What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-09-06 compared with 2024-06-07 · 104 added, 74 removed, 147 unchanged (55% of the section changed)

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We encourage you to read this in conjunction with our Condensed Consolidated Financial Statements and the notes thereto included in PART I, ITEM 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 as filed with the SEC.

This section of this Quarterly Report on Form 10-Q generally discusses our results for first quarter 2024 and first quarter 2023 and year-over-year comparisons between first quarter 2024 and first quarter 2023.

Referred to herein, first quarter 2024 is the thirteen weeks ended May 4, 2024 and first quarter 2023 is the thirteen weeks ended April 29, 2023.

This section of this Quarterly Report on Form 10-Q generally discusses our results for second quarter 2024 and second quarter 2023 and year-over-year comparisons between second quarter 2024 and second quarter 2023, as well as year-to-date results for, and comparisons between, the two periods.

Referred to herein, second quarter 2024 is the thirteen weeks ended August 3, 2024 and second quarter 2023 is the thirteen weeks ended July 29, 2023.

Also referred to herein, year-to-date 2024 is the twenty-six weeks ended August 3, 2024 and year-to-date 2023 is the twenty-six weeks ended July 29, 2023.

Overview of Our Business

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Shoe Carnival and Shoe Station.

On February 13, 2024, we furthered our acquisition strategy by acquiring all of

the stock of Rogan Shoes, Incorporated (“Rogan’s”).

On February 13, 2024, we furthered our acquisition strategy by acquiring all of the stock of Rogan Shoes, Incorporated (“Rogan’s”).

The acquisition of Rogan’s added 28 physical stores (25 in Wisconsin, 2 in Minnesota, and 1 in Illinois) to our portfolio, positioned us as the market leader in Wisconsin and established a store base in Minnesota, creating additional expansion opportunities.

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Store Sales (1)

August 3, 2024

April 29, 2023

(1) Comparable store sales is a key performance indicator for us.

Comparable store sales include stores that have been open for 13 full months after such stores’ grand opening or acquisition prior to the beginning of the period, including those stores that have been relocated or remodeled.

Therefore, stores recently opened, acquired or closed are not included in comparable store sales.

We generally include e-commerce sales in our comparable store sales as a result of our omnichannel retailer strategy.

July 29, 2023

(1) Comparable stores Net Sales is a key performance indicator for us.

Comparable stores Net Sales include stores that have been open for 13 full months after such stores’ grand opening or acquisition prior to the beginning of the period, including those stores that have been relocated, remodeled or rebannered.

Therefore, stores recently opened, acquired or permanently closed

are not included in comparable stores Net Sales.

We generally include e-commerce sales in our comparable stores Net Sales as a result of our omnichannel retailer strategy.

Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores.

E-commerce sales channels associated with a physical store acquisition will not be included in comparable store sales until the initial physical stores are included.

The 21 original Shoe Station stores acquired and the www.shoestation.com e-commerce site that went live in early February 2023 were included in comparable store sales calculations beginning in first quarter 2023.

All Rogan’s sales (physical stores and e-commerce) are excluded from our comparable store sales.

E-commerce sales channels associated with a physical store acquisition will not be included in comparable stores Net Sales until the initial physical stores are included.

The 21 original Shoe Station stores acquired and the www.shoestation.com e-commerce site that went live in early February 2023 were included in comparable stores Net Sales calculations beginning in first quarter 2023.

All Rogan’s sales (physical stores and e-commerce) are excluded from our comparable stores Net Sales.

Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.

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The 53rd week in Fiscal 2023 caused a one-week shift in our fiscal calendar.

As a result, each of our first three quarters in Fiscal 2024 is shifted one week later

compared to Fiscal 2023.

As a result, each of our first three quarters in Fiscal 2024 is shifted one week later compared to Fiscal 2023.

This one-week shift impacts our year-over-year sales comparisons when there are seasonal sales influences that fall near the respective quarter-end dates.

