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What changed in SHOE CARNIVAL INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SHOE CARNIVAL INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+265 added−284 removedSource: 10-K (2024-03-22) vs 10-K (2023-03-24)

Top changes in SHOE CARNIVAL INC's 2024 10-K

265 paragraphs added · 284 removed · 216 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+16 added−19 removed29 unchanged
Biggest changeIn Fiscal 2022 and Fiscal 2021 our capital expenditures were $77.3 million and $31.4 million, 5 respectively, with a primary focus on store modernization and new stores. Our new store design is viewed as a differentiator by certain strategic vendor partners and has provided us an opportunity to increase access to branded merchandise in the near term.
Biggest changeOur new store design is viewed as a differentiator by certain strategic vendor partners and has provided us an opportunity to increase access to branded merchandise in the near term. As of Fiscal 2023 year end, approximately 60% of our Shoe Carnival store modernization was complete. We expect to continue to modernize additional Shoe Carnival stores in Fiscal 2024.
More information regarding our approach to conducting business responsibly, including our guidelines on discrimination and harassment, can be found in our 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.
More information regarding our approach to conducting business responsibly, including our guidelines on discrimination and harassment, can be found in our Code of Ethics. Our Code of Ethics applies to all of our Board members, officers and employees, including our principal executive officer and our principal financial and accounting officer.
Our "bricks" first, omnichannel approach provides customers easy access to our wide assortment of branded footwear for work, athletics, daily activities and special events via their choice of delivery channel. We have a proven track record selling branded footwear, such as Nike, Skechers, adidas, Puma, HEYDUDE, Converse, Vans and Crocs, and generating profits without incurring debt.
Our "bricks" first, omnichannel approach provides customers easy access to our wide assortment of branded footwear for athletics, daily activities and special events via their choice of delivery channel. We have a proven track record selling branded footwear, such as Nike, Skechers, Crocs, adidas, Puma, HEYDUDE, Converse and Vans, and generating profits without incurring debt.
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 or through our other omnichannel choices. Competition The retail footwear business is highly competitive. We believe the principal competitive factors in our industry are merchandise selection, price, fashion, quality, location, shopping environment and service.
Additionally, the time-conscious customer appreciates the convenience of one-stop shopping for the entire family, whether this occurs at our store locations or through our other omnichannel choices. Competition The retail footwear business is highly competitive. We believe the principal competitive factors in our industry are merchandise selection, price, fashion, quality, location, shopping environment and service.
Merchandise is typically shipped to each store location once per week. For stores within the continental United States, a dedicated carrier, with occasional use of common carriers, handles the majority of shipments. We leverage these investments with third party managed software tailored to our specific needs to track merchandise during the transportation and distribution process.
Merchandise is typically shipped to each store location once per week. For stores 7 within the continental United States, a dedicated carrier, with occasional use of common carriers, handles the majority of shipments. We leverage these investments with third party managed software tailored to our specific needs to track merchandise during the transportation and distribution process.
E-commerce orders can also be fulfilled from our distribution center in Evansville, Indiana and the distribution center is used in times of peak demand. We also maintain a vendor drop-ship program with select business partners. This program offers our customers an expanded online assortment of styles and colors that we do not carry in-store.
E-commerce orders can also be fulfilled from our distribution center in Evansville, Indiana and this distribution center is used in times of peak demand. We also maintain a vendor drop-ship program with select business partners. This program offers our customers an expanded online assortment of styles and colors that we do not carry in store.
These 7 methods may include count verification, price and bar code labeling of each unit (when not performed by the manufacturer), redistribution of an order into size assortments (when not performed by the manufacturer) and allocation of shipments to individual stores. Throughout packing, allocating, storing and shipping, our distribution process is essentially paperless.
These methods may include count verification, price and bar code labeling of each unit (when not performed by the manufacturer), redistribution of an order into size assortments (when not performed by the manufacturer) and allocation of shipments to individual stores. Throughout packing, allocating, storing and shipping, our distribution process is essentially paperless.
Over the last three years, three board members have transitioned, creating opportunity for new directors who have enhanced our diversity. Retention 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.
Over the last four years, three board members have transitioned, creating opportunity for new directors who have enhanced our diversity. Retention 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.
Using the POS, both store personnel and centralized merchandising staff are able to monitor sales, cost of sales and the success of product promotions in real-time. Our systems provide up-to-date sales and inventory information. Our data warehouse enables our merchandising and store operations staff to analyze sales, margin and inventory levels by store.
Using the POS, both store personnel and centralized merchandising staff are able to monitor sales, cost of sales and the success of product promotions in real-time. 8 Our systems provide up-to-date sales and inventory information and our data warehouse enables our merchandising and store operations staff to analyze sales, margin and inventory levels by store.
Our CRM program allows us to drive customer retention by delivering to 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 allows us to drive customer retention by delivering to each customer more individualized shopping opportunities and experiences and aids in gaining a better understanding of our existing customer base as well as 6 identifying new customers.
The POS provides, in addition to other features, full price management, promotion tracking capabilities (in support of the spontaneous nature of the in-store price 8 promotions), real-time sales and cost of sales by product category at the store level and customer tracking.
The POS provides, in addition to other features, full price management, promotion tracking capabilities (in support of the spontaneous nature of the in-store price promotions), real-time sales and cost of sales by product category at the store level and customer tracking.
CRM provides our marketing, merchandising, analytics and real estate teams a better and more complete 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 CRM program provides our marketing, merchandising, analytics and real estate teams with a better and more complete 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 Competitive Strengths We believe our financial success is due to a number of key competitive strengths that make our Shoe Carnival and Shoe Station banners destinations of choice for our family channel footwear consumer.
Our Competitive Strengths We believe our operational and financial success is due to a number of key competitive strengths that make our Shoe Carnival and Shoe Station banners destinations of choice for our family channel footwear consumer.
On average, our Shoe Station physical stores are approximately 17,800 square feet and carry an average inventory of 44,100 pairs of shoes per location. More information about our store locations and other properties can be found in PART I, ITEM 2, "Properties" of this Annual Report on Form 10-K.
On average, our Shoe Station physical stores are approximately 17,800 square feet and carry an average inventory of 43,100 pairs of shoes per location. More information about our store locations and other properties can be found in PART I, ITEM 2, "Properties" of this Annual Report on Form 10-K.
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.
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 Fiscal 2024 or for the near future.
Over the last five fiscal years, we have had no debt outstanding and Cash, Cash Equivalents, and Marketable Securities of at least $61 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 had no debt outstanding and Cash, Cash Equivalents and Marketable Securities of $61 million to $132 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.
Excluding the Shoe Station operations, which continue to be integrated into our safety culture, the decrease compared to five years ago was 20%. 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.
Excluding the Shoe Station operations, which continue to be integrated into our safety culture, the decrease compared to five years ago was 5%. 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 Diversified Sales Mix We sell broadly across the family footwear channel, with balanced distribution among type of customer (men, women and children), product (athletics and non-athletics) and age (senior citizens to infants) with no singular reliance on any particular segment. The products we offer are a mix of footwear necessities for sport, work, daily activities and special events.
Our Diversified Sales Mix We sell broadly across the family footwear channel, with balanced distribution among type of customer (men, women and children), product (athletics and non-athletics) and age (senior citizens to infants) and with no singular reliance on any particular segment. The products we offer are a broad mix of footwear for sport, daily activities and special events.
Although the core merchandise assortment tends to be similar for each store, there are differences between our store banners, and to some extent, there is further differentiation by store under each banner, reflecting each store’s unique demographics and customer interests.
Although the core merchandise assortment tends to be similar for each store, there are differences between our store banners, and to some extent, there is further differentiation by store under each banner, reflecting each store’s unique demographics and customer preferences.
Our broad-based training program also engages and educates our employees on the following key topics: • Code of Business Conduct and Ethics (“Code of Ethics”); • Non-discrimination and anti-harassment; • Cybersecurity awareness and responsibility; and • Supply chain security.
Our broad-based training program also engages and educates our employees on the following key topics: • Code of Business Conduct and Ethics (“Code of Ethics”); • Insider trading; • Non-discrimination and anti-harassment; • Cybersecurity awareness and responsibility; and • Supply chain security.
The use of digital media comprises the substantial portion of 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.
The use of digital media comprises the substantial portion of our marketing investment, 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.
Television, radio, print media (including inserts, direct mail and newspaper advertising) and outdoor advertising accounted for the balance of our total advertising budget. Centralized Distribution Process Our distribution center is equipped with mechanized processing and product movement equipment. The facility utilizes cross docking/store replenishment and redistribution methods to fill store product requirements.
Television, radio, print media (including inserts, direct mail and newspaper advertising) and outdoor advertising accounted for the balance of our total advertising investment. Centralized Distribution Process Our Evansville distribution center is equipped with mechanized processing and product movement equipment. The facility utilizes cross docking/store replenishment and redistribution methods to fill store product requirements.
Our most significant areas of focus are fuel 11 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.
Our most significant areas of focus are fuel and packaging material used to deliver merchandise to our Evansville distribution center and stores; the HVAC and lighting systems in our stores, Evansville distribution center and corporate office; and recycling methods.
Seasonality For a discussion of the impact of seasonality on our operating results and our business, see PART II, ITEM 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Store Count and Seasonality on Quarterly Results.” Trademarks We own the following federally registered trademarks and service marks: Shoe Carnival ® and associated trade dress and related logos, Y-NOT? ® , UNR8ED ® , Solanz ® , Shoe Perks ® , SC Work Wear ® , A Surprise In Store ® , Shoes 2U ® , Laces for Learning ® , Princess Lacey’s Laces ® , Shoe Station ® , Shoe Station Super Store ® and Shoe Station Select ® .
Seasonality For a discussion of the impact of seasonality on our operating results and our business, see PART II, ITEM 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Store Count and Seasonality on Quarterly Results.” Trademarks As of our Fiscal 2023 year end, we own the following federally registered trademarks and service marks: Shoe Carnival ® and associated trade dress and related logos, Y-NOT? ® , UNR8ED ® , Solanz ® , Shoe Perks ® , SC Work Wear ® , A Surprise In Store ® , Shoes 2U ® , Laces for Learning ® , Princess Lacey’s Laces ® , Shoe Station ® , Shoe Station Super Store ® and Shoe Station Select ® .
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 meet this customer need and demand at a geographic and store level.
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 meet customer needs and demand at a geographic and store level.
The average tenure of the general managers who operate our Shoe Carnival and Shoe Station bannered stores was 14 years as of Fiscal 2022 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 or Shoe Station for an average of 19 years.
