What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-26 compared with 2020-03-31 · 205 added, 100 removed, 226 unchanged (57% of the section changed)

3 unchanged sentences

We differentiate our retail concept from our competitors by our distinctive, fun and promotional marketing efforts.

On average, our stores are approximately 10,800 square feet, generated approximately $2.5 million in annual sales in fiscal 2019 and carry inventory of approximately 27,800 pairs of shoes per location.

As of February 1, 2020, we operated 392 stores in 35 states and Puerto Rico and offered online shopping at www.shoecarnival.com.

On average, our physical stores are approximately 10,800 square feet and carry inventory of approximately 25,200 pairs of shoes per location.

Including e-commerce sales in close proximity to a physical store, our physical stores each generated an average of $2.5 million in annual sales in fiscal 2020.

As of January 30, 2021, we operated 383 stores in 35 states and Puerto Rico and offered online shopping at www.shoecarnival.com.

We are an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996.

12 unchanged sentences

and enhanced sell-through of in-season goods.

A similar customer experience is reflected in our e-commerce site and mobile app through special promotions and limited time sales.

A similar customer experience is reflected in our e-commerce platform through special promotions and limited time sales.

Broad merchandise assortment

1 unchanged sentence

Our product assortment includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes for the entire family.

Our average store carries shoes in four general categories – women’s, men’s, children’s and athletics, as well as a broad range of accessories such as socks, belts, shoe care items, handbags, hats, sport bags, backpacks and wallets.

Footwear is organized by category and brand, creating strong brand statements within the aisles.

1 unchanged sentence

Our signage may highlight a vendor’s product offerings or sales promotions, or may highlight seasonal or lifestyle statements by grouping similar footwear from multiple vendors.

Our e-commerce site offers customers a large assortment of products in all categories of footwear with an increased depth of sizes and colors that may not be available in all stores.

Over 100 of our physical stores have strongly branded Nike shops that highlight Nike products within the stores, and we expect to add more Nike shops to our physical stores through 2023.

Our e-commerce platform offers customers a large assortment of products in all categories of footwear with an increased depth of sizes and colors that may not be available in all stores.

Value pricing for our customers

1 unchanged sentence

We believe that by offering a wide selection of popular styles of name brand and private label merchandise at competitive prices, we generate broad customer appeal.

Additionally, the time-conscious customer appreciates the convenience of one-stop shopping for the entire family, whether this occurs at any of our store locations, online at www.shoecarnival.com or through our mobile app.

Additionally, the time-conscious customer appreciates the convenience of one-stop shopping for the entire family, whether this occurs at any of our store locations, online at

shoecarnival.com or through our mobile app.

Our fun and promotional shopping environment adds to our value - priced reputation.

4 unchanged sentences

We locate stores predominantly in open-air shopping centers in order to take advantage of lower occupancy costs and maximize our exposure to value-conscious shoppers.

We continue to invest in our existing store locations and expect to remodel and refresh many of our physical stores over the next three fiscal years.

Heavy reliance on information technology

6 unchanged sentences

Our data warehouse enables our merchandising and store operations staff to analyze sales, margin and inventory levels by location, by day, down to the size of shoe.

Using this information, our merchandise managers meet regularly with vendors to compare their product sales, gross margins and return on inventory investment against previously stated objectives.

We believe timely access to key business data has enabled us to drive annual comparable store sales increases, manage our markdown activity and improve inventory turnover.

In fiscal 2019, we began developing and deploying new processes underlying our traffic management (“TMS”), warehouse management (“WMS”) and order management (“OMS”) systems in order to build a more efficient supply chain, position us for long-term growth and ultimately enhance customer satisfaction and convenience in an increasingly competitive environment.

We believe that the expected enhancements to these systems will enable us to meet the complex demands of multi-channel fulfillment, but they will require significant investments in infrastructure and technology.

We have partnered with a third-party developer to provide a hosted solution for the deployment of the necessary software and tools to implement these improvements.

We expect these systems to go live in mid-fiscal 2020.

Using this information, our merchandise managers meet regularly with vendors to compare their product sales and margins and return on inventory investment against previously stated objectives.

We believe timely access to key business data has enabled us to drive our comparable store sales, manage our markdown activity and improve inventory turnover.

In fiscal 2020, we implemented new Traffic, Warehouse and Order Management Systems (“TMS”, “WMS”, “OMS”, respectively).

We believe these cloud-based, software-as-a-service arrangements will enable us to meet the complex demands of multi-channel fulfillment, enhance our supply chain, position us for long-term growth and ultimately enhance customer satisfaction and convenience in an increasingly competitive environment.

Disciplined Approach to Capital Management

We remain focused on funding our operations without leverage.

We ended fiscal 2020 with no debt and $106.5 million of cash and cash equivalents.

