Shoe Carnival Earnings 2020-05-02

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

scvl-10q_20200502.htm

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 May 2, 2020
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 May 29, 2020 was 14,087,896.

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	21

	Item 4.	Controls and Procedures	21

Part II	Other Information

	Item 1A.	Risk Factors	22

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

	Item 6.	Exhibits	23

	Signature		24

SHOE CARNIVAL, INC.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands, except share data)	May 2, 2020			February 1, 2020			May 4, 2019
Assets
Current Assets:
Cash and cash equivalents	$	13,084		$	61,899		$	21,616
Accounts receivable		6,316			2,724			2,003
Merchandise inventories		303,988			259,495			289,356
Other		14,186			5,529			9,769
Total Current Assets		337,574			329,647			322,744
Property and equipment – net		64,928			67,781			72,313
Deferred income taxes		7,249			7,833			8,159
Other noncurrent assets		9,454			8,106			760
Operating lease right-of-use assets		210,345			215,007			224,642
Total Assets	$	629,550		$	628,374		$	628,618

Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	90,040		$	60,665		$	56,488
Accrued and other liabilities		12,517			18,695			17,611
Current portion of operating lease liabilities		49,078			43,146			47,089
Total Current Liabilities		151,635			122,506			121,188
Long-term portion of operating lease liabilities		184,896			194,108			202,517
Deferred compensation		12,646			13,345			13,386
Other		915			1,052			24
Total Liabilities		350,092			331,011			337,115

Shareholders’ Equity:
Common stock, $.01 par value, 50,000,000 shares authorized, 20,524,601 shares, 20,524,601 shares and 20,527,905 shares issued, respectively		205			205			205
Additional paid-in capital		76,910			79,914			76,282
Retained earnings		378,352			395,761			370,453
Treasury stock, at cost, 6,436,087 shares, 6,516,875 shares and 5,837,164 shares, respectively		(176,009	)		(178,517	)		(155,437	)
Total Shareholders’ Equity		279,458			297,363			291,503
Total Liabilities and Shareholders’ Equity	$	629,550		$	628,374		$	628,618

See notes to Condensed Consolidated Financial Statements.

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)	Thirteen Weeks Ended May 2, 2020			Thirteen Weeks Ended May 4, 2019
Net sales	$	147,495		$	253,810
Cost of sales (including buying, distribution and occupancy costs)		116,031			178,670
Gross profit		31,464			75,140
Selling, general and administrative expenses		54,725			59,532
Operating (loss)/income		(23,261	)		15,608
Interest income		(89	)		(331	)
Interest expense		56			36
(Loss)/income before income taxes		(23,228	)		15,903
Income tax (benefit)/expense		(7,038	)		2,030
Net (loss)/income	$	(16,190	)	$	13,873
Net (loss)/income per share:
Basic	$	(1.16	)	$	0.95
Diluted	$	(1.16	)	$	0.91
Weighted average shares:
Basic		13,992			14,612
Diluted		13,992			15,192

See notes to Condensed Consolidated Financial Statements.

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Unaudited

	Common Stock								Additional Paid-In			Retained			Treasury
(In thousands, except per share data)	Issued			Treasury			Amount		Capital			Earnings			Stock			Total
Balance at February 1, 2020		20,525			(6,517	)	$	205	$	79,914		$	395,761		$	(178,517	)	$	297,363
Dividends declared ($0.085 per share)													(1,219	)					(1,219	)
Employee stock purchase plan purchases					4					(34	)					97			63
Restricted stock awards					148					(4,111	)					4,111			0
Shares surrendered by employees to pay taxes on restricted stock					(71	)										(1,700	)		(1,700	)
Stock-based compensation expense										1,141									1,141
Net loss													(16,190	)					(16,190	)
Balance at May 2, 2020		20,525			(6,436	)	$	205	$	76,910		$	378,352		$	(176,009	)	$	279,458

Balance at February 2, 2019		20,529			(5,154	)	$	205	$	75,631		$	360,443		$	(131,846	)	$	304,433
Adoption of Accounting Standards Codification Topic 842, Leases													(2,649	)					(2,649	)
Dividends declared ($0.080 per share)													(1,214	)					(1,214	)
Employee stock purchase plan purchases					2					6						57			63
Restricted stock awards		(1	)		47					(1,304	)					1,304			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										1,949									1,949
Net income													13,873						13,873
Balance at May 4, 2019		20,528			(5,837	)	$	205	$	76,282		$	370,453		$	(155,437	)	$	291,503

See notes to Condensed Consolidated Financial Statements.

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In thousands)	Thirteen Weeks Ended May 2, 2020			Thirteen Weeks Ended May 4, 2019
Cash Flows From Operating Activities
Net (loss)/income	$	(16,190	)	$	13,873
Adjustments to reconcile net (loss)/income to net cash used in operating activities:
Depreciation and amortization		3,831			4,277
Stock-based compensation		1,054			1,958
Loss on retirement and impairment of assets		2,089			164
Deferred income taxes		584			1,463
Non-cash operating lease expense		10,250			10,993
Other		(1,065	)		1,278
Changes in operating assets and liabilities:
Accounts receivable		(3,592	)		(783	)
Merchandise inventories		(44,493	)		(31,817	)
Operating lease liabilities		(8,881	)		(11,853	)
Accounts payable and accrued liabilities		23,508			4,011
Other		(9,958	)		(2,878	)
Net cash used in operating activities		(42,863	)		(9,314	)
Cash Flows From Investing Activities
Purchases of property and equipment		(3,189	)		(9,199	)
Other		194			3
Net cash used in investing activities		(2,995	)		(9,196	)
Cash Flows From Financing Activities
Borrowings under line of credit		8,691			0
Payments on line of credit		(8,691	)		0
Proceeds from issuance of stock		63			63
Dividends paid		(1,320	)		(2,006	)
Purchase of common stock for treasury		0			(14,012	)
Shares surrendered by employees to pay taxes on restricted stock		(1,700	)		(10,940	)
Net cash used in financing activities		(2,957	)		(26,895	)
Net decrease in cash and cash equivalents		(48,815	)		(45,405	)
Cash and cash equivalents at beginning of period		61,899			67,021
Cash and cash equivalents at end of period	$	13,084		$	21,616
Supplemental disclosures of cash flow information:
Cash paid during period for interest	$	44		$	36
Cash (received)/paid during period for income taxes	$	(97	)	$	103
Capital expenditures incurred but not yet paid	$	1,358		$	575
Dividends declared but not yet paid	$	64		$	96

See notes to Condensed Consolidated Financial Statements.

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, providing the convenience of shopping at any of our store locations or online. We offer customers a broad assortment of moderately priced dress, casual and athletic footwear for men, women and children with an emphasis on national name brands. We differentiate our retail concept from our competitors by our distinctive, fun and promotional marketing efforts. We are an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996. References to “Shoe Carnival,” “we,” “us,” “our” and the “Company” in this Quarterly Report on Form 10-Q refer to Shoe Carnival, Inc. and its subsidiaries.

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 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 1, 2020.

Note 2 - Net (Loss)/Income Per Share

The following tables set forth the computation of basic and diluted net (loss)/income per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

	Thirteen Weeks Ended
	May 2, 2020								May 4, 2019
				(In thousands, except per share data)
Basic Net (Loss)/Income per Share:	Net (Loss)/Income			Shares		Per Share Amount			Net (Loss)/Income			Shares		Per Share Amount
Net (loss)/income	$	(16,190	)						$	13,873
Conversion of share-based compensation arrangements		0								(44	)
Net (loss)/income available for basic common shares and basic net (loss)/income per share	$	(16,190	)		13,992	$	(1.16	)	$	13,829			14,612	$	0.95
Diluted Net (Loss)/Income per Share:
Net (loss)/income	$	(16,190	)						$	13,873
Conversion of share-based compensation arrangements		0			0					(43	)		580
Net (loss)/income available for diluted common shares and diluted net (loss)/income per share	$	(16,190	)		13,992	$	(1.16	)	$	13,830			15,192	$	0.91

The computation of basic net (loss)/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 (loss)/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 restricted stock awards, restricted stock units and performance stock units, of which a small portion have a non-forfeitable right to dividends. The computation of diluted net (loss)/income per share excluded approximately 198,000 unvested share-settled equity awards for the first quarter of fiscal 2020 because the impact would be anti-dilutive. During the first quarter of fiscal 2019 all unvested share-settled equity awards were dilutive.

Note 3 – COVID-19 Impacts

Our operations are currently experiencing significant disruption associated with the outbreak of a novel strain of coronavirus (“COVID-19”). On March 11, 2020, the World Health Organization declared the COVID 19 outbreak a pandemic. The U.S. Government as well as the vast majority of states and local municipalities have taken unprecedented measures to control the spread of COVID-19 and to provide stimulus as a mitigating measure to deteriorating economic conditions and increasing unemployment.

The COVID-19 pandemic began significantly impacting our store operations, sales and costs beginning in the first quarter of fiscal 2020. Impacts included the temporary closure of our brick-and-mortar stores effective March 19, 2020, reduced foot traffic and sales, deteriorating economic conditions for our customer base and some disruption to our global supply chain. As a result, substantially all of our brick-and-mortar stores were closed for approximately 50% of the first quarter of fiscal 2020 and our net sales and gross profit significantly decreased year-over-year. Our website and mobile app continued to process e-commerce orders, which were generally fulfilled at our store locations. We began re-opening stores in accordance with applicable public health guidelines in late April, and as of June 4, 2020, approximately 97% of our stores have re-opened. The COVID-19 pandemic will likely continue to impact our financial condition and results of operations for the foreseeable future.