To minimize the effect of this fiscal calendar shift on comparable store sales, our reported comparable store sales results for first quarter 2024 in this Quarterly Report on Form 10-Q and our other public disclosures compare the 13-week period ended May 4, 2024 to the 13-week period ended May 6, 2023.

As such, changes in comparable store sales may not be consistent with changes in Net Sales reported for the fiscal period.

To minimize the effect of this fiscal calendar shift on comparable stores Net Sales, our reported comparable stores Net Sales results for second quarter 2024 in this Quarterly Report on Form 10-Q and our other public disclosures compare the thirteen-week and twenty-six week periods ended August 3, 2024 to the thirteen-week and twenty-six week periods ended August 5, 2023.

As such, changes in comparable stores Net Sales may not be consistent with changes in Net Sales reported for the fiscal period.

The following table sets forth our results of operations expressed as a percentage of Net Sales for the periods indicated:

April 29, 2023

August 3, 2024

July 29, 2023

August 3, 2024

July 29, 2023

Cost of sales (including buying, distribution and

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Income tax expense

Executive Summary for First Quarter Ended May 4, 2024

During first quarter 2024, we completed the second acquisition in our history, acquiring all the stock of Rogan’s.

The Rogan’s acquisition advanced our strategy to be the nation's leading family footwear retailer, and it immediately positioned us as the market leader in Wisconsin and established a store base in Minnesota.

More information about this acquisition can be found in Note 2 — “Acquisition of Rogan Shoes” to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q.

During first quarter 2024, Net Sales grew 6.8% compared to first quarter 2023, to $300.4 million, led by the following key drivers:

• Shoe Station Net Sales grew in the low double digits as we entered new markets, engaged new customers, continued to grow share in the existing markets we serve and increased Shoe Station’s e-commerce Net Sales;

• Rogan’s, which was acquired on February 13, 2024, delivered first quarter Net Sales of $19.6 million;

• Trends significantly improved at our Shoe Carnival banner, due primarily to our new, digital-first marketing campaign.

On a comparable store basis, as impacted by the calendar shift discussed above under “Results of Operations Summary Information,” Net Sales were down 3.4%.

During first quarter 2024, comparable store sales trends significantly improved as the quarter progressed and included comparable store sales increases in both athletics and sandals.

Overall, comparable store sales demonstrated growth versus the prior year late in first quarter 2024 and were improved compared to the more significant declines experienced in late Fiscal 2023.

Executive Summary for Second Quarter Ended August 3, 2024

During second quarter 2024, Net Sales grew 12.9% compared to second quarter 2023, to $332.7 million, a record level of second quarter Net Sales.

The increase was led by the following key drivers:

• Rogan’s, which was acquired on February 13, 2024, delivered second quarter Net Sales of $22.0 million;

• Shoe Station banner Net Sales grew in the mid-teens, inclusive of e-commerce and new store growth;

• Trends continued to improve at our Shoe Carnival banner, with Net Sales up mid-singles, driven by our digital-first marketing campaign and product assortment.

Due to the calendar shift described above, an important week of the back-to-school season moved into second quarter 2024 that was included in third quarter 2023.

The net effect of this shift increased Net Sales in second quarter 2024 by approximately $20 million compared to second quarter 2023.

On a comparable stores basis, as impacted by this calendar shift, Net Sales were down 2.1%, representing continued improvement from first quarter 2024 when comparable stores Net Sales were down 3.4% and second quarter 2023 when comparable stores Net Sales were down 6.5%.

The improvement in comparable stores Net Sales in second quarter 2024 included increased Net Sales in the sandal and women’s athletics categories.

Long-term gross profit margin expansion has been a key driver of our profit transformation, led by our targeted promotional plans, buying strategies and growth of our Shoe Perks membership.

During first quarter 2024, our gross profit margin was above 35% for the 13th consecutive quarter at 35.6%, an increase of 60 basis points compared to first quarter 2023 and an increase of 600 basis points compared to the same period five years ago.