The average tenure of the general managers who operate our Shoe Carnival and Shoe Station bannered stores was 14 years as of Fiscal 2023 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 or Shoe Station for an average of 18 years.
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.
We believe our Shoe Perks program provides a 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.
Our knowledge of these interests, combined with our vendor relationships and distribution process, allows us to react quickly to emerging trends or special events. Information Technology Our proprietary inventory management and advanced point-of-sale (“POS”) systems provide us with the timely information necessary to monitor and control all phases of operations.
Our knowledge of these customer preferences, combined with our vendor relationships and distribution process, allows us to react to emerging trends or special events. Information Technology Our proprietary inventory management and advanced point-of-sale (“POS”) systems provide us with the timely information necessary to monitor and control all phases of operations.
During Fiscal 2022, 92% of merchandise was received into our distribution center, with a much smaller percentage of merchandise being either directly drop shipped to customers or sent directly to a store location. Additional information about our distribution center can be found in PART I, ITEM 2, "Properties" of this Annual Report on Form 10-K.
During Fiscal 2023, 98% of merchandise was received into our Evansville distribution center, with a much smaller percentage of merchandise being either directly drop shipped to customers or sent directly to a store location. Additional information about our Evansville distribution center can be found in PART I, ITEM 2, "Properties" of this Annual Report on Form 10-K.
We believe there is room within our existing markets to grow our store count to over 500 stores by 2028 through both organic and acquired store growth. We believe this opportunity to increase our scale, together with stable double-digit operating income margins, will continue to drive shareholder value and our future earnings potential.
We believe there is potential within our existing markets to grow our store count to over 500 stores in 2028 through both organic and acquired store growth. We believe this opportunity to increase our scale, together with stable operating income margins, will continue to drive shareholder value and our future earnings potential.
Currently, two of four (50%) of our non-employee Board members and two of seven of our total Board identify as female. We are continuing to refresh our Board and assess long-term succession as well as the diversity of the Board’s collective skill set.
We are also focused on the diversity of our Board. Currently, two of four of our non-employee Board members and two of seven of our total Board identify as female. We are continuing to refresh our Board and assess long-term succession as well as the diversity of the Board’s collective skill set.
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.
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 at an individual store level.
Safety of our Employees and Security of our Data We strive to provide our associates with a safe and healthy work environment. We measure OSHA recordable incidents to gauge the success of our safety protocol. During calendar year 2022, we recorded 71 non COVID-related OSHA recordable incidents, an approximate 7% reduction in incidents compared to five years ago.
Safety of our Employees and Security of our Data We strive to provide our associates with a safe and healthy work environment. We measure OSHA recordable incidents to gauge the success of our safety protocol. During calendar year 2023, we recorded 62 non COVID-related OSHA recordable incidents, an approximate 2% reduction in incidents compared to five years ago.
Efficient E-commerce Order Management and Fulfillment (Ship-From-Store and Vendor Drop Ship Program) We recently implemented a third party hosted order management system designed to our specific needs, which has enabled us to meet the complex demands of omnichannel fulfillment and has positioned us for scaling our e-commerce capabilities as we grow.
Efficient E-commerce Order Management and Fulfillment (Ship-From-Store and Vendor Drop Ship Program) We have implemented a third party hosted order management system designed to our specific needs, which has enabled us to meet the complex demands of omnichannel fulfillment and has positioned us to further scale our e-commerce capabilities as we grow.
We have been in business for 44 years and have been a public company subject to SEC reporting requirements since 1993. Since 1993, we have earned a profit in every year except one.
We have been in business for 45 years and have been a public company subject to SEC reporting requirements since 1993. Since 1993, we have earned a profit in every year except 1995.
Fiscal Years 2022 2021 2020 2019 2018 Non-Athletics: Women's 28 % 24 % 22 % 25 % 24 % Men's 17 14 14 14 14 Children's 7 6 5 5 5 Total 52 44 41 44 43 Athletics: Women's 14 16 18 17 18 Men's 16 20 22 20 21 Children's 12 14 13 14 14 Total 42 50 53 51 53 Accessories 5 5 5 5 4 Other 1 1 1 0 0 Total 100 % 100 % 100 % 100 % 100 % Our Strategic Growth Initiatives Store Growth Increasing market penetration by adding new stores is as a key component of our growth strategy.
Fiscal Years 2023 2022 2021 2020 2019 Non-Athletics: Women's 26 % 28 % 24 % 22 % 25 % Men's 16 17 14 14 14 Children's 7 7 6 5 5 Total 49 52 44 41 44 Athletics: Women's 15 14 16 18 17 Men's 17 16 20 22 20 Children's 13 12 14 13 14 Total 45 42 50 53 51 Accessories 5 5 5 5 5 Other 1 1 1 1 0 Total 100 % 100 % 100 % 100 % 100 % 5 Our Strategic Growth Initiatives Store Growth Increasing market penetration by adding new stores is a key component of our growth strategy.
Sifford served as Vice Chairman of the Board and Chief Executive Officer. Mr. Sifford also served as President and Chief Executive Officer from October 2012 to September 2019 and has been a Director since October 2012. Mr. Sifford served as Chief Merchandising Officer from October 2012 to March 2016. From June 2001 to October 2012, Mr.
Sifford also served as President and Chief Executive Officer from October 2012 to September 2019 and has been a Director since October 2012. Mr. Sifford served as Chief Merchandising Officer from October 2012 to March 2016. From June 2001 to October 2012, Mr.
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 24, 2023: Name Age Position J. Wayne Weaver 88 Chairman of the Board and Director Clifton E. Sifford 69 Vice Chairman of the Board and Director Mark J.
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 22, 2024: Name Age Position J. Wayne Weaver 89 Chairman of the Board and Director Clifton E. Sifford 70 Vice Chairman of the Board and Director Mark J.
We believe our distinctive shopping experience gives us various competitive advantages, including increased multiple unit sales, the building of a loyal, repeat customer base, the creation of word-of-mouth advertising, and enhanced sell-through of in-season goods.
We believe our distinctive shopping experience gives us important competitive advantages, including the building of a loyal, repeat customer base, the creation of word-of-mouth advertising, and enhanced sell-through of in-season goods.
The diversity of our leadership team trends with the diversity of our customer base, which based on recent data from our Shoe Perks customer loyalty program, approximates 70% Caucasian and 30% African American, Hispanic or Asian and is more female than male.
The diversity of our leadership team trends with the diversity of our customer base, which based on recent data from our Shoe Perks customer loyalty program, approximates 70% Caucasian and 30% non-Caucasian and is more female than male.
Currently, all of the general managers who operate our Shoe Carnival bannered stores and 90% of our district managers who oversee those general managers were trained, developed and promoted from within. As of our Fiscal 2022 year end, of our 33 district managers across both banners, 61% have been employed by us for more than 20 years.
Currently, all of the general managers who operate our Shoe Carnival bannered stores and 94% of our district managers who oversee those general managers were trained, developed and promoted from within. As of our Fiscal 2023 year end, of our 32 district managers across both banners, 66% have been employed by us for more than 20 years.
Leased Stores Our stores can be easily found in high traffic shopping areas and are generally located in open-air shopping centers. On average, our Shoe Carnival physical stores are approximately 10,900 square feet and carry inventory of approximately 30,800 pairs of shoes per location.
Leased Stores Our stores are found in high traffic shopping areas and are generally located in open-air shopping centers. On average, our Shoe Carnival physical stores are approximately 10,900 square feet and carry inventory of approximately 32,500 pairs of shoes per location.
Disciplined Approach to Capital Management We remain focused on funding our normal operations without debt. We ended Fiscal 2022 with no debt and $63.0 million of Cash and Cash Equivalents and Marketable Securities.
Disciplined Approach to Capital Management We remain focused on funding our normal operations without debt. We ended Fiscal 2023 with no debt and $111.2 million of Cash and Cash Equivalents and Marketable Securities.
Edwards was Vice President of Accounting for CenterPoint Energy, Inc. from February 2019 to August 2019 following its acquisition of Vectren Corporation (“Vectren”). For Vectren, Mr.
Edwards was Vice President of Accounting for CenterPoint Energy, Inc., a publicly traded utility company, from February 2019 to August 2019 following its acquisition of Vectren Corporation (“Vectren”), also a publicly traded utility company. For Vectren, Mr.
In our corporate leadership roles (senior director-level employees through our named executive officers), the percentage identifying as female has significantly increased over the last five years from 5% to 18% with several departments, such as human resources, merchandising and technology, being led by those that identify as female. We are also focused on the diversity of our Board.
In our corporate leadership roles (senior director-level employees through our named executive officers), the percentage identifying as female has significantly increased over the last five years from 5% to 24% with several departments, such as human resources, buying and merchandising, technology and accounting, being led by those that identify as female.
Our broad-based leadership team, including those who manage and lead our stores and those who lead our Company, identified as 60% female and 40% male. With respect to ethnicity, our leadership team identified as 64% Caucasian and 36% non-Caucasian.
As of our Fiscal 2023 year end, our workforce identified as 64% female and 36% male. Our broad-based leadership team, including those who manage and lead our stores and those who lead our Company, identified as 62% female and 38% male. With respect to ethnicity, our leadership team identified as 60% Caucasian and 40% non-Caucasian.
We are targeting operating at least 500 stores by 2028. We believe our current store footprint provides for near-term fill-in opportunities within existing markets as well as longer-term growth to new markets within the United States. In Fiscal 2022, we opened four new stores (one Shoe Carnival store and three Shoe Station stores) within existing markets.
We believe our current store footprint provides for near-term fill-in opportunities within existing markets as well as longer-term growth to new markets within the United States. In Fiscal 2023, we opened five new stores (one Shoe Carnival store and four Shoe Station stores) within existing markets.
These communications afford us additional opportunities to highlight our broad product assortment and promotions. 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 and the national name brands we offer.
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 and the national name brands we offer. We are focused on expanding our Shoe Perks enrollment.
From April 2021 to February 2023, Mr. Chilton served as our Executive Vice President – Chief Retail Operations Officer. From February 2020 to April 2021, Mr. Chilton served as our Senior Vice President – Store Administration and Development and from March 2019 to February 2020 served as our Senior Vice President – Store Operations and Administration. Mr.
Chilton served as our Senior Vice President – Store Administration and Development and from March 2019 to February 2020 served as our Senior Vice President – Store Operations and Administration. Mr.