Over the last five years, we have had no debt outstanding and a cash and cash equivalents balance of at least $48 million at the end of each fiscal year.

We believe this approach increases our ability to make impactful long-term decisions and enhances our stakeholder relationships.

Over the last five fiscal years we have returned approximately $181.6 million to our shareholders through share repurchases and dividends.

Growth Strategy

1 unchanged sentence

Increasing market penetration by opening new stores has historically been a key component of our growth strategy, and we continue to focus on generating positive long-term financial performance for our store portfolio.

We opened one new store in fiscal 2019 and expect to open a limited number of new stores in existing markets in fiscal 2020.

We expect to pursue opportunities for brick-and-mortar store growth across large and mid-size markets as we leverage customer data from our Customer Relationship Management (“CRM”) program and more attractive real estate options become available.

Further, our future store growth may continue to be impacted by the current economic uncertainty associated with the COVID-19 pandemic.

We opened four new stores in fiscal 2020 and expect to open a limited number of new stores in existing markets in fiscal 2021.

We believe our current store footprint provides for growth nationwide as well as fill-in opportunities within existing markets.

We expect to pursue opportunities for store growth across large and mid-size markets as we leverage customer data from our customer relationship management (“CRM”) program and more attractive real estate options become available.

Furthermore, our future store growth may continue to be impacted by the economic uncertainty

associated with the COVID-19 pandemic.

Our CRM program is more fully described below under “Multi-Channel Strategy – Customer Relationship Management.”

4 unchanged sentences

We believe the advantages of clustering stores in existing markets will lead to cost efficiencies and overall incremental sales gains that should more than offset any adverse effect on sales of existing stores.

We have continuously analyzed our portfolio of stores, with a concentration on underperforming stores, to meet our long-term goal of increasing shareholder value through increasing operating income.

Our objective is to identify and address underperforming stores that produce low or negati ve contribution and either renegotiate lease terms, relocate or close those stores.

Based on this analysis, we closed six stores in fiscal 201 9 and expect store closures to occur in fiscal 20 20 .

Even though store closings could reduce our overall net sal es volume, we believe this strategy w ill realize long-term improvement in operating income and diluted net income per share.

As of February 1, 2020, we operated 392 stores located across 35 states and Puerto Rico.

We continuously analyze our portfolio of stores, with a concentration on underperforming stores, to meet our long-term goal of increasing shareholder value through increasing operating income.

Our objective is to identify and address underperforming stores that produce low or negative contribution and either renegotiate lease terms, relocate or close those stores.

Based on this analysis, we closed 13 stores in fiscal 2020 and expect to close nine stores in fiscal 2021.

Even though store closings could reduce our overall net sales volume, we believe this strategy will realize long-term improvement in operating income and diluted net income per share.

As of January 30, 2021, we operated 383 stores located across 35 states and Puerto Rico.

Our stores averaged approximately 10,800 square feet, ranging in size from 4,000 to 26,000 square feet.

1 unchanged sentence

Our traditional store prototype typically utilizes between 8,000 and 12,000 square feet of leased area.

During the past several years, we began to roll out scalable store prototypes that reflect the diverse population densities of our markets.

These scalable prototypes utilize a wide range of leased space based on sales potential and opportunistic space availability.

We also utilize scalable store prototypes that reflect the diverse population densities of our markets.

These prototypes utilize a wide range of leased space based on sales potential and opportunistic space availability.

The sales area is approximately 85% of the typical gross store footprint.

6 unchanged sentences

Percentage of store base remodeled

The following table identifies the number of our stores in each state and Puerto Rico as of February 1, 2020:

The following table identifies the number of our stores in each state and Puerto Rico as of January 30, 2021:

State/Territory

7 unchanged sentences

The time required to open a store after signing a lease depends primarily upon the property owner’s ability to deliver the premises.

After we accept the premises from the property owner, we can generally open a turnkey store within 60 days and

open an “as-is” store in up to 115 days.

A turnkey store is g enerally available for immediate use from the landlord , as the landlord performs nearly all aspect s of construction and delivers the store in a condition ready for fixtures.

There are typically minimal tenant improvement allowances negotiated with lan dlor ds for turnkey stores.

An “ as-is ” store typically requires more significant capital investment by us, as the landlord perform s minimal construction and delivers the space “as-is” while representing that the location is free of hazardous materials.

After we accept the premises from the property owner, we can generally open a turnkey store within 60 days and open an “as-is” store in up to 115 days.

A turnkey store is generally available for immediate use from the landlord, as the landlord performs nearly all aspects of construction and delivers the store in a condition ready for fixtures.

There are typically minimal tenant improvement allowances negotiated with landlords for turnkey stores.

An “as-is” store typically requires more significant capital investment by us, as the landlord performs minimal construction and delivers the space “as-is” while representing that the location is free of hazardous materials.