First quarter 2024 Operating Income totaled $22.5 million and increased 7.5% versus first quarter 2023, driven by higher Net Sales and gross profit margin expansion.

Operating Income in the first quarter 2024 included $485,000 in expenses related to the Rogan’s acquisition, of which $164,000 were in Cost of Sales and $321,000 were in Selling, General and Administrative Expenses (“SG&A”).

First quarter 2024 Net Income was $17.3 million, or $0.63 per diluted share, compared to first quarter 2023 Net Income of $16.5 million, or $0.60 per diluted share as impacted by increased Operating Income, partially offset by a higher effective tax rate.

Merchandise Inventories totaled $411.6 million at the end of first quarter 2024, an increase of approximately $22.1 million versus first the end of first quarter 2023.

The increase reflected Rogan’s inventory of approximately $40 million acquired in February 2024 and the timing of purchases, partially offset by continued inventory efficiencies as part of our ongoing inventory optimization improvement plan.

Excluding the inventory acquired in the Rogan’s acquisition, Merchandise Inventories at the end of first quarter 2024 were approximately 6% lower on a dollar basis compared to the end of first quarter 2023.

At the end of first quarter 2024, we had total Cash, Cash Equivalents and Marketable Securities of $69.5 million.

Cash and Cash Equivalents increased $24.3 million compared to the end of first quarter 2023, and cash flows from operations in first quarter 2024 increased $15.0 million compared to first quarter 2023.

Fiscal 2023 year end marked the 19 th consecutive year the Company ended the fiscal year with no debt, and through first quarter 2024, we continued to fund our operations and growth investments, including the initial purchase price for the Rogan’s acquisition of $44.6 million (net of $2.2 million of cash acquired), from operating cash flows and without incurring debt.

Results of Operations for First Quarter Ended May 4, 2024 Compared to First Quarter Ended April 29, 2023

Net Sales were $300.4 million during first quarter 2024 and increased 6.8% compared to first quarter 2023.

The increase was due to the acquisition of Rogan’s, which added Net Sales of $19.6 million, and new store growth in the Shoe Station banner, partially offset by a 3.4% decrease in comparable store sales.

E-commerce sales were approximately 9% of merchandise sales in first quarter 2024, compared to 8% in first quarter 2023, and were favorably impacted by the relaunch of www.shoecarnival.com in third quarter 2023 and the launch of www.shoestation.com in first quarter 2023.

Gross Profit was $106.8 million during first quarter 2024, an increase of $8.3 million compared to first quarter 2023.

Gross profit margin in first quarter 2024 was 35.6% compared to 35.0% in first quarter 2023.

Merchandise margin increased 50 basis points primarily due to stable product margins and lower inbound freight and e-commerce shipping costs.

Buying, distribution and occupancy (“BDO”) costs were higher in first quarter 2024 compared to first quarter 2023 due to rent associated with operating more stores;

however, BDO costs increased gross profit margin by 10 basis points due to the higher Net Sales in first quarter 2024.

During second quarter 2024, our gross profit margin was above 35% for the 14 th consecutive quarter at 36.1%, an increase of 30 basis points compared to second quarter 2023.

Second quarter 2024 Operating Income totaled $30.1 million and increased 22.0% versus second quarter 2023, driven by higher Net Sales and higher gross profit margin.

Operating Income in second quarter 2024 included $430,000 in merger and integration expenses related to the Rogan’s acquisition, of which $333,000 were in Cost of Sales and $97,000 were in Selling, General and Administrative Expenses (“SG&A”).

Second quarter 2024 Net Income was $22.6 million, or $0.82 per diluted share, compared to second quarter 2023 Net Income of $19.4 million, or $0.71 per diluted share.

The increase reflected the higher Operating Income, partially offset by a higher effective tax rate.

Second quarter 2024 ranked as the third best second quarter Diluted Net Income per Share in our history and was in the top ten of any historical quarter.