The Shoe Station e-commerce website, www.shoestation.com, went live on our e-commerce platform in early February 2023. More information on the acquisition can be found in Note 3 - "Acquisition of Shoe Station" in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.
More information on the Shoe Station acquisition can be found in Note 3 - "Acquisition of Shoe Station" in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.
This decision also allowed for us to reopen quickly to meet the in-store needs of our customer base and other stakeholders. Our store-level training programs provide the foundation for long-term careers and our ability to promote from within. We support the first-time jobs for many of our associates where they gain workforce experiences that may grow into long-term careers.
Our store-level training programs provide the foundation for long-term careers and our ability to promote from within. We support the first-time jobs for many of our associates where they gain workforce experiences that may grow into long-term careers.
Environmental 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.
We are not aware of any pending claims of infringement or other challenges to our right to use these marks. 11 Environmental 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.
Shoe Carnival, Inc. is an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996. References to the “SEC” refer to the United States Securities and Exchange Commission.
References to “we,” “us,” “our” and the “Company” in this Annual Report on Form 10-K refer to Shoe Carnival, Inc. and its subsidiaries. Shoe Carnival, Inc. is an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996. References to the “SEC” refer to the United States Securities and Exchange Commission.
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. since 2008. From 2004 to 2007, Mr.
Scibetta has been employed as Senior Executive Vice President – Chief Merchandising Officer since March 2021. From March 2016 to March 2021, Mr. Scibetta served 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.
Edwards has been employed as Vice President, Chief Accounting Officer, Corporate Controller since March 2021. He has also served as our Secretary since June 2021 and as our Assistant Secretary from December 2019 to June 2021. From October 2019 to March 2021, Mr. Edwards served as our Vice President and Corporate Controller. Prior to joining us, Mr.
Edwards has been employed as Senior Vice President, Chief Financial Officer and Treasurer since September 2023. He has also served as our Secretary since June 2021 and served as our Assistant Secretary from December 2019 to June 2021. Mr.
While our customers benefit from expanded item assortment, the functionality of this program is seamless, and our customers’ online experience is not impacted by the vendor drop-ship fulfillment option. We benefit from this program by not having to make a capital investment in the expanded inventory assortment, which is carried and fulfilled by our business partners participating in this program.
While our customers benefit from expanded item assortment, the functionality of this program is seamless, and our customers’ online experience is not impacted by the vendor drop-ship fulfillment option.
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. Mr. Scibetta began his retail career with Wohl Shoe Company in 1980. Mr. Chilton has been employed as Executive Vice President – Chief Operating Officer since February 2023.
Scibetta began his retail career with Wohl Shoe Company in 1980. Mr. Chilton has been employed as Executive Vice President – Chief Operating Officer since February 2023. From April 2021 to February 2023, Mr. Chilton served as our Executive Vice President – Chief Retail Operations Officer. From February 2020 to April 2021, Mr.
Our goal is for our e-commerce sales channel to provide between 10% and 15% of enterprise-wide merchandise sales, versus a pre-pandemic 6% in Fiscal 2019. E-commerce sales represented approximately 10% of our merchandise sales in Fiscal 2022, 12% in Fiscal 2021 and 19% in Fiscal 2020 as impacted by changes in customer shopping behavior during the peak of the pandemic.
We continue to expect our e-commerce platform to be a significant sales channel for us. Our goal is for our e-commerce sales channel to provide between 10% and 15% of enterprise-wide merchandise sales, versus a pre-pandemic 6% in Fiscal 2019. E-commerce sales represented approximately 10% of our merchandise sales in Fiscal 2023 and Fiscal 2022, and 12% in Fiscal 2021.
This marks the first major redesign of our Shoe Carnival website since 2016. We anticipate these enhancements will increase user conversion, enhance the ease of navigation and improve overall functionality compared to the legacy website design. We continue to expect our e-commerce platform to be a significant sales channel for us.
This marked the first major redesign of our Shoe Carnival website since 2016. We have completed the technology migration for both banners to a single platform hosted by a leading provider. We anticipate these enhancements will increase user engagement and conversion, enhance the ease of navigation and improve overall functionality compared to the legacy website design.
Many of our competitors are significantly larger and have substantially greater resources than we do. 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.
Many of our competitors are significantly larger than we are in terms of Net Sales, and many can access the capital markets with greater speed and efficiency than we can. 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.
He has over 50 years of experience in the footwear industry. Mr. Weaver is a former Director of Nine West Group Inc. Mr. Weaver served as Chairman and Chief Executive Officer of Jacksonville Jaguars, LTD, a professional football franchise, until January 2012. Mr.
From 1978 until February 1993, Mr. Weaver had served as President and Chief Executive Officer of Nine West Group Inc., a designer, developer and marketer of women’s footwear. He has over 50 years of experience in the footwear industry. Mr. Weaver is a former Director of Nine West Group Inc. Mr.
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 our Fiscal 2022 year end, our workforce identified as 64% female and 36% male.
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 communicate 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.
The average transaction value for our Gold tier customers was approximately 39% higher than non-Gold tier Shoe Perks members in Fiscal 2022. Strong and Diversified Vendor Partnerships In Fiscal 2022, a record number of vendors generated over $15 million in merchandise sales for us. We continued our long-term relationships with both Nike, Inc. (“Nike”) and Skechers U.S.A., Inc.
The average transaction value for our Gold tier customers was approximately 43% higher than non-Gold tier Shoe Perks members in Fiscal 2023. Strong and Diversified Vendor Partnerships We offer merchandise from a broad range of over 270 vendor partners. In Fiscal 2023, Nike, Inc. (“Nike”), Skechers U.S.A., Inc. (“Skechers”) and Crocs, Inc.
See PART II, ITEM 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K for more information regarding the trends impacting our Fiscal 2022 operating results.
See PART II, ITEM 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K for more information regarding the trends impacting our Fiscal 2023 operating results. 4 Our Banners Shoe Carnival Our Shoe Carnival retail concept has developed over our 45-year history and is differentiated from competitors by our distinctive, fun and promotional marketing efforts.
The addition of this banner has created a complementary retail platform for us to serve a broader base of family footwear customers in both urban and suburban demographics. Net Sales attributed to the Shoe Station banner were $99.9 million in Fiscal 2022 and $16.6 million from the acquisition date through January 29, 2022 in Fiscal 2021.
The addition of this banner has created a complementary retail platform for us to serve a broader base of family footwear customers in both urban and suburban demographics.
While we have no long-term contracts in place with any of our vendors, we anticipate that Nike and Skechers will continue to be high-volume vendors for us in Fiscal 2023. We also anticipate increased availability of athletic product in Fiscal 2023 as athletic supply chains are expected to return to a more normal cadence.
We continually work to strengthen our brand offerings and our relationships with our key vendors. While we have no long-term contracts in place with any of our vendors, we anticipate that Nike, Skechers and Crocs will continue to be high-volume vendors for us in Fiscal 2024.
Including e-commerce sales in close proximity to a physical store, our comparable physical stores generated an average of $3.2 million in Net Sales in Fiscal 2022 and over $281 in Net Sales per square foot.
As of our Fiscal 2023 year end, we operated 400 stores across 35 states and Puerto Rico under our Shoe Carnival and Shoe Station banners. Including e-commerce sales in close proximity to a physical store, our comparable physical stores generated an average of $2.9 million in Net Sales in Fiscal 2023 and approximately $255 in Net Sales per square foot.
We believe these marks are valuable and, accordingly, we intend to maintain the marks and the related registrations. We are not aware of any pending claims of infringement or other challenges to our right to use these marks.
We believe these marks are valuable and, accordingly, we intend to maintain the marks and the related registrations.
Nike accounted for approximately 14% of our Net Sales in Fiscal 2022, 28% in Fiscal 2021 and 33% in Fiscal 2020, and Skechers accounted for approximately 13% of our Net Sales in Fiscal 2022, 11% in Fiscal 2021 and 10% in Fiscal 2020. We continually work to strengthen our brand offerings and our relationships with our key vendors.
Nike accounted for approximately 20% of our Net Sales in Fiscal 2023, 14% in Fiscal 2022 and 28% in Fiscal 2021; Skechers accounted for approximately 14% of our Net Sales in Fiscal 2023, 13% in Fiscal 2022 and 11% in Fiscal 2021; and Crocs accounted for approximately 11% of our Net Sales in Fiscal 2023.
Unique features of our store experience include upbeat music, opportunities for customers to spin our spin-n-win wheel and a mic-person who runs in-store specials. These specials include contests, games and hot deals of the moment to encourage customers to take immediate advantage of our special, in-store pricing.
Shoe Carnival stores combine competitive pricing with a high-energy in-store environment that encourages customer participation. Unique features of our store experience include upbeat music, opportunities for customers to spin our spin-n-win wheel and a mic-person who runs in-store specials.
We aim to operate approximately 10 to 20 new stores in Fiscal 2023 with additional store growth acceleration in 2024 and beyond. This increased scale will be accomplished through a combination of both organic and acquired store growth.
We aim to operate approximately 30 new stores in Fiscal 2024, inclusive of integrating the 28 Rogan's stores acquired on February 13, 2024. We are targeting operating at least 500 stores in 2028. This increased scale will be accomplished through a combination of both organic and acquired store growth with particular focus on the Shoe Station banner.
(“Skechers”) and further diversified our merchandise offerings among other vendor partners. Collectively, Nike and Skechers accounted for 27% of our Net Sales in Fiscal 2022, compared to 39% in Fiscal 2021 and 43% in Fiscal 2020.
("Crocs") collectively accounted for approximately 45% of our Net Sales in Fiscal 2023. Nike and Skechers collectively accounted for approximately 27% in Fiscal 2022 and 39% in Fiscal 2021.
Diversity is an important 9 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.
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 9 important element in our ongoing annual mandatory training for all employees and managers. We do not tolerate harassment or unlawful discrimination of any kind.
Employee Benefits Among the many ways we seek to serve our employees, we offer a complete range of benefits.
Since 2004, responses to this survey have had an average score of 4.2 to 4.3, with 5 being “strongly agree.” Employee Benefits Among the many ways we seek to serve our employees, we offer a complete range of benefits.
Our technology department monitors and regularly tests compliance with our protocols, provides regular updates to employees and management and conducts annual training. Number of Employees As of our Fiscal 2022 year end, we had approximately 5,500 employees, of which approximately 3,000 were employed on a part-time basis. The number of employees fluctuates during the year primarily due to seasonality.