There are typically significant tenant improvement allowances negotiated with landlords for “as-is” stores.

To do our part in helping to prevent the rapid spread of COVID-19 and to align with the evolving guidance from federal, state and local governments and health officials , we temporarily closed our stores across the United States and Puerto Rico effective March 19, 2020 until April 2, 2020.

Our website and mobile app are continuing to take e-commerce orders, which are generally being fulfilled at our store locations.

Store associates are being paid as scheduled during this timeframe.

As guidance and mandates from governments and health officials continue to evolve, closures to some, or all, of our operations will need to extend beyond the announced closure period.

To do our part in helping to prevent the rapid spread of COVID-19 and to align with the evolving guidance from federal, state and local governments and health officials , we temporarily closed all of our stores across the United States and Puerto Rico effective March 19, 2020.

We began reopening stores in accordance with applicable public health guidelines in late April 2020.

By the beginning of our second fiscal quarter, approximately 50% of our stores were reopened, and by early June, substantially all of our stores had reopened.

Our e-commerce platform has been fully operational during the pandemic, with e-commerce orders generally fulfilled by our store locations.

As of January 30, 2021, we do not have any stores closed due to the COVID-19 pandemic.

However, we continue to closely monitor the impact of the COVID-19 pandemic on all facets of our business and will take the necessary steps to ensure the health and safety of our associates and customers.

This could include future, temporary store closures or modifications to our normal store operating processes.

Multi-Channel Strategy

2 unchanged sentences

Our customer’s shopping journey bridges multiple devices and touchpoints.

We are committed to providing an incomparable customer experience across all channels and believe that our ongoing multi-channel initiatives represent the cornerstone for our long-term growth and are aligned with rapidly changing consumer behavior.

changing consumer behavior.

These initiatives are an integral part of expanding our multi-channel footprint and creating opportunities to connect with our customers in new ways.

Customer Relationship Management

In fiscal 2019, we continued to invest in CRM and completed the launch of our new, upgraded CRM platform in the third quarter of fiscal 2019.

This new platform includes a new production CRM database for a single source of customer information, identity resolution for multiple customer records, a new loyalty management platform and a new campaign management solution.

This new CRM platform provides our marketing, merchandising, analytics and real estate teams with a holistic view of our customer’s shopping behaviors and forms the foundation of our digital marketing efforts and our Shoe Perks loyalty program (“Shoe Perks”).

Our improved view into customer data allows us to more effectively communicate with our customers on a segmented basis through all owned and paid media channels and tailor the merchandise mix down to a store level.

Through transaction data, we are gaining useful insights into our customers’ shopping habits, including where, when and how they shop our stores and navigate our online presence.

Additionally, we are gaining a deeper understanding of the brands and categories that our high-value customers consistently purchase so that we can continue to deliver strong performance at a geographic and store level.

CRM allows us to drive customer retention by delivering each customer more individualized shopping opportunities and experiences and aids in gaining a better understanding of our existing customer base as well as identifying new customers.

Our CRM program continues to provide valuable customer insights to our business, resulting in more efficient and effective marketing outreach.

CRM provides our marketing, merchandising, analytics and real estate teams with a holistic view of our customer’s shopping behaviors and forms the foundation of our digital marketing efforts and our Shoe Perks loyalty program (“Shoe Perks”).

Our view into customer data allows us to more effectively communicate with our customers on a segmented basis through all owned and paid media channels and tailor the merchandise mix down to a store level.

Through transaction data, we gain useful insights into our customers’ shopping habits, including where, when and how they shop our stores and navigate our online presence.

Additionally, our CRM program allows us to gain a deeper understanding of the brands and categories that our high-value customers consistently purchase so that we can continue to deliver strong performance at a geographic and store level.

Our CRM program allows us to drive customer retention by delivering each customer more individualized shopping opportunities and experiences and aids in gaining a better understanding of our existing customer base as well as identifying new customers.

We expect segmentation and activation of our high-value customers through data analysis and targeting the broader market of ‘look-a-like’ customers to play a key role in our growth.

Customers who enroll in our Shoe Perks loyalty program or register on our website receive personalized e-mail communications from us.

Customers who enroll in Shoe Perks or register on our website receive personalized e-mail communications from us.

These communications afford us additional opportunities to highlight our broad product assortment and promotions.

Our Shoe Perks loyalty program provides customers with a heightened shopping experience, which includes exclusive offers and rewards that are earned by making purchases either in-store or online and through participating in other point earning opportunities that facilitate engagement with our brand.

Shoe Perks provides customers with a heightened shopping experience, which includes exclusive offers and rewards that are earned by making purchases either in-store or online and through participating in other point earning opportunities that facilitate engagement with our brand.

We remain highly focused on expanding our Shoe Perks enrollment.