Merchandise Inventories totaled $425.5 million at the end of second quarter 2024, an increase of approximately $16.1 million compared to the end of second quarter 2023.

The increase reflected Rogan’s inventory, which was approximately $40 million when acquired in February 2024, partially offset by continued inventory efficiencies as part of our ongoing inventory optimization improvement plan.

Excluding the inventory acquired in the Rogan’s acquisition, Merchandise Inventories at the end of second quarter 2024 were approximately 7% lower on a dollar basis compared to the end of second quarter 2023.

At the end of second quarter 2024, we had total Cash, Cash Equivalents and Marketable Securities of $84.5 million.

Cash and Cash Equivalents increased $37.1 million compared to the end of second quarter 2023, and Cash Flows from Operations in year-to-date 2024 increased $18.4 million compared to year-to-date 2023.

Fiscal 2023 year end marked the 19 th consecutive year we ended the fiscal year with no debt, and in year-to-date 2024, we continued to fund our operations and growth investments, including the purchase of Rogan’s, from operating cash flows and without incurring debt.

In year-to-date 2024, we have paid $44.4 million for Rogan’s and, based on the current preliminary purchase price adjustment estimates, we will owe another $445,000 in the near term.

Up to $5.0 million more in consideration will be due in 2027 if three-year performance targets are met.

Results of Operations for Second Quarter Ended August 3, 2024 Compared to Second Quarter Ended July 29, 2023

Net Sales were $332.7 million during second quarter 2024 and increased 12.9% compared to second quarter 2023.

The increase was due to the acquisition of Rogan’s, which added Net Sales of $22.0 million, the effect of the calendar shift adding approximately $20 million of Net Sales to second quarter 2024 and new store growth in the Shoe Station banner, partially offset by a 2.1% decrease in comparable stores Net Sales.

E-commerce sales were approximately 9% of merchandise sales in both second quarter 2024 and second quarter 2023.

Gross Profit was $119.9 million during second quarter 2024, an increase of $14.5 million compared to second quarter 2023.

Gross profit margin in second quarter 2024 was 36.1% compared to 35.8% in second quarter 2023.

The increase in gross profit margin was primarily due to improved leverage of Buying, distribution and occupancy (“BDO”) costs due to the higher Net Sales in second quarter 2024.

BDO costs were higher in second quarter 2024 compared to second quarter 2023 due primarily to occupancy costs associated with operating more stores.

The increase in gross profit margin was partially offset by a 50 basis point decrease in merchandise margin in second quarter 2024 compared to second quarter 2023 due to competitive intensity.

Selling, General and Administrative Expenses

SG&A increased $6.7 million in first quarter 2024 to $84.3 million compared to $77.6 million in first quarter 2023.

The increase was primarily due to higher selling expenses related to Rogan’s and increased marketing investment during first quarter 2024.

As a percentage of Net Sales, SG&A were 28.1% in first quarter 2024 compared to 27.6% in first quarter 2023.

The effective income tax rate for first quarter 2024 was 25.4% compared to 22.6% for first quarter 2023.

SG&A increased $9.1 million in second quarter 2024 to $89.9 million compared to $80.8 million in second quarter 2023.

The increase was primarily due to higher compensation-related costs, including compensation costs related to Rogan’s, and other Rogan’s-related operating expenses.

As a percentage of Net Sales, SG&A were 27.1% in second quarter 2024 compared to 27.4% in second quarter 2023.

The effective income tax rate for second quarter 2024 was 26.3% compared to 22.3% for second quarter 2023.

Our provision for income taxes is based on the current estimate of our annual effective tax rate and is adjusted as necessary for quarterly events.

The higher effective tax rate in first quarter 2024 compared to the prior year was due to the decrease in tax benefits from share-settled equity awards.

The higher effective tax rate in second quarter 2024 compared to second quarter 2023 was due to the decrease in tax benefits from share-settled equity awards in second quarter 2024 and a state deferred tax benefit included in second quarter 2023 that did not recur in Fiscal 2024.