Number of Employees As of our Fiscal 2023 year end, we had approximately 5,300 employees, of which approximately 3,000 were employed on a part-time basis. The Rogan's acquisition added approximately 600 additional employees as of February 13, 2024. The number of employees fluctuates during the year primarily due to seasonality. None of our employees are represented by a labor union.
The Shoe Station assets were acquired for approximately $70.4 million, funded with cash on hand. This acquisition was the first in our history. As of our Fiscal 2022 year end, we operated 24 stores across five states in the Southeast under the Shoe Station banner, inclusive of the 21 stores acquired and three additional stores opened since the acquisition.
Shoe Station On December 3, 2021, we acquired the physical stores and substantially all of the other assets and liabilities of privately-held, family-owned Shoe Station, Inc. ("Shoe Station"). The Shoe Station assets were acquired for approximately $70.4 million, funded with cash on hand. This acquisition was the first in our history.
Worden 49 President and Chief Executive Officer and Director W. Kerry Jackson 61 Senior Executive Vice President - Chief Financial and Administrative Officer and Treasurer Carl N. Scibetta 64 Senior Executive Vice President - Chief Merchandising Officer Marc A. Chilton 53 Executive Vice President - Chief Operating Officer Patrick C.
Worden 50 President and Chief Executive Officer and Director Carl N. Scibetta 65 Senior Executive Vice President - Chief Merchandising Officer Marc A. Chilton 54 Executive Vice President - Chief Operating Officer Patrick C. Edwards 52 Senior Vice President, Chief Financial Officer, Treasurer and Secretary Mr. Weaver has served as Chairman of the Board since March 1988.
Referred to herein, Fiscal 2022 is the fiscal year ended January 28, 2023; Fiscal 2021 is the fiscal year ended January 29, 2022; Fiscal 2020 is the fiscal year ended January 30, 2021; and Fiscal 2019 is the fiscal year ended February 1, 2020. Fiscal years 2022, 2021, 2020 and 2019 all consisted of 52 weeks.
Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31. Unless otherwise stated, references to years 2023, 2022 and 2021 relate to the fiscal years ended February 3, 2024 ("Fiscal 2023"), January 28, 2023 ("Fiscal 2022") and January 29, 2022 ("Fiscal 2021"), respectively. Fiscal 2019 is the fiscal year ended February 1, 2020.
E-commerce Growth Our e-commerce platform is an extension of our physical stores and is designed to improve our customer’s shopping experience. We are committed to providing a personalized, seamless customer experience across all channels, and we believe that our ongoing omnichannel initiatives are aligned with rapidly changing consumer behavior.
We are committed to providing a personalized, seamless customer experience across all channels, and we believe that our ongoing omnichannel initiatives are aligned with changing consumer behavior. We delivered a new online experience to our customers in Fiscal 2023. We launched our www.shoestation.com website in February 2023 and relaunched our www.shoecarnival.com website in late October 2023.
Workforce Diversity 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 offices. 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.
Our commitment to, and investment in, a strong performance culture is paramount to our long-term sustainability and success. Workforce Diversity We serve a diverse customer base and seek diversity in and among our workforce in all areas, from our stores to our Evansville distribution center and our corporate offices.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our distribution center is shut down for any reason, if our information technology systems do not operate effectively or if we are the target of attacks or security breaches, we may suffer the loss of critical data, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores, our ability to operate our e-commerce platform may be impacted and we could experience other interruptions or delays to our operations, which could have an adverse effect on our operating and financial performance.
Biggest changeDespite our precautionary efforts, our information technology systems are vulnerable from time to time to damage or interruption from, among other things, natural or man-made disasters, technical malfunctions, inadequate systems capacity, power outages, terrorist attacks, computer viruses and security breaches, which may require significant investment to fix or replace. 19 If our primary distribution center is shut down for any reason, if our information technology systems do not operate effectively or if we are the target of attacks or security breaches, we may suffer the loss of critical data, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores, our ability to operate our e-commerce platform may be impacted and we could experience other interruptions or delays to our operations, which could have an adverse effect on our operating and financial performance.
Failure to generate or raise sufficient funds may require us to modify, delay or abandon some of our future growth or expenditure plans. We utilize our credit agreement to fund working capital, including inventory purchases, and special purpose standby letters of credit, as needed.
Failure to generate or raise sufficient funds may require us to modify, delay or abandon some of our future growth or expenditure plans. We may utilize our credit agreement to fund working capital, including inventory purchases, and special purpose standby letters of credit, as needed.
Future acquisitions involve many risks that could have an adverse effect on our business, results of operations or financial condition, including: • our ability to identify suitable acquisition candidates, prevail against competing potential acquirers and negotiate and consummate acquisitions on terms attractive to us; • any acquired business not achieving anticipated revenues, earnings, cash flow or market share; • the potential loss of key employees, vendors or suppliers of the acquired company or adverse effects on our existing relationships with our vendors and suppliers; • the failure of our due diligence procedures to detect material issues related to the acquired business, including exposure to legal claims for activities of the acquired business prior to the acquisition; • unexpected liabilities resulting from the acquisition for which we may not be adequately indemnified; • the integration of the personnel, operations, logistics, information technologies, communications, purchasing, accounting, marketing, administration and other systems and the establishment of internal controls into the acquired company’s operations; • the diversion of management attention and financial resources from our current operations; • the potential incurrence of debt to fund an acquisition; • any unforeseen management and operational difficulties; and • incorrect estimates made in accounting for acquisitions, incurrence of non-recurring charges and write-offs of significant amounts of goodwill or other assets that could adversely affect our financial results.
Future acquisitions involve many risks that could have an adverse effect on our business, results of operations or financial condition, including: • our ability to identify suitable acquisition candidates, prevail against competing potential acquirers and negotiate and consummate acquisitions on terms attractive to us; • any acquired business not achieving anticipated revenues, earnings, cash flow or market share; • the potential loss of key employees, vendors or suppliers of the acquired company or adverse effects on our existing relationships with our vendors and suppliers; • the failure of our due diligence procedures to detect material issues related to the acquired business, including exposure to legal claims for activities of the acquired business prior to the acquisition; • unexpected liabilities resulting from the acquisition for which we may not be adequately indemnified; 18 • the integration of the personnel, operations, logistics, information technologies, communications, purchasing, accounting, marketing, administration and other systems and the establishment of internal controls into the acquired company’s operations; • the diversion of management attention and financial resources from our current operations; • the potential incurrence of debt to fund an acquisition; • any unforeseen management and operational difficulties; and • incorrect estimates made in accounting for acquisitions, incurrence of non-recurring charges and write-offs of significant amounts of goodwill or other assets that could adversely affect our financial results.
Other risks associated with our use of imported goods include: • disruptions in the flow of imported goods because of factors such as electricity or raw material shortages, work stoppages, strikes, political unrest, war, pandemics and natural disasters; • tariffs, import duties, import quotas, anti-dumping duties and other trade sanctions; • modifications to international trade policy and/or existing trade agreements and other changes affecting United States trade relations with other countries; 15 • problems with oceanic shipping, including shipping container shortages and piracy; • port congestion at arrival ports causing delays; • additional oceanic shipping costs to reach non-congested ports; • inland transit costs and delays resulting from port congestion; • economic crises and international disputes; • currency exchange rate fluctuations; • increases in the cost of purchasing or shipping foreign merchandise resulting from the failure to maintain normal trade relations with source countries; • increases in shipping rates imposed by the trans-Pacific shipping cartel; and • compliance with the laws and regulations, and changes to such laws and regulations, in the United States and the countries where our manufacturers are located, including but not limited to requirements relating to shipping security, product safety testing, environmental requirements and anti-corruption laws.
Other risks associated with our use of imported goods include: • disruptions in the flow of imported goods because of factors such as electricity or raw material shortages, work stoppages, strikes, political unrest, war, pandemics and natural disasters; • tariffs, import duties, import quotas, anti-dumping duties and other trade sanctions; • modifications to international trade policy and/or existing trade agreements and other changes affecting United States trade relations with other countries; • problems with oceanic shipping, including shipping container shortages and piracy; • port congestion at arrival ports causing delays; • additional oceanic shipping costs to reach non-congested ports; • inland transit costs and delays resulting from port congestion; • economic crises and international disputes; • currency exchange rate fluctuations; • increases in the cost of purchasing or shipping foreign merchandise resulting from the failure to maintain normal trade relations with source countries; • increases in shipping rates imposed by the trans-Pacific shipping cartel; and • compliance with the laws and regulations, and changes to such laws and regulations, in the United States and the countries where our manufacturers are located, including but not limited to requirements relating to shipping security, product safety testing, environmental requirements and anti-corruption laws.
Our facilities, including our distribution center, our corporate headquarters and other offices and our retail stores, and the facilities of our third-party vendors and service providers could suffer if affected by: • natural disasters, such as fires, earthquakes, explosions, hurricanes, power shortages or outages, floods, monsoons, ice storms or tornadoes; • other public health crises such as pandemics and epidemics; • political crises such as terrorism, war, political instability, civil unrest or other conflict; or • other events outside of our control.
Our facilities, including our Evansville distribution center, our corporate headquarters and other offices and our retail stores, and the facilities of our third-party vendors and service providers could suffer if affected by: • natural disasters, such as fires, earthquakes, explosions, hurricanes, power shortages or outages, floods, monsoons, ice storms or tornadoes; • public health crises such as pandemics and epidemics; • political crises such as terrorism, war, political instability, civil unrest or other conflict; or • other events outside of our control.
If our security and information systems or the systems of our employees or external business partners are compromised or our employees or external business partners fail to comply with these laws and regulations and this information is obtained by unauthorized persons, or collected or used inappropriately, our reputation, as well as our operations and financial results, could be negatively affected and litigation or regulatory action against us or the imposition of costs, fines or other penalties could also occur.
If our security and information systems or the 21 systems of our employees or external business partners are compromised or our employees or external business partners fail to comply with these laws and regulations and this information is obtained by unauthorized persons, or collected or used inappropriately, our reputation, as well as our operations and financial results, could be negatively affected and litigation or regulatory action against us or the imposition of costs, fines or other penalties could also occur.
While we have succession plans in place for members of our executive management team, and continue to review and update those plans, and we have employment agreements with certain key executive officers, these plans and agreements do not guarantee that the services of our executive officers will 22 continue to be available to us or that we will be able to find suitable management personnel to replace departing executives on a timely basis.
While we have succession plans in place for members of our executive management team, and continue to review and update those plans, and we have employment agreements with certain key executive officers, these plans and agreements do not guarantee that the services of our executive officers will continue to be available to us or that we will be able to find suitable management personnel to replace departing executives on a timely basis.