In fiscal 2019, we added 2.4 million new members , which brought total loyalty membership to 23.9 million members at the end of fiscal 2019, an 11 % increase over fiscal 2018.

In fiscal 2020, we added 2.3 million new members, which brought total Shoe Perks membership to 26.3 million members at the end of fiscal 2020, an approximate 10% increase over fiscal 2019.

Purchases from Shoe Perks members were approximately 67% of our comparable net sales.

We believe our Shoe Perks program affords us tremendous opportunity to communicate, build relationships, and engage with our most loyal sh oppers and increase our customer touch points, which we believe will result in long-term sales gains.

We believe our Shoe Perks program affords us tremendous opportunity to communicate, build relationships, and engage with our most loyal shoppers and increase our customer touch points, which we believe will result in long-term sales gains.

Our most loyal customers, those who qualify for our “Gold” tier, receive additional rewards and incentives.

The Gold tier represents approximately 15 % of o ur members , and the average transaction value for these customers was 38 % higher than non-Gold Shoe Perks members in fiscal 2019 .

In fiscal 2019, we added 454,000 new Gold tier Shoe Perks members , which brought total Gold tier membership to 3.5 million me mbers at the end of fiscal 2019, a 15 % increase over fiscal 2018.

E-commerce and Mobile

Our e-commerce and mobile storefronts are designed to improve the customer’s journey and allow us to provide a more relevant and personalized shopping experience for our customers.

We continue to build upon this foundation and added new functionality in fiscal 2019, including mobile payment options and the ability to shop from a specific Shoe Carnival store location.

Due to our multi-channel retailer strategy, we view our e-commerce and mobile sales as an extension of our physical stores.

Given our desire to connect with customers anywhere and anytime, our mobile strategy is an important component of the customer’s journey and our overall multi-channel strategy.

A majority of our customers are accessing our e-commerce site on their mobile devices, and we continue to enhance our mobile web experience to better serve the unique needs of each of our customers.

In addition, our mobile app offers native e-commerce functionality directly from the app and provides Shoe Perks members easy access to their rewards.

When in physical stores, customers can use their mobile devices to scan bar codes that access product ratings and reviews and find extended sizes.

The Gold tier represents approximately 10% of our members, and the average transaction value for these customers was approximately 40% higher than non-Gold tier Shoe Perks members in fiscal 2020.

E-commerce Platform

Our e-commerce platform is an extension of our physical stores and is designed to improve the customer journey by providing a more relevant and personalized shopping experience.

Our e-commerce platform played a critical role in fiscal 2020 due to the challenges associated with the COVID-19 pandemic.

In fiscal 2020, our customers embraced our e-commerce platform as demand for online shopping surged, and we exceeded our e-commerce sales expectations.

During fiscal 2020, we also added a new online payment platform, which we believe helped to generate a record increase in multi-channel sales.

This payment solution allows customers to enjoy flexible payment options for their purchases, such as separating purchases into multiple, interest free payments.

E-commerce sales represented approximately 19% of our merchandise sales in fiscal 2020 and 6% of our merchandise sales in fiscal 2019.

Ship-From-Store

15 unchanged sentences

Order Management System

In fiscal 2020, we will launch a new hosted OMS, which we expect will enhance the operational efficiency of our direct-to-consumer programs.

Combined with our new WMS capabilities, we will have the ability to optimize the allocation of e-commerce and Shoes 2U orders and further leverage our distribution center.

Moreover, with our new OMS, we will have increased insight into customer transactions, enhanced visibility as to availability of inventory and seamless orchestration of orders across the Company.

In fiscal 2020 we launched a cloud-based OMS, which will enhance the operational efficiency of our direct-to-consumer programs.

Combined with our new WMS, our new OMS allows us to optimize the allocation of e-commerce and Shoes 2U orders and further leverage our distribution center.

Moreover, with our new OMS, we have seamless orchestration of orders across the Company as well as enhanced visibility of available inventory and insight into customer transactions.

Critical to our success is maintaining fresh, fashionable merchandise at moderate prices.

5 unchanged sentences

Management encourages store operations personnel to provide input to our merchandising staff regarding market specific fashion trends.

Our e-commerce site offers customers an opportunity to choose from a large selection of products in all of the same categories of footwear and introduces our concept to consumers who are new to Shoe Carnival, in both existing and new markets.

Our stores and e-commerce site offer a broad assortment of current-season, name brand footwear, supplemented with private label merchandise.

Our stores carry complementary accessories such as socks, belts, shoe care items, handbags, hats, sport bags, backpacks and wallets, while our e-commerce site offers certain handbags, sport bags and backpacks.

We purchase merchandise from approximately 160 footwear vendors.