For the full 2024 fiscal year, we expect our tax rate to be between 25.5% and 26.0% compared to the 23.7% effective tax rate recognized during the full 2023 fiscal year.

Results of Operations Year-to-Date Through August 3, 2024 Compared to Year-to-Date Through July 29, 2023

Net Sales were $633.1 million during year-to-date 2024 and increased 9.9% compared to year-to-date 2023.

The increase was due to the acquisition of Rogan’s, which added Net Sales of $41.6 million, the effect of the calendar shift adding approximately $25 million of Net Sales to year-to-date 2024 results and new store growth in the Shoe Station banner, partially offset by a 2.8% decrease in comparable stores Net Sales.

E-commerce sales were approximately 9% of merchandise sales in year-to-date 2024, compared to 8% in year-to-date 2023.

Year-to-date 2024 e-commerce sales were favorably impacted by the relaunch of www.shoecarnival.com in third quarter 2023 and the launch of www.shoestation.com in first quarter 2023.

Gross Profit was $226.7 million during year-to-date 2024, an increase of $22.8 million compared to year-to-date 2023.

Gross profit margin in year-to-date 2024 was 35.8% compared to 35.4% in year-to-date 2023.

BDO costs were higher in year-to-date 2024 compared to year-to-date 2023 due to occupancy costs associated with operating more stores;

however, BDO costs increased gross profit margin by 50 basis points due to the higher Net Sales in year-to-date 2024.

Merchandise margin decreased 10 basis points.

Selling, General and Administrative Expenses

SG&A increased $15.8 million, or 10.0%, in year-to-date 2024 to $174.2 million compared to $158.4 million in year-to-date 2023.

The increase was due to higher compensation-related costs, including compensation costs related to Rogan’s, and other Rogan’s-related operating expenses and increased marketing investment in year-to-date 2024.

As a percentage of Net Sales, SG&A were 27.5% in both year-to-date 2024 and year-to-date 2023.

Interest Income and Interest Expense

Changes in our interest income and expense increased our income before taxes by $428,000 in year-to-date 2024 compared to year-to-date 2023.

This increase was primarily due to higher interest earned on invested cash balances.

The effective income tax rate for year-to-date 2024 was 25.9% compared to 22.4% for year-to-date 2023.

The higher effective tax rate in year-to-date 2024 compared to year-to-date 2023 was due to the decrease in tax benefits from share-settled equity awards in year-to-date 2024 and a state deferred tax benefit included in second quarter 2023 that did not recur in Fiscal 2024.

Liquidity and Capital Resources

Our primary sources of liquidity are $69.5 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of the first quarter 2024, cash generated from operations and availability under our $100 million Credit Agreement.

Our primary sources of liquidity are $84.5 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of second quarter 2024, cash generated from operations and availability under our $100 million Credit Agreement.

We believe our resources will be sufficient to fund our cash needs, as they arise, for at least the next 12 months.

Our primary uses of cash are normally for working capital, which are principally inventory purchases, investments in our stores, such as new stores, modernization/remodels and relocations, distribution center initiatives, lease payments associated with our real estate leases, potential dividend payments, potential share repurchases under our share repurchase program and the financing of capital projects, including investments in new systems.

Our primary uses of cash are normally for working capital, which are principally inventory purchases, investments in our stores, such as new stores, modernization/remodels, relocations, rebannered stores, distribution center initiatives, lease payments associated with our real estate leases, potential dividend payments, potential share repurchases under our share repurchase program and the financing of capital projects, including investments in new systems.

As part of our growth strategy, we have also pursued strategic acquisitions of other footwear retailers.

Cash Flow - Operating Activities

Net cash generated from operating activities was $17.1 million in first quarter 2024 compared to $2.1 million in first quarter 2023.

The change in operating cash flow was primarily driven by the timing of inventory purchases.

Working capital increased on a year-over-year basis and totaled $355.8 million at May 4, 2024 compared to $318.3 million at April 29, 2023.

