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Shoe Carnival profits slump in third quarter
21
Nov '08
Shoe Carnival Inc announced sales and earnings for the third quarter ended November 1, 2008.

Net earnings for the thirteen-week third quarter were $2.6 million, or $0.21 per diluted share, compared to net earnings of $4.2 million, or $0.33 per diluted share, for the thirteen-week prior year third quarter ended November 3, 2007.

Sales for the third quarter were $170.1 million compared to sales of $173.9 million for the prior year third quarter. Comparable store sales for the thirteen-week period ended November 1, 2008 decreased 5.0 percent compared with the thirteen-week period ended November 3, 2007.

The gross profit margin for the third quarter was 27.2 percent compared to 29.1 percent for the third quarter of the prior year. As a percentage of sales, the merchandise margin decreased 1.1 percent while buying, distribution and occupancy costs increased 0.8 percent.

Selling, general and administrative expenses for the third quarter were $42.4 million, or 24.9 percent of sales, compared to $43.6 million, or 25.1 percent of sales, for the third quarter of 2007.

Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, "Our customers continue to be impacted by the economic downturn as buying habits have shifted to periods of need. We saw a definite lift in sales during the back-to-school season. However, sales trended lower during September and October when spending became more discretionary."

Mr. Lemond continued, "Despite operating an additional 17 stores at the end of the third quarter and incurring store closing costs of an additional $321,000 as compared to the prior year, we were still able to decrease our selling, general and administrative expenses by $1.2 million or 0.2 percent as a percentage of sales. We are managing our business conservatively by focusing on reducing inventory and thereby generating cash flow. At the end of the third quarter, we reduced inventories on a per store basis by 8.0 percent and generated $10.8 million in cash provided by operations year-to-date. We had no borrowings on our line of credit at the end of the quarter and look to continue to manage our business to remain free of long-term debt."

Net income for the first nine months of 2008 was $8.4 million, or $0.67 per diluted share, compared with net income of $11.7 million, or $0.87 per diluted share, in the first nine months of last year. Net sales for the first nine months was $490.7 million compared to net sales of $494.3 million for the same period last year.

Comparable store sales for the thirty-nine week period ended November 1, 2008 decreased 3.7 percent compared to the thirty-nine week period last year ended November 3, 2007. The gross profit margin for the first nine months of 2008 was 27.6 percent compared to 28.5 percent last year. Selling, general and administrative expenses, as a percentage of sales, was 24.9 percent for both 2008 and 2007.

Store Growth
Currently, the Company expects to open 24 new stores in fiscal 2008 and close 12 stores.

Shoe Carnival


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