Our e-commerce platform offers customers an opportunity to choose from a large selection of products in all of the same categories of footwear and introduces our concept to consumers who are new to Shoe Carnival, in both existing and new markets.

In fiscal 2020, we commenced implementation of a new merchandise planning system that will provide a unified strategic planning and budgeting process that is supported by various solutions, including strategic and assortment planning, store allocation and replenishment and in-season management.

This cloud-based platform is a multi-year project.

We believe this collaborative platform will unify our buy plans, optimize inventory levels, help achieve more sales at higher margins and allow us to set goals for multiple channels and formats common in today’s competitive environment.

Our stores and e-commerce platform offer a broad assortment of current-season, name brand footwear, supplemented with private label merchandise and accessories.

We purchase merchandise from 177 footwear vendors.

Management of the purchasing function is the responsibility of our Executive Vice President – Chief Merchandising Officer.

2 unchanged sentences

In fiscal 2020, two branded suppliers, Nike, Inc.

and Skechers USA, Inc., collectively accounted for approximately 41% of our net sales.

and Skechers USA, Inc.,

collectivel y accounted for approximately 43 % of our net sales.

accounted for approximately 33 % and Skechers USA, Inc.

1 unchanged sentence

Name brand suppliers also provide us with cooperative advertising and visual merchandising funds.

A loss of any of our key suppliers in certain product categories or our inability to obtain name brand or other merchandise from suppliers at competitive prices could have a material adverse effect on our business.

As is common in the industry, we do not have any long ‑term contracts with our suppliers.

11 unchanged sentences

The use of digital media continues to grow in importance in our marketing mix, particularly as we leverage data that comes directly from our customers as part of our CRM solution, allowing us to directly communicate with our core customers.

For fiscal 2019, approximately 48% of our total advertising budget was directed to digital media, television and radio.

Print media (including inserts, direct mail and newspaper advertising) and outdoor advertising accounted for the balance of our total advertising budget.

In fiscal 2020, we invested more heavily in targeted digital advertising to drive customers to our e-commerce platform.

We believe this was an effective way to counter the pandemic and the related shifts in back-to-school shopping.

Approximately 70% of our total advertising budget in fiscal 2020 was directed to digital media.

Television, radio, print media (including inserts, direct mail and newspaper advertising) and outdoor advertising accounted for the balance of our total advertising budget.

We strive to make each store opening a major retail event.

2 unchanged sentences

We operate a single 410,000 square foot distribution center located in Evansville, Indiana.

Our facility is leased from a third party and can support the processing and distribution needs for up to 460 stores based on our current configuration.

Our facility can support the processing and distribution needs for up to 460 stores based on our current configuration.

We have the right to expand the facility by 200,000 square feet, which would provide us processing capacity to support approximately 650 stores.

We lease the facility from a third party, which expires in 2034.

Our distribution center is equipped with state-of-the-art processing and product movement equipment.

5 unchanged sentences

Our shipments to Puerto Rico are loaded for containerized overseas shipment, with final delivery by a third-party provider.

We are in the process of enhancing our current configuration and the key processes underlying our supply chain and distribution systems in order to optimize our supply chain and drive warehouse efficiency.

These new processes will allow us to modernize our distribution center to keep pace with the customers’ needs.

These enhancements are hosted solutions that will be integrated with our existing systems and require significant investment, including the payment of hosting fees long-term.

During fiscal 2020 we implemented a new WMS in order to optimize our supply chain and drive warehouse efficiency.

This new platform was integrated with our existing systems and affords us the flexibility to keep pace with changing customer buying habits.

The retail footwear business is highly competitive.

10 unchanged sentences

Store operations personnel make certain merchandising decisions necessary to maximize sales and profits primarily through merchandise placement, signage and timely clearance of slower selling items.

Administrative functions are centralized at the corporate headquarters.

These functions include accounting, purchasing, store maintenance, information systems, advertising, human resources, distribution and pricing.

Administrative functions are centralized at our corporate headquarters.

These functions include accounting, strategic sourcing, store maintenance, information systems, marketing, human resources, distribution and pricing.

Management oversight for e-commerce is also located at our corporate headquarters.

At February 1, 2020, we had approximately 5,100 employees, of which approximately 2,900 were employed on a part-time basis.

Culture and Human Capital Management

We have intentionally built an employee-centric, customer-focused organization designed to compete at the highest levels in the retail industry.

Our commitment to, and investment in, a strong performance culture is paramount to our long-term sustainability and success.

Forbes Magazine recently recognized the quality of our employee-centric culture by naming us one of America’s Best Midsize Employers for 2019.

Our employee-centric culture aided us during the COVID-19 pandemic.

As non-essential retailers were required to close to the public, many of our competitors decided to furlough a significant number of employees.

We, however, took a different route, finding innovative ways to keep our associates in full employment.

This strategy positively impacted our associates, their families, and the communities we serve.