The increase was primarily attributable to a higher cash balance and higher Merchandise Inventories levels due to the acquisition of Rogan’s, partially offset by increased Accounts Payable.

Our current ratio was 3.4 as of May 4, 2024 and as of April 29, 2023.

Net cash generated from operating activities was $40.7 million in year-to-date 2024 compared to $22.4 million in year-to-date 2023.

The change in operating cash flow was primarily driven by the timing of inventory, tax and prepaid contracts payments and higher earnings.

Working capital increased on a year-over-year basis and totaled $377.1 million at August 3, 2024 compared to $330.6 million at July 29, 2023.

The increase was primarily attributable to a higher cash balance and higher Merchandise Inventories levels due to the acquisition of Rogan’s.

Our current ratio was 3.4 as of August 3, 2024 compared to 3.1 as of July 29, 2023.

Cash Flow – Investing Activities

Our cash outflows for investing activities are normally for capital expenditures.

During the first quarters of 2024 and 2023, we expended $10.2 million and $15.0 million, respectively, for the purchase of Property and Equipment, primarily related to store modernization.

During first quarter 2024, our Rogan’s acquisition resulted in the payment of initial cash consideration of $44.6 million, net of cash acquired.

During year-to-date 2024 and 2023, we expended $15.7 million and $30.6 million, respectively, for the purchase of Property and Equipment, primarily related to store modernization and opening new Shoe Station stores.

Our Rogan’s acquisition in first quarter 2024 resulted in the payment of initial cash consideration of $44.4 million, net of cash acquired, during year-to-date 2024.

Additional information regarding the Rogan’s acquisition, including information on the additional contingent consideration of up to $5.0 million, can be found in Note 2 — “Acquisition of Rogan Shoes” to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q.

We invest in publicly traded mutual funds designed to mitigate income statement volatility associated with our non-qualified deferred compensation plan.

The balance of these Marketable Securities was $12.6 million at May 4, 2024, compared to $12.2 million at February 3, 2024 and $11.5 million at April 29, 2023.

The balance of these Marketable Securities was $12.8 million at August 3, 2024, compared to $12.2 million at February 3, 2024 and July 29, 2023.

Additional information can be found in Note 5 — “Fair Value Measurements” to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q.

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Our cash inflows from financing activities generally reflect stock issuances to employees under our Employee Stock Purchase Plan and borrowings under our Credit Agreement.

During first quarter 2024, net cash used in financing activities was $4.4 million compared to $5.8 million during first quarter 2023.

During year-to-date 2024, net cash used in financing activities was $8.0 million compared to $8.5 million during year-to-date 2023.

The decrease in net cash used in financing activities was primarily due to the decrease in shares surrendered by employees to pay taxes on stock-based compensation awards, partially offset by increased dividend payments.

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Material covenants associated with the Credit Agreement require that we maintain a minimum net worth of $250 million and a consolidated interest coverage ratio of not less than 3.0 to 1.0.

We were in compliance with these covenants as of May 4, 2024.

We were in compliance with these covenants as of August 3, 2024.

The Credit Agreement contains certain restrictions.

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A commitment fee is charged at 0.2% to 0.3% per annum, depending on our achievement of certain performance criteria, on the unused portion of the lenders’ commitment.

During first quarter 2024, we did not borrow or repay funds under the Credit Agreement.

Letters of credit outstanding were $1.0 million at May 4, 2024 and our borrowing capacity was $99.0 million.

During year-to-date 2024, we did not borrow or repay funds under the Credit Agreement.

Letters of credit outstanding were $1.0 million at August 3, 2024 and our borrowing capacity was $99.0 million.

The terms “net worth”, “consolidated interest coverage ratio”, “consolidated funded indebtedness”, “consolidated rental expense”, “consolidated EBITDA”, “base rate” and “Adjusted Term SOFR” are defined in the Credit Agreement.