If any of the following risks actually occur, we may not be able to conduct our business as 13 currently planned and our financial condition and operating results could be materially and adversely affected. See PART I, “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this Annual Report on Form 10-K.
If any of the following risks actually occur, we may not be able to conduct our business as currently planned and our financial condition and operating results could be materially and adversely affected. See PART I, “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this Annual Report on Form 10-K.
These impacts could include, but are not limited to: • population shifts; 21 • changes in the level of annual rainfall; • changes in the overall average temperature; and • changes to the frequency and severity of weather events such as hurricanes and other wind related events, thunderstorms, tornadoes and ice storms that can damage our facilities and impact our supply chain and distribution channels.
These impacts could include, but are not limited to: • population shifts; • changes in the level of annual rainfall; • changes in the overall average temperature; and • changes to the frequency and severity of weather events such as hurricanes and other wind related events, thunderstorms, tornadoes and ice storms that can damage our facilities and impact our supply chain and distribution channels.
All of our stores are subject to leases and are primarily located in open-air shopping centers. If we fail to effectively implement our real estate strategies or negotiate appropriate lease terms or if unforeseen changes arise, the consequences could have an adverse effect on our profitability, cash flows and liquidity.
All of our stores are subject to leases and are primarily located in open-air shopping centers. If we fail to effectively implement our real estate strategies or negotiate appropriate lease terms or if unforeseen changes arise, the consequences could have an adverse effect on our 15 profitability, cash flows and liquidity.
This evolution and structural change has resulted in the bankruptcy and/or reorganization of various footwear specific and other publicly traded retailers. Despite our best efforts to differentiate our business model and processes, our stock price has fluctuated as 23 a result of perceptions of the overall retail environment and investor confidence in the retail sector.
This evolution and structural change has resulted in the bankruptcy and/or reorganization of various footwear specific and other publicly traded retailers. Despite our best efforts to differentiate our business model and processes, our stock price has fluctuated as a result of perceptions of the overall retail environment and investor confidence in the retail sector.
If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management attention and resources, thus harming our business. We cannot guarantee that we will continue to make dividend payments or that we will continue to repurchase stock pursuant to our stock repurchase program.
If we become involved in securities class action 23 litigation in the future, it could result in substantial costs and diversion of management attention and resources, thus harming our business. We cannot guarantee that we will continue to make dividend payments or that we will continue to repurchase stock pursuant to our stock repurchase program.
We are a defendant from time to time in lawsuits and regulatory actions relating to our business. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have an adverse effect on our business, financial condition and results of operations.
We are a defendant from time to time in lawsuits and regulatory actions relating to our business. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of such proceedings. An unfavorable outcome could have an adverse effect on our business, financial condition and results of operations.
Our risk factors are categorized as follows: Operational and Strategic Risks, Compliance and Litigation Risks, Human Capital Risks, Financial and Liquidity Risks and Risks Relating to the Ownership of Our Common Stock. Operational and Strategic Risks Adverse impacts on consumer spending may significantly harm our business and impact our promotional strategies and intensity.
Our risk factors are categorized as follows: Operational and Strategic Risks, Compliance and Litigation Risks, Human Capital Risks, Financial and Liquidity Risks and Risks Relating to the Ownership of Our Common Stock. 13 Operational and Strategic Risks Adverse impacts on consumer spending may significantly harm our business and impact our promotional strategies and intensity.
The capital and credit markets have recently experienced, and may continue to experience, volatility and disruption, which could have the following impacts, among other things: • make obtaining other sources of debt more difficult; and • increase our borrowing costs or limit other potential sources of financing available to us.
The capital and credit markets have experienced, and may continue to experience, volatility and disruption, which could have the following impacts, among other things: • make obtaining other sources of debt more difficult; and • increase our borrowing costs or limit other potential sources of financing available to us.
The success of our growth strategy will depend on a number of other factors, many of which are out of our control, including, among other things: • the acceptance of our banners and concepts in new markets; • our ability to provide adequate distribution to support growth; • our ability to source sufficient levels of inventory; • our ability to resolve downtime or technical issues related to our e-commerce platform, our order management and fulfillment systems and all other related systems that support our omnichannel strategy; • our ability to execute omnichannel advertising and marketing campaigns to effectively communicate our message to our customers and our employees; • our ability to locate suitable store sites and negotiate store leases (for new stores and renewals) on favorable terms; • particularly if we expand into new markets, our ability to open a sufficient number of new stores to provide the critical mass needed for efficient advertising and effective brand recognition; • the availability of financing for capital expenditures and working capital requirements; • our ability to improve costs and timing associated with opening new stores; and • the impact of new stores on sales or profitability of existing stores in the same market.
The success of our growth strategy will depend on a number of other factors, some of which are out of our control, including, among other things: • the acceptance of our banners and concepts in new markets; • our ability to provide adequate distribution to support growth; • our ability to source sufficient levels of inventory; 17 • our ability to resolve downtime or technical issues related to our e-commerce platform, our order management and fulfillment systems and all other related systems that support our omnichannel strategy; • our ability to execute omnichannel advertising and marketing campaigns to effectively communicate our message to our customers and our employees; • our ability to locate suitable store sites and negotiate store leases (for new stores and renewals) on favorable terms; • particularly if we expand into new markets, our ability to open a sufficient number of new stores to provide the critical mass needed for efficient advertising and effective brand recognition; • the availability of financing for capital expenditures and working capital requirements; • our ability to improve costs and timing associated with opening new stores; and • the impact of new stores on sales or profitability of existing stores in the same market.
Reductions in demand for our merchandise during these peak shopping seasons could require us to sell excess inventory at a substantial markdown, which could reduce our Net Sales and margins and negatively affect our profitability.
Reductions in demand for our merchandise during these peak shopping seasons could require us to sell excess inventory at a substantial markdown, which could reduce our Net Sales and margins and negatively affect our 20 profitability.
If we are unable to attract and retain quality sales associates and management, embrace automation, such as robot and self-checkout technology, as necessary, or if market conditions or changes to minimum wage laws result in the need for higher wages paid to employees, our ability to meet our growth goals or to sustain expected levels of profitability may be compromised and our financial condition, results of operations and cash flows may be adversely affected.
If we are unable to attract and retain quality sales associates and management, embrace automation, such as robot, artificial intelligence, and self-checkout technology, as necessary, or if market conditions or changes to minimum wage laws result in the need for higher wages paid to employees, our ability to meet our growth goals or to sustain expected levels of profitability may be compromised and our financial condition, results of operations and cash flows may be adversely affected.
A number of factors have historically affected, and will continue to affect, our comparable store sales results, including: • competition; • timing of holidays, including sales tax holidays; • general regional and national economic conditions, including inflation; • inclement weather and/or unseasonable weather patterns; • consumer trends, including the impact of higher prices on consumer goods; • fashion trends; • changes in our merchandise mix; • our ability to efficiently distribute merchandise; 17 • timing and type of, and customer response to, sales events, promotional activities or other advertising; • the effectiveness of our inventory management; • new merchandise introductions; and • our ability to execute our business strategy effectively.
A number of factors have historically affected, and will continue to affect, our comparable store sales results, including: • competition; • timing of holidays, including sales tax holidays; • general regional and national economic conditions, including inflation; • inclement weather and/or unseasonable weather patterns; • consumer trends, including the impact of higher prices on consumer goods; • the impact of and government response to pandemics; • fashion trends; • changes in our merchandise mix; • our ability to efficiently distribute merchandise; • timing and type of, and customer response to, sales events, promotional activities or other advertising; • the effectiveness of our inventory management; • new merchandise introductions; and • our ability to execute our business strategy effectively.
In the future, our results of operations and financial condition may not allow for a dividend to be declared or the Board of Directors may decide not to continue to declare dividends. In addition, our current share repurchase program authorizes the purchase of up to $50 million of our common stock through December 31, 2023.
In the future, our results of operations and financial condition may not allow for a dividend to be declared or the Board of Directors may decide not to continue to declare dividends. In addition, our current share repurchase program authorizes the purchase of up to $50 million of our common stock through December 31, 2024.
We cannot control the development of alternative shopping destinations near 16 our existing stores or the availability or cost of real estate within existing or new shopping destinations.
We cannot control the development of alternative shopping destinations near our existing stores or the availability or cost of real estate within existing or new shopping destinations.
The reliability and capacity of our information technology systems, and in particular our distribution technology operations, are critical to our continued operations. We currently operate a single distribution center in Evansville, Indiana. Virtually all merchandise received by our physical stores is, and will be, shipped through our distribution center.
The reliability and capacity of our information technology systems, and in particular our distribution technology operations, are critical to our continued operations. We currently operate a primary distribution center in Evansville, Indiana. Virtually all merchandise received by our physical stores is, and will be, shipped through this distribution center.
However, we are not obligated to make any purchases under the share repurchase program and the program may be amended, suspended or discontinued at any time. We are controlled by our principal shareholders. J. Wayne Weaver, our Chairman of the Board of Directors, and his spouse together beneficially own approximately 32.0% of our outstanding common stock. Mr.
However, we are not obligated to make any purchases under the share repurchase program and the program may be amended, suspended or discontinued at any time. We are controlled by our principal shareholders. J. Wayne Weaver, our Chairman of the Board of Directors, and his spouse together beneficially own approximately 32.8% of our outstanding common stock. In addition, Mr.
Weaver's adult daughter is the sole trustee of several grantor retained annuity trusts and, as a result, beneficially owns approximately 4.5% of our outstanding common stock held by such trusts. Accordingly, the Weaver family is able to exert substantial influence over our management and operations.
Weaver's adult daughter is the sole trustee of several grantor retained annuity trusts and, as a result, beneficially owns less than 5% of our outstanding common stock held by such trusts. Accordingly, the Weaver family is able to exert substantial influence over our management and operations.
The rising popularity of 20 social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination.
The popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination.
Our failure to attract and retain qualified personnel could adversely affect our business. Our business model requires us to train, motivate and manage our employees and to attract, motivate and retain additional qualified managerial and merchandising personnel.
Our failure to attract and retain qualified personnel and control labor costs could adversely affect our business. Our business model requires us to train, motivate and manage our employees and to attract, motivate and retain additional qualified managerial and merchandising personnel.
In addition, if our store locations fail to attract sufficient customer traffic or we are unable to locate replacement locations on terms acceptable to us, our business could suffer. Various risks associated with our e-commerce platform may adversely affect our business and results of operations.