In addition, this decision enabled us to rapidly reopen our stores in a safe manner as soon as we were permitted to do so.

Workforce Diversity and Inclusion

We serve a diverse customer base and seek diversity in and among our workforce in all areas, from our stores to our distribution center and our corporate office.

We believe that the diversity of our workforce and management is a tremendous asset.

We are firmly committed to providing equal opportunities in all aspects of employment and believe that all individuals should be treated with respect and dignity.

Diversity is an important element in our

ongoing annual mandatory training for all employees and managers.

We do not tolerate harassment or unlawful discrimination of any kind.

We have clear policies encouraging strong relationships and protecting open lines of communication with management at every level.

This, coupled with our non-retaliation policy, encourages employees to raise issues and seek immediate redress of those issues if they should arise.

We understand the value of diversity at all levels, whether of gender, race, ethnicity, background or experience.

As of January 30, 2021, our overall workforce identified as 66% female and 34% male.

Our broad-based leadership team, including those who manage and lead our stores and those who lead our company, identified as 59% female and 41% male as of our fiscal 2020 year end.

With respect to ethnicity, our broad-based leadership team identified as 61% Caucasian and 39% non-Caucasian as of January 30, 2021.

The diversity of our broad-based leadership team trends with the diversity of our customer base, which based on recent data from our Shoe Perks customer loyalty program, approximates three-quarters Caucasian and one-quarter African American, Hispanic, or Asian and is more female than male.

In our corporate leadership roles (senior director-level employees through our named executive officers), the portion identifying as female has significantly increased over the last three years from 5% to 26%.

Our human resources, marketing, and supply chain departments as well as portions of our merchandising and technology departments are led by females.

At the Board level, we are also focused on increasing our diversity.

Currently 20% of our non-employee Board members is female.

We are currently refreshing our Board and assessing long-term succession as well as the diversity of the Board’s collective skill set.

In fiscal 2019, a board member rolled off the Board as his term expired, creating space for new candidates who will enhance our diversity.

Our short-term goal is to achieve 40% diversity in our non-employee Board members by the end of fiscal 2021.

We believe our employee-centric culture not only supports higher levels of execution and performance, but also has led to increased retention of key talent.

We take great pride in our store-level training programs that provide the foundation for long-term careers and our ability to promote from within.

Currently, all of the general managers who operate our stores and 85% of our district managers who oversee those general managers were trained, developed, and promoted from within.

As of January 30, 2021, of our 26 district managers, 81% have been employed by Shoe Carnival for more than 20 years.

The average tenure of the general managers who operate our 383 stores was 13 years as of fiscal 2020 year end.

Individuals who comprise our leadership team, which includes our named executive officers, vice presidents and senior director-level employees, have been employed by Shoe Carnival for an average of 18 years.

Employee Benefits

Among the many ways we seek to serve our employees, we offer a complete range of benefits.

These include competitive wages and incentives, including stock appreciation rights for mid-level managers;

an employee stock purchase plan with a 15% discount off the fair value of our common stock;

employer-subsidized medical plans with dental and vision benefits;

qualified and unqualified defined contribution plans with employer matching contributions;

and merchandise discounts, among other benefits.

Training and Code of Business Conduct and Ethics

We are dedicated to strengthening our culture and execution through ongoing training for all associates.

We are uniquely focused on training within our store-level, customer-facing operations.

Employees must obtain necessary certifications in order to be responsible for the keys to a store and eventually to become a general manager.

Our broad-based training program also engages and educates our employees on the following key topics:

Non-discrimination and anti-harassment, including the value of diversity and awareness of unconscious bias in all aspects of the employment relationship;

Cybersecurity awareness and responsibility;

Supply chain security;

Business code of conduct.

More information regarding our approach to conducting business responsibly, including our guidelines on discrimination and harassment, can be found in our Code of Business Conduct and Ethics (“Code of Ethics”).

Our Code of Ethics applies to all of our Board members, officers and employees, including our principal executive officer, our principal financial officer, and our principal accounting officer.

The Code of Ethics is posted on our website at investors.shoecarnival.com/governance/ governance-documents .

We intend to disclose any amendments to the Code of Ethics by posting such amendments on our website.

In addition, any waivers of the Code of Ethics for our Board members or executive officers will be disclosed in a Current Report on Form 8-K.

Safety of our Employees and Security of our Data

We strive to provide our associates with a safe and healthy work environment.

Our Safety Committee works across the Company and with leadership at all levels and regularly reports to management.

We evaluate conditions and incidents on an ongoing basis, developing lessons learned and documenting actions taken to safeguard our personnel.

We measure OSHA recordable incidents to gauge the success of our safety protocol.

During calendar year 2020, we recorded 49 OSHA recordable incidents, an approximate 25% reduction in incidents compared to just two years ago.