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Capital Expenditures

Capital expenditures for fiscal 2024, including actual expenditures in first quarter 2024, are expected to be between $25 million and $35 million, with approximately $15 million to $20 million to be used for new stores and modernization and approximately $10 million to $15 million for upgrades to our Evansville distribution center and e-commerce sales channels, various other store improvements, continued investments in technology and normal asset replacement activities.

Capital expenditures for Fiscal 2024, including actual expenditures in year-to-date 2024, are expected to be between $30 million and $35 million, with approximately $20 million to $25 million to be used for new and rebannered stores and modernization and approximately $10 million to $15 million for upgrades to our Evansville distribution center and e-commerce sales channels, various other store improvements, continued investments in technology and normal asset replacement activities.

The resources allocated to projects are subject to near-term changes depending on the supply chain and potential inflationary and other macroeconomic impacts.

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Store Portfolio

During first quarter 2024, we opened two Shoe Station branded stores and acquired 28 Rogan’s stores, which are being integrated into our Shoe Station banner.

We opened three new Shoe Station branded stores, permanently closed one Shoe Carnival branded store, and acquired 28 Rogan’s stores, which are being integrated into our Shoe Station banner, in year-to-date 2024.

Increasing market penetration by adding new stores is a key component of our growth strategy.

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We aim to grow the Shoe Station banner to over 100 stores over the same time period.

Since our acquisition of Shoe Station in December 2021, we have gained insights about the Shoe Station customer base and have defined markets where we believe a Shoe Station bannered store may outperform our current Shoe Carnival bannered store located in those markets.

In year-to-date 2024, we have closed a Shoe Carnival bannered store and opened a Shoe Station bannered store in three test markets, and each test market has grown comparable stores Net Sales since transition.

To further test and learn, we plan to close five to ten additional Shoe Carnival bannered stores in the second half of Fiscal 2024 and open Shoe Station bannered stores in those markets.

Future store growth may continue to be impacted by macroeconomic uncertainty and our ability to identify desirable locations and/or acquisition partners.

Dividends and Share Repurchases

On March 13, 2024, the Board of Directors approved a 12.5% increase in our cash dividend paid to shareholders in first quarter 2024.

The quarterly cash dividend of $0.135 per share was paid on April 22, 2024 to shareholders of record as of the close of business on April 8, 2024.

In first quarter 2023, the dividend paid was $0.100 per share.

During the first quarters of 2024 and 2023, we returned $3.7 million and $2.9 million, respectively, to our shareholders through our quarterly cash dividends.

On June 25, 2024, the Board of Directors approved the payment of a second quarter 2024 cash dividend paid to our shareholders.

The quarterly cash dividend of $0.135 per share was paid on July 22, 2024 to shareholders of record as of the close of business on July 8, 2024.

In second quarter 2023, the dividend paid was $0.100 per share.

During year-to-date 2024 and 2023, we returned $7.4 million and $5.7 million, respectively, to our shareholders through our quarterly cash dividends.

The declaration and payment of any future dividends are at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors.

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The actual number and value of the shares to be purchased will depend on the performance of our stock price and other market and economic factors.

No share repurchases have been made to date in Fiscal 2024 and no share repurchases were made during first quarter 2023.

No share repurchases have been made to date in Fiscal 2024 and no share repurchases were made during year-to-date 2023.

Our Credit Agreement permits the payment of dividends and repurchase of shares, subject to certain covenants and restrictions.

See “Credit Agreement” above and Note 9 — “Debt” to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 for a further discussion of the Credit Agreement, its covenants and restrictions regarding dividends and share repurchases and other matters.

The Credit Agreement’s covenants and restrictions did not change during first quarter 2024.

The Credit Agreement’s covenants and restrictions did not change during year-to-date 2024.

We have three distinct peak selling periods:

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We do not use interest rate derivative instruments to manage exposure to changes in market interest rates.

We had no borrowings outstanding during first quarter 2024.

We had no borrowings outstanding during year-to-date 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis