Shoe Carnival(SCVL) - 2022 Q4 - Annual Report

Part I Business Shoe Carnival, Inc. is a major family footwear retailer that achieved record fiscal 2021 performance and expanded its market presence through strategic acquisition - In fiscal 2021, the company achieved record financial results, with net sales growing by 36% and diluted net income per share of $5.42[9][174] - The company completed its first acquisition of Shoe Station for approximately $70.7 million in cash, adding 21 stores and expanding its customer base[12] Sales by Product Category (as % of Total Sales) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Non-Athletics | 44% | 41% | 44% | | Women's | 24% | 22% | 25% | | Men's | 14% | 14% | 14% | | Children's | 6% | 5% | 5% | | Athletics | 50% | 53% | 51% | | Women's | 16% | 18% | 17% | | Men's | 20% | 22% | 20% | | Children's | 14% | 13% | 14% | | Accessories | 5% | 5% | 5% | | Other | 1% | 1% | 0% | - Nike, Inc. and Skechers USA, Inc. collectively accounted for approximately 39% of net sales in fiscal 2021, indicating significant supplier concentration[46] - The growth strategy targets adding over 10 new stores in fiscal 2022, over 20 in fiscal 2023, and over 25 annually by fiscal 2024 through organic growth and acquisitions[25] - The Shoe Perks loyalty program expanded to 28.5 million members in fiscal 2021, with member purchases comprising approximately 68% of comparable net sales[36] Risk Factors The company faces key operational, compliance, human capital, financial, and ownership risks, including supply chain disruptions and high supplier concentration - Operational and strategic risks include adverse impacts on consumer spending, ongoing effects of the COVID-19 pandemic, disruptions in imported goods, and potential difficulties integrating the Shoe Station acquisition[89][90][94][97] - The business depends heavily on key suppliers, with Nike, Inc. and Skechers USA, Inc. accounting for approximately 39% of net sales in fiscal 2021, creating a concentration risk[111] - The company faces compliance and litigation risks related to protecting customer and employee data from cybersecurity breaches, which could result in litigation, fines, and reputational damage[130] - A significant risk related to stock ownership is the control held by principal shareholders, as the Weaver family beneficially owns approximately 35.5% of the outstanding common stock[143] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - None[146] Properties As of January 29, 2022, the company leased 393 stores and a 410,000 sq ft distribution center, while owning its corporate headquarters - As of January 29, 2022, the company leased 393 stores, with approximately 98% of store leases having fixed minimum rentals[147] - The company leases a 410,000 sq ft distribution center in Evansville, IN, with the lease expiring in 2034 and the right to expand by 200,000 sq ft[148] - The corporate headquarters in Evansville, Indiana is owned by the company[149] Legal Proceedings The company is involved in various legal proceedings but does not expect any material adverse effect on its financial position or operations - The company is involved in legal proceedings from time to time but does not expect any to have a material adverse effect on its financial position or operations[150] Mine Safety Disclosures This item is not applicable to the company - Not applicable[151] Part II Market for Common Equity, Stockholder Matters, and Issuer Purchases The company's common stock trades on Nasdaq, completed a two-for-one stock split, and increased quarterly dividends, with no share repurchases in Q4 fiscal 2021 - The company's common stock is traded on The Nasdaq Stock Market under the symbol "SCVL"[153] - A two-for-one stock split was completed on July 19, 2021, with all share and per-share amounts retroactively adjusted[154] - During fiscal 2021, the company paid quarterly cash dividends of $0.07 per share, which increased by 29% to $0.09 per share on March 10, 2022[155][156] - No shares were repurchased under the company's share repurchase program during the fourth quarter of fiscal 2021[157] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Fiscal 2021 was a record year for Shoe Carnival, with all-time highs in net sales, gross profit, and diluted EPS, driven by strong comparable store sales and merchandise margins - Fiscal 2021 was a record year, achieving the highest net sales, gross profit, operating income, and diluted net income per share in company history, with diluted EPS of $5.42 exceeding the total earned during the last six fiscal years combined[174] - Comparable store sales increased 35.3% in fiscal 2021 compared to fiscal 2020, and 28.3% compared to fiscal 2019[175] - The company ended fiscal 2021 with no debt and $132.4 million in cash, cash equivalents, and marketable securities, even after funding the Shoe Station acquisition with cash on hand[177][187] Historical Financial Data (in thousands, except per share data) | Fiscal Year | Net Sales | Gross Profit | Operating Income | Net Income | Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | 2021 | $1,330,394 | $526,787 | $207,654 | $154,881 | $5.42 | | 2020 | $976,765 | $279,982 | $21,865 | $15,991 | $0.56 | | 2019 | $1,036,551 | $311,869 | $54,209 | $42,914 | $1.46 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is variable interest rates on its credit facility, but it had no borrowings in fiscal 2021 and does not use derivatives - The company is exposed to market risk from variable interest rates on its credit facility, but had no borrowings during fiscal 2021[240] - The company does not use interest rate derivative instruments to manage market risk exposure[240] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal year 2021, including balance sheets, income statements, and cash flow statements Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 29, 2022 | Jan 30, 2021 | | :--- | :--- | :--- | | Total Current Assets | $442,032 | $355,305 | | Cash and cash equivalents | $117,443 | $106,532 | | Merchandise inventories | $285,205 | $233,266 | | Total Assets | $812,264 | $642,747 | | Total Current Liabilities | $153,708 | $130,901 | | Total Liabilities | $359,731 | $332,571 | | Total Shareholders' Equity | $452,533 | $310,176 | Consolidated Statement of Income Highlights (in thousands) | Account | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Net sales | $1,330,394 | $976,765 | | Gross profit | $526,787 | $279,982 | | Operating income | $207,654 | $21,865 | | Net income | $154,881 | $15,991 | - The independent auditor, Deloitte & Touche LLP, identified the valuation of Merchandise Inventories as a Critical Audit Matter due to significant management judgments in estimating net realizable value[247][248][249] Changes in and Disagreements with Accountants The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[375] Controls and Procedures Management concluded that the company's internal control over financial reporting and disclosure controls were effective as of January 29, 2022, excluding the Shoe Station acquisition - Management assessed the company's internal control over financial reporting as effective as of January 29, 2022, based on the COSO framework (2013)[378] - The assessment of internal controls excluded the recently acquired Shoe Station, which constituted 1.3% of net sales and 11.9% of total assets for the fiscal year[379][388] - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of January 29, 2022[382] Other Information The company reports no other information for this item - None[393] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[394] Part III Part III incorporates information by reference from the 2022 Proxy Statement, covering directors, executive compensation, security ownership, and related transactions Directors, Executive Officers and Corporate Governance Information regarding directors, corporate governance, and the Code of Ethics is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Shareholders[396] Executive Compensation Information regarding executive and director compensation is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Shareholders[397] Security Ownership and Related Stockholder Matters Information regarding security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Shareholders[398] Certain Relationships, Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Shareholders[399] Principal Accounting Fees and Services Information regarding fees paid to and services provided by the principal accountant is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the definitive Proxy Statement for the 2022 Annual Meeting of Shareholders[400] Part IV Part IV lists financial statements, schedules, and exhibits filed with the Form 10-K, including consolidated financial statements and required certifications Exhibits and Financial Statement Schedules This section lists financial statements included in Item 8 and provides an index of all exhibits filed with the report - This item lists the financial statements filed in Part II, Item 8 and provides an index to all exhibits filed with the Form 10-K[402][404] Form 10-K Summary The company indicates that no Form 10-K summary is provided - None[410]