Our strategies to address the ever-expanding complexities of protecting customer and employee data and executing our business strategies in an increasingly digital world continue to advance.

Our Security Committee monitors and tests compliance with our protocols, provides regular updates to employees and management, and conducts annual training.

Number of Employees

At January 30, 2021, we had approximately 4,700 employees, of which approximately 2,600 were employed on a part-time basis.

The number of employees fluctuates during the year primarily due to seasonality.

No employees are represented by a labor union.

We attribute a large portion of our success in various areas of cost control to our inclusion of virtually all management level employees in incentive compensation plans.

We contribute all or a portion of the cost of medical, disability and life insurance coverage for those employees who are eligible to participate in Company‑sponsored plans.

Additionally, we sponsor retirement plans that are open to all employees who have met the minimum age and work hour requirements.

All employees are eligible to receive discounts on purchases from our stores.

We consider our relationship with our employees to be satisfactory.

None of our employees are represented by a labor union.

Our quarterly results of operations have fluctuated and are expected to continue to fluctuate in the future, primarily as a result of seasonal variances and the timing of sales and costs associated with opening new stores and closing underperforming stores.

Non-capital expenditures, such as advertising and payroll incurred prior to the opening of a new store, are expensed.

The timing and actual amount of expense recorded in closing a store can vary significantly depending, in part, on the period in which management commits to a closing plan, the remaining basis in the fixed assets to be disposed of at closing and the amount of any lease buyout.

2 unchanged sentences

Easter, back-to-school and Christmas.

To prepare for our peak shopping seasons, we must order and keep in stock significantly more merchandise than we would carry during other parts of the year.

To prepare for our peak shopping seasons, we must order and keep in stock significantly more merchandise than we would carry during other periods of the year.

Any unanticipated decrease in demand for our products during these peak shopping seasons could require us to sell excess inventory at a substantial markdown, which could reduce our net sales and gross margins and negatively affect our profitability.

1 unchanged sentence

We own the following federally registered trademarks and service marks:

Shoe Carnival ® and associated trade dress and related logos, The Carnival ® , Donna Lawrence ® , Innocence ® , Y-NOT?

® , UNR8ED ® , Solanz ® , Cabrizi ® , Shoe Perks ® , SC Work Wear ® , When You Want To 2 ® , A Surprise In Store ® , Shoes 2U ® , Laces for Learning ® and Princess Lacey’s Laces ® .

Shoe Carnival ® and associated trade dress and related logos, Y-NOT?

® , UNR8ED ® , Solanz ® , Shoe Perks ® , SC Work Wear ® , When You Want To 2 ® , A Surprise In Store ® , Shoes 2U ® , Laces for Learning ® and Princess Lacey’s Laces ® .

We believe these marks are valuable and, accordingly, we intend to maintain the marks and the related registrations.

1 unchanged sentence

Environmental

Compliance with federal, state and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment has not had a material effect upon our capital expenditures, earnings or competitive position.

We believe the nature of our operations have little, if any, environmental impact.

We therefore anticipate no material capital expenditures for environmental control facilities for our current fiscal year or for the near future.

We seek to minimize our impact on the environment and reduce our carbon footprint by actively implementing environmentally-friendly processes throughout our business, including energy efficiency initiatives, waste minimization, and the use of recycled materials within our supply chain.

Our most significant areas of focus are fuel and packaging material used to deliver merchandise to our distribution center and stores;

the HVAC and lighting systems in our stores, distribution center, and corporate office;

and recycling methods.

Compliance with current federal, state and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment has not had a material effect upon our capital expenditures, earnings or competitive position.

We anticipate no material capital expenditures for environmental control facilities for our current fiscal year or for the near future.

Available Information

6 unchanged sentences

Information about our Executive Officers

The following table sets forth certain information with respect to our executive officers as of the date of filing this Annual Report on Form 10-K, March 26, 2021:

Chairman of the Board and Director

3 unchanged sentences

Senior Executive Vice President - Chief Financial and Administrative Officer and Treasurer

Senior Executive Vice President - Chief Merchandising Officer

Executive Vice President - Chief Retail Operations Officer

Executive Vice President - Chief Merchandising Officer

Vice President, Chief Accounting Officer, Corporate Controller and Assistant Secretary

Weaver has served as Chairman of the Board since March 1988.

3 unchanged sentences

Weaver is a former Director of Nine West Group, Inc.

Weaver served as Chairman and Chief Executive Officer of Jacksonville Jaguars, LTD, a professional football franchise, until January 2012.

Weaver served as Chairman and Chief Executive Officer of

Jacksonville Jaguars, LTD, a professional football franchise, until January 2012.

Weaver previously served two terms as a Director of Stein Mart, Inc., a publicly traded chain of off-price retail stores, from June 2014 until March 2016 and from November 2000 until April 2008 .