Note 4 - Fair Value Measurements

The accounting guidance related to fair value measurements defines fair value and provides a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other guidance requires or permits the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities;

•

Level 2 – Quoted prices in active or inactive markets for similar assets or liabilities that are either directly or indirectly observable; and

•

Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. Fair values of our long-lived assets are estimated using an income-based approach and are classified within Level 3 of the valuation hierarchy.

Fair Value of Financial Instruments

The following table presents financial instruments that are measured at fair value on a recurring basis at May 2, 2020, February 1, 2020 and May 4, 2019.

Fair Value Measurements

(In thousands)

Level 1

Level 2

Level 3

Total

As of May 2, 2020

Price	32.44	EPS	3
Shares	15	P/E	12
MCap	481	P/FCF	17
Net Debt	-34	EBIT	52
TEV	447	TEV/EBIT	9
TTM 2019-11-02, in MM, except price, ratios

10-Q	2020-05-02	Filed 2020-06-04
10-K	2020-02-01	Filed 2020-03-31
10-Q	2019-11-02	Filed 2019-12-05
10-Q	2019-08-03	Filed 2019-09-09
10-Q	2019-05-04	Filed 2019-06-11
10-K	2019-02-02	Filed 2019-04-02
10-Q	2018-11-03	Filed 2018-12-07
10-Q	2018-08-04	Filed 2018-09-11
10-Q	2018-05-05	Filed 2018-06-11
10-K	2018-02-03	Filed 2018-04-02
10-Q	2017-10-28	Filed 2017-12-05
10-Q	2017-07-29	Filed 2017-08-31
10-Q	2017-04-29	Filed 2017-05-31
10-K	2017-01-28	Filed 2017-03-29
10-Q	2016-10-29	Filed 2016-11-30
10-Q	2016-07-30	Filed 2016-09-07
10-Q	2016-04-30	Filed 2016-06-03
10-K	2016-01-30	Filed 2016-04-04
10-Q	2015-10-31	Filed 2015-12-08
10-Q	2015-08-01	Filed 2015-09-09
10-Q	2015-05-02	Filed 2015-06-10
10-K	2015-01-31	Filed 2015-04-16
10-Q	2014-11-01	Filed 2014-12-11
10-Q	2014-08-02	Filed 2014-09-08
10-Q	2014-05-03	Filed 2014-06-12
10-K	2014-02-01	Filed 2014-04-10
10-Q	2013-08-03	Filed 2013-09-12
10-Q	2013-05-04	Filed 2013-06-13
10-K	2013-02-02	Filed 2013-04-15
10-Q	2012-10-27	Filed 2012-12-06
10-Q	2012-07-28	Filed 2012-09-06
10-Q	2012-04-28	Filed 2012-06-07
10-K	2012-01-28	Filed 2012-04-12
10-Q	2011-10-29	Filed 2011-12-08
10-Q	2011-07-30	Filed 2011-09-07
10-Q	2011-04-30	Filed 2011-06-09
10-K	2011-01-29	Filed 2011-04-14
10-Q	2010-10-30	Filed 2010-12-09
10-Q	2010-07-31	Filed 2010-09-09
10-Q	2010-05-01	Filed 2010-06-10
10-K	2010-01-30	Filed 2010-04-15

8-K	2020-06-22
8-K	2020-06-11
8-K	2020-05-20
8-K	2020-05-05
8-K	2020-05-04
8-K	2020-04-16
8-K	2020-04-09
8-K	2020-04-02
8-K	2020-03-25
8-K	2020-03-19
8-K	2019-12-12
8-K	2019-11-21
8-K	2019-09-19
8-K	2019-08-28
8-K	2019-06-13
8-K	2019-05-22
8-K	2019-04-26
8-K	2019-03-26
8-K	2019-03-20
8-K	2019-01-14
8-K	2018-12-17
8-K	2018-11-15
8-K	2018-08-28
8-K	2018-06-14
8-K	2018-05-24
8-K	2018-04-13
8-K	2018-03-27
8-K	2018-01-23

EX-31.1	scvl-ex311_8.htm
EX-31.2	scvl-ex312_6.htm
EX-32.1	scvl-ex321_9.htm
EX-32.2	scvl-ex322_7.htm

SCVL 10Q Quarterly Report

Shoe Carnival Earnings 2020-05-02