In addition, if our store locations fail to attract sufficient customer traffic or we are unable to locate replacement locations on terms acceptable to us, our business could suffer. Various risks associated with our e-commerce platform may adversely affect our business and results of operations. E-commerce has been an important sales channel for us.
The acquired Shoe Station banner may underperform relative to our expectations. Any of these impacts could have an adverse effect on our growth opportunities, business, results of operations and financial condition. We face significant competition in our markets, and we may be unable to compete favorably. The retail footwear industry is highly competitive with few barriers to entry.
Any of these impacts could have an adverse effect on our growth, business, results of operations and financial condition. We face significant competition in our markets, and we may be unable to compete favorably. The retail footwear industry is highly competitive with few barriers to entry.
We may not realize the expected operating results, growth opportunities and other benefits of the Shoe Station acquisition. A significant portion of our growth strategy is based on growing the Shoe Station banner.
We may not realize the expected operating results from, and planned growth of, our Shoe Station banner. A significant portion of our growth strategy is based on growing our Shoe Station banner.
Any breach involving our customer information could harm our reputation or result in liability including, but not limited to, fines, penalties and costs of litigation, any of which could have an adverse effect on our operating results, financial condition and cash flows.
Any breach involving our customer information could harm our reputation or result in liability including, but not limited to, fines, penalties and costs of litigation, any of which could have an adverse effect on our operating results, financial condition and cash flows. 16 A failure to increase sales at our existing stores may adversely affect our stock price and affect our results of operations.
Should the disruption continue or worsen, it may further increase the cost of the goods we purchase, limit our ability to acquire merchandise and decrease our sales and profits. If imported merchandise becomes more expensive or unavailable, the transition to alternative sources may not occur in time to meet our demands.
Our primary footwear manufacturers are located in China. Any disruption in the supply chain may increase the cost of the goods we purchase, limit our ability to acquire merchandise and decrease our sales and profits. 14 If imported merchandise becomes more expensive or unavailable, the transition to alternative sources may not occur in time to meet our demands.
Our growth strategy requires that we continue to expand and improve our operating and financial systems and expand, train and manage our employee base.
Our growth strategy requires that we continue to invest in omnichannel initiatives, which requires substantial investment in technology, to expand and improve our operating and financial systems and expand, train and manage our employee base.
Our ability to achieve our strategies will depend, in part, on our ability to realize the expected operating results, growth opportunities and other benefits from acquiring the Shoe Station assets. We may not realize these operating results, growth opportunities or other benefits within the expected time frames, or at all.
Our ability to achieve our strategies will depend, in part, on our ability to realize the expected operating results from, and planned growth of, our Shoe Station banner, which we may not realize within our expected time frames, or at all. The Shoe Station banner may underperform relative to our expectations.
Disasters occurring at our distribution center, our corporate headquarters and other offices, our retail stores or the infrastructure of a key third-party vendor or service provider also could result in us being unable to deliver 19 merchandise to our stores or directly to customers for a prolonged period and could impact our reputation and our customers’ perception of our brand.
Disasters occurring at our distribution center located in Evansville, Indiana, our corporate headquarters and other offices, our retail stores or the infrastructure of a key third-party vendor or service provider also could impact our reputation and our customers’ perception of our brand.
Significant decreases in cash flow from operations could result in our borrowing under the credit agreement to fund operational needs. If we borrow funds under our credit agreement and interest rates materially increase from present levels, our financial results could be adversely affected.
Significant decreases in cash flow from operations could result in our borrowing under the credit agreement to fund 22 operational needs. If we borrow funds under our credit agreement and interest rates materially increase, our financial results could be adversely affected. Continued financial market volatility could have an adverse effect on the sources and costs of financing available to us.
We rely on imported merchandise to sell in our stores. Substantially all of our footwear product is manufactured overseas, including the merchandise we purchase from domestic vendors and the smaller portion we import directly from overseas manufacturers. Our primary footwear manufacturers are located in China.
An increase in the cost, or a disruption in the flow, of imported goods may decrease our sales and profits. We rely on imported merchandise to sell in our stores. Substantially all of our footwear product is manufactured overseas, including the merchandise we purchase from domestic vendors and the smaller portion we import directly from overseas manufacturers.
Two branded suppliers, Nike, Inc. and Skechers U.S.A., Inc., 18 collectively accounted for approximately 27% of our Net Sales in Fiscal 2022, 39% of our Net Sales in Fiscal 2021 and 43% in Fiscal 2020 (Nike, Inc. accounted for approximately 14% of our Net Sales in Fiscal 2022, 28% in Fiscal 2021 and 33% in Fiscal 2020 and Skechers U.S.A., Inc. accounted for approximately 13% of our Net Sales in Fiscal 2022, 11% in Fiscal 2021 and 10% in Fiscal 2020).
Three branded suppliers, Nike, Inc., Skechers U.S.A., Inc. and Crocs, Inc. collectively accounted for approximately 45% of our Net Sales in Fiscal 2023. Nike, Inc. and Skechers U.S.A., Inc. collectively accounted for approximately 27% of our Net Sales in Fiscal 2022 and 39% of our Net Sales in Fiscal 2021.
We fulfill substantially all of our e-commerce orders from our store locations and our distribution center. Our corporate computer network is essential to our distribution process.
We fulfill substantially all of our e-commerce orders from our store locations and our primary distribution center. Given that we have one primary distribution center, virtually any technology disruption there could be significant to our operations. Our corporate computer network is essential to our distribution process.
E-commerce has been a rapidly growing sales channel and an increasing source of competition in the retail industry. We sell shoes and related accessories through our websites at www.shoecarnival.com and www.shoestation.com and through our related mobile app. We fulfill substantially all e-commerce orders from our store locations and from our distribution center.
We sell shoes and related accessories through websites that we control, including www.shoecarnival.com and www.shoestation.com and through our related mobile app. We fulfill substantially all e-commerce orders from our store locations and from our Evansville distribution center.
We may not be able to successfully execute our growth strategy, which could have an adverse effect on our business, financial condition and results of operations. We intend to continue to invest in omnichannel initiatives, which requires substantial investment in technology.
If our Shoe Perks members do not continue to shop with us, our sales may be adversely affected, which could have an adverse impact on our results of operations. We may not be able to successfully execute our growth strategy, which could have an adverse effect on our business, financial condition and results of operations.
Our inability to accurately predict our customers’ preferences, to utilize their desired mode of communication, or to ensure availability of advertised products at effective price points could adversely affect our business and results of operations. An increase in the cost, or a disruption in the flow, of imported goods may decrease our sales and profits.
Effective use of CRM data and successful marketing efforts are necessary for us to reach customers through their desired mode of communication. Our inability to accurately predict our customers’ preferences, to utilize their desired mode of communication, or to ensure availability of advertised products at effective price points could adversely affect our business and results of operations.
Rewards are earned by making purchases and participating in other point earning opportunities that facilitate engagement with our brand. We remain focused on expanding our Shoe Perks enrollment. If our Shoe Perks members do not continue to shop with us, our sales may be adversely affected, which could have an adverse impact on our results of operations.
Rewards are earned by making purchases and participating in other point earning opportunities that facilitate engagement with our brand. We remain focused on expanding our Shoe Perks enrollment. In Fiscal 2023, purchases from Shoe Perks members were approximately 71% of our comparable Net Sales through our Shoe Carnival bannered stores.
Our success and growth are partially dependent on generating customer traffic in order to gain sales momentum in our physical stores and drive traffic to our e-commerce platform. Effective use of CRM data and successful marketing efforts are necessary for us to reach customers through their desired mode of communication.
Failure to successfully manage and execute our marketing and pricing strategies could have a negative impact on our business . Our success and growth are partially dependent on generating customer traffic in order to gain sales momentum in our physical stores and drive traffic to our e-commerce platform.
Removed
The COVID-19 pandemic has impacted, and may continue to impact, our business and our results of operations. Our operations and the markets in which we operate, procure merchandise and raise capital have experienced, and may continue to experience, disruption and financial market volatility associated with the remaining effects of the COVID-19 pandemic.
Added
We may experience difficulties in integrating Rogan’s and realizing the expected operating results, synergies, growth opportunities and other benefits of the acquisition. The success of the Rogan’s acquisition will depend, in part, on our ability to realize the expected operating results, synergies, growth opportunities and other benefits from acquiring Rogan’s.
Removed
Governments took, and may continue to take, unprecedented measures to control the spread of COVID-19 and to provide stimulus as a mitigating measure to deteriorating economic conditions.
Added
We may not realize these operating results, synergies, growth opportunities or other benefits within the expected time frames, or at all. The acquisition may disrupt our current plans and operations and may negatively impact our relationship with our vendors and other key suppliers.
Removed
Our business and results of operations were impacted by the temporary closure of our physical stores in Fiscal 2020, government stimulus in Fiscal 2021 and impacts of inflation potentially sparked by the government stimulus and supply chain disruptions in Fiscal 2022.
Added
We may not be able to successfully integrate Rogan’s operations, logistics, information technologies, communications, purchasing, accounting, marketing, administration and other systems, establish internal controls into Rogan’s operations or retain key Rogan’s employees. Rogan’s may underperform relative to our expectations. Any of these impacts could have an adverse effect on our growth opportunities, business, results of operations and financial condition.
Removed
Federal stimulus payments made directly to consumers as a result of the COVID-19 pandemic likely had a positive impact on our Net Sales, including in Fiscal 2021. The amount of any future stimulus payments and duration of the impact of such payments is uncertain.
Added
We currently operate a primary distribution center located in Evansville, Indiana. Virtually all merchandise received by our physical stores is, and will be, shipped through this distribution center. A disaster occurring at this distribution center would be significant and we could be unable to effectively deliver merchandise to our stores for an extended period.
Removed
Our sales and profitability have been volatile based on the amount of government stimulus and could be further impacted by stimulus in future periods. 14 We did not have any stores closed as of our Fiscal 2022 and Fiscal 2021 year ends or for extended periods during Fiscal 2022 or Fiscal 2021 due to the pandemic.
Removed
As guidance and mandates from governments and public health officials continue to evolve, closures to some, or all, of our store and other operations may reoccur.
Removed
The extent of the continued impact of the COVID‑19 pandemic on our operational and financial performance will depend on future developments, including, but not limited to: • the duration and spread of COVID-19 and its variants in the areas in which we operate and whether there are additional periods of increases or spikes in the number of such cases in future periods; • mitigating efforts deployed by government agencies and the public at large, including vaccine, testing and masking mandates; • the development, pace of distribution and effectiveness of vaccines and therapeutic treatments; and • the general perception of those mitigating efforts where we operate, procure merchandise and raise capital.