9 unchanged sentences

From September 2018 to September 2019, Mr.

Worden served as Executive Vice President – Chief Strategy and Marketing Offi cer .

Worden served as Executive Vice President – Chief Strategy and Marketing Officer.

Prior to joining us, Mr.

1 unchanged sentence

Johnson & Son, Inc.

(“SC Johnson”), a manufacturer of household cleaning suppl ies and products, and was responsible for revenue and share growth objectives across six countries from May 2014 to July 2018.

(“SC Johnson”), a manufacturer of household cleaning supplies and products, and was responsible for revenue and share growth objectives across six countries from May 2014 to July 2018.

Prior to that, Mr.

Worden served as Assistant to the Chairman and C hief E xecutive O fficer of SC Johnson from May 2012 to May 2014 and as a Senior Marketing Director from 2009 to 2012 .

Worden also served as a Senior Brand Manager at Kim berly-Clark Corporation and held multiple marketing roles across their flagship brands during his tenure there from 2003 through 2009.

Worden served as Assistant to the Chairman and Chief Executive Officer of SC Johnson from May 2012 to May 2014 and as a Senior Marketing Director from 2009 to 2012.

Worden also served as a Senior Brand Manager at Kimberly-Clark Corporation and held multiple marketing roles across their flagship brands during his tenure there from 2003 through 2009.

Jackson has been employed as Senior Executive Vice President, Chief Financial and Administrative Officer and Treasurer since September 2019.

14 unchanged sentences

He is a Certified Public Accountant.

Scibetta has been employed as Senior Executive Vice President – Chief Merchandising Officer since March, 2021.

From March 2016 to March 2021, Mr.

Scibetta serviced as Executive Vice President – Chief Merchandising Officer.

From December 2012 to March 2016, Mr.

Scibetta served as General Merchandise Manager.

Prior to joining us, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager– Footwear for Belk, Inc.

From 2004 to 2007, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager – Footwear for Parisian Department Stores.

From 1998 to 2000, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager for Shoe Corporation of America.

Scibetta began his retail career with Wohl Shoe Company in 1980.

Baker has been employed as Executive Vice President – Chief Retail Operations Officer since September 2019.

8 unchanged sentences

Baker held various retail management positions with Payless ShoeSource.

Scibetta has been employed as Executive Vice President – Chief Merchandising Officer since March 2016.

From December 2012 to March 2016, Mr.

Scibetta served as General Merchandise Manager.

Edwards has been employed as Vice President, Chief Accounting Officer, Corporate Controller and Assistant Secretary since March 2021.

From October 2019 to March 2021, Mr.

Edwards served as our Vice President and Corporate Controller and as our Assistant Secretary since December 2019.

Prior to joining us, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager– Footwear for Belk, Inc.

From 2004 to 2007, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager – Footwear for Parisian Department Stores.

From 1998 to 2000, Mr.

Scibetta served as Vice President, Divisional Merchandise Manager for Shoe Corporation of America.

Scibetta began his retail career with Wohl Shoe Company in 1980.

Edwards was Vice President of Accounting for CenterPoint Energy, Inc.

(“CenterPoint”) from February 2019 to August 2019 following its acquisition of Evansville, Indiana-based Vectren Corporation (“Vectren”).

For Vectren, Mr.

Edwards held various leadership roles in the accounting, audit and finance functions from February 2001 through February 2019, including Vice President and Treasurer from April 2017 to February 2019 and Vice President of Corporate Audit from August 2013 to April 2017.

Prior to joining Vectren, Mr.

Edwards worked in public accounting.

Edwards is a Certified Public Accountant.

Our executive officers serve at the discretion of the Board of Directors.

There is no family relationship between any of our Directors or executive officers.

Chief Executive Officer Succession

In March 2021, our Board unanimously elected Mr.

Worden as our next President and Chief Executive Officer, effective September 30, 2021.

Worden will succeed Mr.

Sifford, who will step down as our Chief Executive Officer effective September 30, 2021, but will continue to serve in the role of Vice Chairman of the Board of Directors and, in such role, will continue as an employee.

Chief Retail Operations Officer Succession

Effective April 2021, Marc A.

Chilton will succeed Mr.

Baker as our Executive Vice President – Chief Retail Operations Officer.

Baker is stepping away after 32 years as our operations leader.

Chilton, age 51, served as our Senior Vice President – Store Operations and Administration from March 2019 until February 2020, after which he has served as Senior Vice President – Store Administration and Development.

Chilton started with us in 1994 as a store manager and has served in roles of increasing responsibility in store management and operations since that time, including serving as the Vice President of our Northern Division, with approximately one-third of our stores reporting to him, from April 2012 until March 2019.

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-K

Item 1. Business