluted net income per share

 

$

39,859

 

 

 

27,452

 

 

$

1.45

 

 

$

35,967

 

 

 

27,449

 

 

$

1.31

 

The computation of Basic Net Income per Share 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. No unvested stock-based awards that will be settled in shares were excluded from the computation of Diluted Net Income per Share for the thirteen and twenty-six weeks ended August 3, 2024. During the thirteen and twenty-six weeks ended July 29, 2023, approximately 134,000 and 1,000, respectively, of unvested stock-based awards that will be settled in shares were excluded from the computation of Diluted Net Income per Share because the impact would have been anti-dilutive.

 

Note 4 - Recently Issued Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in the ASU will be applied retrospectively to all prior periods presented in the financial statements, using the significant segment expense categories identified and disclosed in the period of adoption. We are continuing to evaluate the impact of this new guidance but believe the adoption will not have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in the ASU should be applied on a prospective basis, but retrospective application is permitted. We are continuing to evaluate the impact of this new guidance but believe the adoption will not have a material impact on our consolidated financial statements.

9


 

Note 5 - Fair Value Measurements

Financial Instruments

The following table presents financial instruments that are measured at fair value on a recurring basis at August 3, 2024, February 3, 2024 and July 29, 2023:

 

 

 

Fair Value Measurements

 

(In thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

As of August 3, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents - money market mutual funds

 

$

44,072

 

 

$

0

 

 

$

0

 

 

$

44,072

 

Marketable securities - mutual funds that fund
    deferred compensation

 

 

12,831

 

 

 

0

 

 

 

0

 

 

 

12,831

 

Total

 

$

56,903

 

 

$

0

 

 

$

0

 

 

$

56,903

 

As of February 3, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents - money market mutual funds

 

$

91,733

 

 

$

0

 

 

$

0

 

 

$

91,733

 

Marketable securities - mutual funds that fund
    deferred compensation

 

 

12,247

 

 

 

 

 

 

 

 

 

12,247

 

Total

 

$

103,980

 

 

$

0

 

 

$

0

 

 

$

103,980

 

As of July 29, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents - money market mutual funds

 

$

22,445

 

 

$

0

 

 

$

0

 

 

$

22,445

 

Marketable securities - mutual funds that fund
    deferred compensation

 

 

12,218

 

 

 

 

 

 

 

 

 

12,218

 

Total

 

$

34,663

 

 

$

0

 

 

$

0

 

 

$

34,663

 

We invest in publicly traded mutual funds with readily determinable fair values. These Marketable Securities are designed to mitigate volatility in our Consolidated Statements of Income associated with our non-qualified deferred compensation plan. As of August 3, 2024, these Marketable Securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan. To the extent there is a variation in invested funds compared to the total non-qualified deferred compensation plan liability, such fund variance is managed through a stable value mutual fund. We classify these Marketable Securities as current assets because we have the ability to convert the securities into cash at our discretion and these Marketable Securities are not held in a rabbi trust. Changes in these Marketable Securities and deferred compensation plan liabilities are charged to Selling, General and Administrative Expenses.

Deferred Compensation Plan Liabilities and Related Marketable Securities

The following tables present the balances and activity of the Company’s deferred compensation plan liabilities and related Marketable Securities:

 

(In thousands)

 

August 3, 2024

 

 

February 3, 2024

 

 

July 29, 2023

 

Deferred compensation plan current liabilities

 

$

193

 

 

$

114

 

 

$

1,617

 

Deferred compensation plan long-term liabilities

 

 

12,564

 

 

 

11,639

 

 

 

10,596

 

Total deferred compensation plan liabilities

 

$

12,757

 

 

$

11,753

 

 

$

12,213

 

Marketable securities - mutual funds that fund deferred compensation

 

$

12,831

 

 

$

12,247

 

 

$

12,218

 

 

(In thousands)

 

Thirteen
Weeks Ended
 August 3, 2024

 

 

Thirteen
Weeks Ended
 July 29, 2023

 

 

Twenty-six
Weeks Ended
 August 3, 2024

 

 

Twenty-six
Weeks Ended
 July 29, 2023

 

Deferred compensation liabilities

 

 

 

 

 

 

 

 

 

 

 

 

   Employer contributions, net

 

$

71

 

 

$

75

 

 

$

152

 

 

$

171

 

   Investment earnings

 

 

259

 

 

 

659

 

 

 

582

 

 

 

656

 

Marketable Securities

 

 

 

 

 

 

 

 

 

 

 

 

Mark-to-market gains (1)

 

 

(276

)

 

 

(683

)

 

 

(584

)

 

 

(617

)

Net deferred compensation expense

 

$

54

 

 

$

51

 

 

$

150

 

 

$

210

 

(1) Included in the mark-to-market activity related to equity securities still held at quarter-end, we recognized unrealized gains of $258,000 and $