Removed
Should the COVID-19 pandemic and/or its related after effects lead to further temporary closures of our physical stores; financial market volatility; adverse changes in economic conditions; adverse changes in consumer spending; increased operational risks; and/or further disruptions to our supply chain and distribution processes, our costs may increase, our sales and gross profit may decline and our stock price may decrease, any of which could negatively impact our results of operations, cash flows and financial condition.
Removed
Our customers and store employees are exposed to certain COVID-19-related safety risks at our physical stores. While we have taken measures to control these risks, the unpredictable nature of COVID-19 may result in unexpected outcomes.
Removed
For example, if the established protocols cease to be effective, or are not followed, the health and safety of our employees and customers could be at risk. A future outbreak in our stores, distribution center or corporate headquarters could result in temporary or sustained workforce shortages or store or facility closures.
Removed
Inadequate response by us, perceived or otherwise, could impact our costs, our reputation, and/or our ability to recruit a qualified workforce. Failure to successfully manage and execute our marketing and pricing strategies could have a negative impact on our business .
Removed
Currently, most retailers, including us, are experiencing some form of disruption in their supply chains involving goods imported from Asian countries. To date, such disruption has increased our costs and negatively impacted our access to merchandise, particularly athletic footwear.
Removed
A failure to increase sales at our existing stores may adversely affect our stock price and affect our results of operations.
Removed
Despite our precautionary efforts, our information technology systems are vulnerable from time to time to damage or interruption from, among other things, natural or man-made disasters, technical malfunctions, inadequate systems capacity, power outages, terrorist attacks, computer viruses and security breaches, which may require significant investment to fix or replace.
Removed
Continued financial market volatility could have an adverse effect on the sources and costs of financing available to us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs part of that plan, which was completed in Fiscal 2021, we identified underperforming stores and worked to address these stores' performance through renegotiation of lease terms, relocation, or closure. We closed 45 stores from Fiscal 2018 through Fiscal 2021.
Biggest changeAs part of that plan, which was completed in Fiscal 2021, we identified underperforming stores and worked to address these stores' performance through renegotiation of lease terms, relocation, or closure. While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years.
Our facility can support the processing and distribution needs for approximately 470 stores. With additional resources added, including our right to expand the facility by 200,000 square feet, the current location could provide processing capacity for approximately 650 stores. We lease the facility from a third party. The lease expires in 2034.
This facility can support the processing and distribution needs for approximately 470 stores. With additional resources added, including our right to expand the facility by 200,000 square feet, the current location could provide processing capacity for approximately 650 stores. We lease the facility from a third party. The lease expires in 2034.
Following is a roll forward of our leased locations over the last five years: Historical Store Count Fiscal Years 2022 2021 2020 2019 2018 Stores open at the beginning of the year 393 383 392 397 408 New store openings 4 1 4 1 3 Stores acquired 0 21 0 0 0 Store closings 0 (12 ) (13 ) (6 ) (14 ) Stores open at the end of the year 397 393 383 392 397 Stores relocated 0 2 0 4 1 Over the last several years, we performed a store improvement plan.
Following is a roll forward of our leased locations over the last five years: Historical Store Count Fiscal Years 2023 2022 2021 2020 2019 Stores open at the beginning of the year 397 393 383 392 397 New store openings 5 4 1 4 1 Stores acquired 0 0 21 0 0 Store closings (2 ) 0 (12 ) (13 ) (6 ) Stores open at the end of the year 400 397 393 383 392 Stores relocated 0 0 2 0 4 Over the last several years, we performed a store improvement plan.
The following table identifies the number of our stores in each state and Puerto Rico as of our Fiscal 2022 year end: State/Territory State/Territory Alabama 21 New Jersey 1 Arkansas 10 New York 3 Arizona 3 North Carolina 18 Colorado 3 North Dakota 3 Delaware 1 Ohio 18 Florida 32 Oklahoma 7 Georgia 19 Pennsylvania 11 Idaho 4 Puerto Rico 5 Iowa 11 South Carolina 10 Illinois 30 South Dakota 2 Indiana 26 Tennessee 18 Kansas 5 Texas 48 Kentucky 12 Utah 2 Louisiana 11 Virginia 6 Michigan 13 Wisconsin 3 Missouri 22 West Virginia 6 Mississippi 9 Wyoming 1 Montana 1 Total Stores 397 Nebraska 2 25 Distribution Center We operate a single 410,000 square foot distribution center located in Evansville, Indiana.
The following table identifies the number of our stores in each state and Puerto Rico as of our Fiscal 2023 year end: State/Territory State/Territory Alabama 22 New Jersey 1 Arkansas 10 New York 2 Arizona 3 North Carolina 18 Colorado 3 North Dakota 3 Delaware 1 Ohio 18 Florida 31 Oklahoma 7 Georgia 21 Pennsylvania 11 Idaho 4 Puerto Rico 5 Iowa 11 South Carolina 11 Illinois 31 South Dakota 2 Indiana 26 Tennessee 18 Kansas 5 Texas 48 Kentucky 12 Utah 2 Louisiana 11 Virginia 6 Michigan 13 Wisconsin 3 Missouri 22 West Virginia 6 Mississippi 9 Wyoming 1 Montana 1 Total Stores 400 Nebraska 2 27 Distribution Center Our primary 410,000 square foot distribution center is located in Evansville, Indiana.
ITEM 2. PROPERTIES Physical Stores As of our Fiscal 2022 year end, we leased our 397 stores located across 35 states and Puerto Rico. Approximately 98% of the leases for our existing stores provide for fixed minimum rentals and approximately 51% provide for contingent rental payments based upon various specified percentages of sales.
ITEM 2. PROPERTIES Physical Stores As of our Fiscal 2023 year end, we leased our 400 stores located across 35 states and Puerto Rico. Approximately 96% of the leases for our existing stores provide for fixed minimum rentals and approximately 54% provide for contingent rental payments based upon various specified percentages of sales.
Removed
While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE S AFETY DISCLOSURES Not applicable. 26 PART II
Biggest changeMINE S AFETY DISCLOSURES Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−4 removed4 unchanged
Biggest changeCredit Agreement's Impact on Share Repurchases and Dividends Our amended and restated credit agreement, dated as of March 23, 2022 (our "Credit Agreement") contains certain restrictions on our ability to pay cash dividends and to repurchase shares of our common stock.
Biggest changeThe 2024 Share Repurchase Program replaced the prior $50.0 million share repurchase program that was authorized in December 2022 and expired in accordance with its terms on December 31, 2023. 29 Credit Agreement's Impact on Share Repurchases and Dividends Our amended and restated credit agreement, dated as of March 23, 2022 (our "Credit Agreement") contains certain restrictions on our ability to pay cash dividends and to repurchase shares of our common stock.
See Note 9 - "Debt" in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for more information regarding the Credit Agreement. ITEM 6 . [RESERVED] 28
See Note 9 - "Debt" in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for more information regarding the Credit Agreement. ITEM 6 . [RESERVED] 30
(2) On December 14, 2022, our Board of Directors authorized the 2023 Share Repurchase Program for up to $50.0 million of our outstanding common stock, effective January 1, 2023 and expiring on December 31, 2023.
(2) On December 14, 2023, our Board of Directors authorized the 2024 Share Repurchase Program for up to $50.0 million of our outstanding common stock, effective January 1, 2024 and expiring on December 31, 2024.
Throughout Fiscal 2022, we issued treasury shares to certain employees upon the vesting of restricted stock units and performance stock units and to our non-employee directors upon the issuance of service-based restricted stock awards.
Throughout Fiscal 2023, we issued treasury shares to certain employees upon the vesting of restricted stock units and performance stock units and to our non-employee directors upon the issuance of service-based restricted stock awards.
Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock under our Board-approved share repurchase program during the fourth quarter of Fiscal 2022.
Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock under our Board-approved share repurchase program during the fourth quarter of Fiscal 2023.
We also repurchased 73,817 shares of common stock as a result of our withholding shares or allowing our employees to deliver shares to us for the income taxes resulting from the vesting of certain share-settled equity awards. We intend to continue issuing shares out of treasury to meet these needs.
We also repurchased 119,084 shares of common stock as a result of our withholding shares or allowing our employees to deliver shares to us for the income taxes resulting from the vesting of certain share-settled equity awards. We intend to continue issuing shares out of treasury to meet these needs.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED S TOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is quoted on The Nasdaq Stock Market LLC under the trading symbol “SCVL.” As of March 17, 2023, there were approximately 123 holders of record of our common stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED S TOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is quoted on The Nasdaq Stock Market LLC under the trading symbol “SCVL.” As of March 18, 2024, there were approximately 122 holders of record of our common stock.
The following table summarizes our repurchase activity during the fourth quarter of Fiscal 2022: Issuer Purchases of Equity Securities Total Number Approximate Of Shares Dollar Value Purchased of Shares Total as Part that May Yet Number Average of Publicly Be Purchased of Shares Price Paid Announced Under Period Purchased (1) per Share Programs (2) Programs (2) October 30, 2022 to November 26, 2022 0 $ 0.00 0 $ 19,485,041 November 27, 2022 to December 31, 2022 0 $ 0.00 0 $ 19,485,041 January 1, 2023 to January 28, 2023 2,963 $ 23.91 0 $ 50,000,000 2,963 0 27 (1) 2,963 shares were withheld by us in connection with employee payroll tax withholding upon the vesting of stock-based compensation awards that were settled in shares.
The following table summarizes our repurchase activity during the fourth quarter of Fiscal 2023: Issuer Purchases of Equity Securities Total Number Approximate Of Shares Dollar Value Purchased of Shares Total as Part that May Yet Number Average of Publicly Be Purchased of Shares Price Paid Announced Under Period Purchased (1) per Share Programs (2) Programs (2) October 29, 2023 to November 25, 2023 657 $ 21.62 0 $ 44,555,074 November 26, 2023 to December 30, 2023 0 $ 0.00 0 $ 44,555,074 December 31, 2023 to February 3, 2024 3,153 $ 30.21 0 $ 50,000,000 3,810 0 (1) 3,810 shares were withheld by us in connection with employee payroll tax withholding upon the vesting of stock-based compensation awards that were settled in shares.
On March 14, 2023, the Board of Directors increased the quarterly cash dividend from $0.09 to $0.10 per share, an increase of 11%, for the first quarter of Fiscal 2023. The quarterly cash dividend of $0.10 per share will be paid on April 17, 2023 to shareholders of record as of the close of business on April 3, 2023.
