Shoe Carnival(SCVL) - 2022 Q3 - Quarterly Report

Part I Financial Statements The company's financial statements show substantial growth in assets, income, and shareholder equity for the period ended October 30, 2021 Condensed Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Account | Oct 30, 2021 | Jan 30, 2021 | Oct 31, 2020 | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $173,364 | $106,532 | $46,740 | | Merchandise inventories | $282,014 | $233,266 | $274,264 | | Total Current Assets | $495,665 | $355,305 | $340,166 | | Total Assets | $786,509 | $642,747 | $623,343 | | Liabilities & Equity | | | | | Total Current Liabilities | $161,837 | $130,901 | $125,227 | | Total Liabilities | $353,963 | $332,571 | $320,126 | | Total Shareholders' Equity | $432,546 | $310,176 | $303,217 | Condensed Consolidated Statements of Income Income Statement Performance (in thousands, except per share data) | Metric | Thirteen Weeks Ended Oct 30, 2021 | Thirteen Weeks Ended Oct 31, 2020 | Thirty-nine Weeks Ended Oct 30, 2021 | Thirty-nine Weeks Ended Oct 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $356,336 | $274,579 | $1,017,023 | $722,868 | | Gross profit | $144,056 | $87,761 | $409,966 | $201,830 | | Operating income | $62,424 | $20,163 | $179,741 | $11,300 | | Net income | $46,836 | $14,678 | $134,290 | $8,548 | | Diluted EPS | $1.64 | $0.51 | $4.69 | $0.30 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Thirty-nine Weeks Ended Oct 30, 2021 | Thirty-nine Weeks Ended Oct 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $120,478 | $170 | | Net cash used in investing activities | ($37,846) | ($9,889) | | Net cash used in financing activities | ($15,800) | ($5,440) | | Net increase (decrease) in cash | $66,832 | ($15,159) | | Cash at end of period | $173,364 | $46,740 | Notes to Condensed Consolidated Financial Statements - On June 21, 2021, the Board of Directors authorized a two-for-one stock split, with all share and per-share amounts retroactively adjusted[25] - The COVID-19 pandemic significantly impacted fiscal 2020 operations, but as of October 30, 2021, no stores were closed due to the pandemic[29][30][31] Revenue by Product Category (YTD % of Net Sales) | Category | Thirty-nine Weeks Ended Oct 30, 2021 | Thirty-nine Weeks Ended Oct 31, 2020 | | :--- | :--- | :--- | | Non-Athletics | 44% | 39% | | Athletics | 50% | 55% | | Accessories and Other | 6% | 6% | - The Shoe Perks rewards program recognized $4.5 million in loyalty rewards in Net Sales for the first thirty-nine weeks of fiscal 2021, up from $3.2 million in the prior year[58] Management's Discussion and Analysis (MD&A) Management reported record-breaking financial results for Q3 and YTD fiscal 2021, driven by strong demand and strategic execution Executive Summary - The third quarter of fiscal 2021 was a record-breaking period, achieving the highest net sales, gross profit, operating income, and diluted EPS in company history[74] - Comparable store sales increased 30.1% versus Q3 2020 and 31.4% versus Q3 2019, with physical store traffic up 29.9% versus Q3 2020[75] - Record results were driven by strong inventory selection, a focused promotional strategy, customers returning to normal lifestyles, and a stronger economy[77] - The Shoe Perks customer loyalty program grew over 10% year-over-year, reaching over 28.5 million members[82] Q3 2021 Results of Operations Q3 2021 Financial Highlights | Metric | Q3 2021 | Change vs Q3 2020 | | :--- | :--- | :--- | | Net Sales | $356.3M | +29.8% | | Comparable Store Sales | - | +30.1% | | Gross Profit | $144.1M | +$56.3M | | Gross Profit Margin | 40.4% | +8.4 ppt | | SG&A as % of Sales | 22.9% | -1.8 ppt | - E-commerce sales accounted for approximately 12% of merchandise sales in Q3 2021, compared to 13% in Q3 2020 and 5% in Q3 2019[78] - Gross profit margin significantly increased due to a 6.7 percentage point rise in merchandise margin, driven by a focused promotional strategy that eliminated broad "buy one get one half off" offers[80] YTD 2021 Results of Operations YTD 2021 Financial Highlights | Metric | YTD 2021 | Change vs YTD 2020 | | :--- | :--- | :--- | | Net Sales | $1,017.0M | +40.7% | | Comparable Store Sales | - | +41.6% | | Gross Profit | $410.0M | +$208.1M | | Gross Profit Margin | 40.3% | +12.4 ppt | | SG&A as % of Sales | 22.6% | -3.7 ppt | Liquidity and Capital Resources - The company maintained a strong liquidity position at the end of Q3 with $191.2 million in cash, cash equivalents, and marketable securities, and no borrowings under its $100 million credit facility[90] - Net cash provided by operating activities significantly increased to $120.5 million in the first nine months of fiscal 2021 from $0.2 million in the prior year period[91] - Working capital increased to $333.8 million as of October 30, 2021, from $214.9 million at October 31, 2020[92] Capital Expenditures - Fiscal 2021 capital expenditures are projected to be between $30 million and $35 million, primarily for store relocations, remodels, and new store development[98] - In the first nine months of fiscal 2021, the company opened one new store and closed seven, with three additional closures expected by year-end[100][101] Dividends - A quarterly cash dividend of $0.070 per share was paid in Q3 2021, an increase from $0.045 per share in Q3 2020[103] - The company repurchased 208,662 shares for $7.1 million in fiscal 2021 under its $50 million share repurchase program, with $42.9 million remaining available as of October 30, 2021[105][106] Quantitative and Qualitative Disclosures About Market Risk Primary market risk is from variable interest rates on the credit facility, with no borrowings in the first nine months of fiscal 2021 - The company is exposed to market risk from variable interest rates on its credit facility, but had no borrowings during the first nine months of fiscal 2021[110] Controls and Procedures CEO and CFO concluded disclosure controls were effective as of October 30, 2021, with no significant internal control changes during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of October 30, 2021[111] - No significant changes in internal control over financial reporting occurred during the quarter ended October 30, 2021[112] Part II Risk Factors No additional material changes to previously disclosed risk factors were reported since the fiscal year 2021 Form 10-K - No additional material changes to the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended January 30, 2021, have occurred[115] Issuer Purchases of Equity Securities The company repurchased 91,594 shares at $34.69 per share in Q3, with $42.9 million remaining for buybacks Share Repurchase Activity (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining for Purchase | | :--- | :--- | :--- | :--- | :--- | | Aug 29 - Oct 2, 2021 | 103,465 | $34.69 | 91,594 | $42,853,000 |