On March 13, 2024, the Board of Directors increased the quarterly cash dividend from $0.12 to $0.135 per share, an increase of 12.5%, for the first quarter of Fiscal 2024. The quarterly cash dividend of $0.135 per share will be paid on April 22, 2024 to shareholders of record as of the close of business on April 8, 2024.
Cash Dividends During Fiscal 2022, we paid quarterly cash dividends of $0.09 per share in all four fiscal quarters. 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.
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.
Removed
We did not sell any unregistered equity securities during Fiscal 2022, 2021 or 2020. On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock.
Added
We did not sell any unregistered equity securities during Fiscal 2023, 2022 or 2021. Cash Dividends During Fiscal 2023, we paid quarterly cash dividends of $0.10 per share in our first and second fiscal quarters and $0.12 per share in the third and fourth fiscal quarters.
Removed
The stock split entitled each shareholder of record at the close of business on July 6, 2021 to receive one additional share of common stock for each share of common stock owned as of that date and was paid on July 19, 2021.
Removed
Upon the completion of the stock split, our outstanding shares increased from approximately 14.1 million shares to approximately 28.2 million shares. All share and per share amounts in this Annual Report on Form 10-K give effect to the stock split and have been adjusted retroactively for all periods presented.
Removed
The 2023 Share Repurchase Program replaced the prior $50.0 million share repurchase program that was authorized in December 2021 and expired in accordance with its terms on December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+28 added−29 removed38 unchanged
Biggest changeResults of Operations The following table sets forth our results of operations expressed as a percentage of Net Sales for the following fiscal years: 2022 2021 2020 2019 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (including buying, distribution, and occupancy costs) 62.9 60.4 71.3 69.9 Gross profit 37.1 39.6 28.7 30.1 Selling, general and administrative expenses 25.5 24.0 26.5 24.9 Operating income 11.6 15.6 2.2 5.2 Interest income (0.1 ) 0.0 0.0 (0.1 ) Interest expense 0.0 0.0 0.0 0.0 Income before income taxes 11.7 15.6 2.2 5.3 Income tax expense 3.0 4.0 0.6 1.2 Net income 8.7 % 11.6 % 1.6 % 4.1 % Fiscal 2022 Compared to Fiscal 2021 Net Sales Net Sales during Fiscal 2021 grew 36.2% compared to Fiscal 2020, with significant government stimulus distributions to our customer base in Fiscal 2021 and COVID-19 related temporary store closures occurring in the first half of Fiscal 2020.
Biggest changeResults of Operations The following table sets forth our results of operations expressed as a percentage of Net Sales for the following fiscal years: 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (including buying, distribution, and occupancy costs) 64.2 62.9 60.4 Gross profit 35.8 37.1 39.6 Selling, general and administrative expenses 27.8 25.5 24.0 Operating income 8.0 11.6 15.6 Interest income (0.2 ) (0.1 ) 0.0 Interest expense 0.0 0.0 0.0 Income before income taxes 8.2 11.7 15.6 Income tax expense 2.0 3.0 4.0 Net income 6.2 % 8.7 % 11.6 % 33 Fiscal 2023 Compared to Fiscal 2022 Net Sales Net Sales were $1.18 billion in Fiscal 2023 and decreased 6.8% compared to Fiscal 2022.
On December 3, 2021, we began operating under two banners: Shoe Carnival and Shoe Station. Our objective is to be the omnichannel retailer-of-choice for on-trend branded footwear for the entire family. Our product assortment, whether shopping in a physical store or on our e-commerce platform, includes dress, casual, and work shoes, sandals, boots and a wide assortment of athletic shoes.
On December 3, 2021, we began operating under two banners: Shoe Carnival and Shoe Station. Our objective is to be the omnichannel retailer-of-choice for on-trend branded footwear for the entire family. Our product assortment, whether shopping in a physical store or on our e-commerce platform, includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes.
These payments include estimates for fixed minimum and contingent rent, estimated reimbursements to landlords for common area maintenance, taxes and insurance and other lease related charges. See Note 10 – “Leases” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for further discussion of our lease obligations.
These payments include estimates for fixed minimum and contingent rent, estimated reimbursements to landlords for common area maintenance, taxes and insurance and other occupancy related charges. See Note 10 – “Leases” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for further discussion of our lease obligations.
Our primary uses of cash are normally for working capital, which are principally inventory purchases, investments in our stores, such as new stores, 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 other 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 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 other capital projects, including investments in new systems.
Therefore, how operating leases are recognized throughout the financial statements in accordance with applicable accounting guidance can have a significant impact on our financial condition and results of operations and related disclosures.
All of our leases are operating leases. Therefore, how operating leases are recognized throughout the financial statements in accordance with applicable accounting guidance can have a significant impact on our financial condition and results of operations and related disclosures.
The resources allocated to projects are subject to near-term changes depending on ongoing supply chain disruptions and potential inflationary and other macroeconomic impacts. Furthermore, the actual amount of cash required for capital expenditures for store operations depends in part on the number of stores opened, relocated, and remodeled, and the amount of lease incentives, if any, received from landlords.
The resources allocated to projects are subject to near-term changes depending on potential inflationary, supply chain and other macroeconomic impacts. Furthermore, the actual amount of cash required for capital expenditures for store operations depends in part on the number of stores opened, relocated, and remodeled, and the amount of lease incentives, if any, received from landlords.
If actual operating results or market conditions differ from those anticipated, the carrying value of certain of our assets may prove unrecoverable and we may incur additional impairment charges in the future. 36 Valuation of Goodwill and Intangible Assets – Our indefinite-lived assets include Goodwill and non-amortizing Intangible Assets (trade name) resulting from the acquisition of Shoe Station in Fiscal 2021.
If actual operating results or market conditions differ from those anticipated, the carrying value of certain of our assets may prove unrecoverable and we may incur additional impairment charges in the future. 38 Valuation of Goodwill and Intangible Assets – Our indefinite-lived assets include Goodwill and non-amortizing Intangible Assets (trade name) resulting from the acquisition of Shoe Station in Fiscal 2021.
The purchases may be made in the open market or through privately negotiated transactions from time-to-time through December 31, 2023 and in accordance with applicable laws, rules and regulations. The 2023 Share Repurchase Program may be amended, suspended or discontinued at any time and does not commit us to repurchase shares of our common stock.
The purchases may be made in the open market or through privately negotiated transactions from time to time through December 31, 2024 and in accordance with applicable laws, rules and regulations. The 2024 Share Repurchase Program may be amended, suspended or discontinued at any time and does not commit us to repurchase shares of our common stock.
In performing impairment tests for our Goodwill in Fiscal 2022, we opted to complete a quantitative assessment at the Shoe Station banner level as opposed to relying on a qualitative assessment as permitted in the guidance.
In performing impairment tests for our Goodwill in Fiscal 2023, we opted to complete a quantitative assessment at the Shoe Station banner level as opposed to relying on a qualitative assessment as permitted in the guidance.
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. The addition of the Shoe Station banner and retail locations has created a complementary retail platform for us to serve a broader base of family footwear customers in both urban and suburban demographics.
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. The Shoe Station banner and retail locations provide a complementary retail platform for us to serve a broader base of family footwear customers in both urban and suburban demographics.
Goodwill represents the purchase price in excess of fair values assigned to the underlying identifiable net assets of the acquired business. Goodwill and indefinite-lived Intangible Assets are reviewed annually for impairment unless circumstances dictate the need for more frequent assessment. We performed our annual impairment testing as of the first day of the fourth fiscal quarter, beginning in Fiscal 2022.
Goodwill represents the purchase price in excess of fair values assigned to the underlying identifiable net assets of the acquired business. Goodwill and indefinite-lived Intangible Assets are reviewed annually for impairment unless circumstances dictate the need for more frequent assessment. We perform our annual impairment testing as of the first day of the fourth fiscal quarter.
Therefore, our results of operations may be adversely affected in any quarter in which we incur pre-opening expenses related to the opening of new stores or incur store closing costs related to the closure of existing stores. Store Openings, Closings and Impairment Charges – Impact on Fiscal 2022 and Fiscal 2021 In Fiscal 2022, we opened four new stores.
Therefore, our results of operations may be adversely affected in any quarter in which we incur pre-opening expenses related to the opening of new stores or incur store closing costs related to the closure of existing stores. Store Openings, Closings and Impairment Charges – Impact on Fiscal 2023 and Fiscal 2022 In Fiscal 2023, we opened five new stores.
This section of this Annual Report on Form 10-K generally discusses Fiscal 2022 and Fiscal 2021 and year-over-year comparisons between Fiscal 2022 and Fiscal 2021.
This section of this Annual Report on Form 10-K generally discusses Fiscal 2023 and Fiscal 2022 and year-over-year comparisons between Fiscal 2023 and Fiscal 2022.
This quantitative assessment required that the estimated fair value of a reporting unit’s net assets, including Goodwill, be calculated and compared to its carrying amount. If that estimated fair value is in excess of the carrying amount, no impairment is recognized. We performed this assessment on October 30, 2022.
This quantitative assessment required that the estimated fair value of a reporting unit’s net assets, including Goodwill, be calculated and compared to its carrying amount. If that estimated fair value is in excess of the carrying amount, no impairment is recognized. We performed this assessment on October 29, 2023.
In accordance with Accounting Standards Codification Topic No. 842 – Leases (“ASC 842”), which we adopted in Fiscal 2019, on the lease commencement date we recognize a right-of-use asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term.
In accordance with Accounting Standards Codification Topic No. 842 – Leases (“ASC 842”), on the lease commencement date we recognize a right-of-use asset for the right to use a leased asset and a liability based on the present value of remaining lease payments over the lease term.
We estimated the fair value of the net assets tested using a discounted cash flow model. This income-based approach required significant judgment to estimate future cash flows, including revenue growth inclusive of long-term growth rate assumptions and the discount rate.
We estimated the fair value of the net assets tested using a discounted cash flow model and guideline transaction market approach. The income-based approach required significant judgment to estimate future cash flows, including revenue growth inclusive of long-term growth rate assumptions and the discount rate.
We include e-commerce sales in our average sales per square foot 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.
(6) Average sales per square foot includes net e-commerce sales. We include e-commerce sales in our average sales per square foot 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.
During Fiscal 2022 and Fiscal 2021, we did not borrow or repay funds under our Credit Agreement. Letters of credit outstanding were $700,000 at January 28, 2023, and our borrowing capacity was $99.3 million. Our Credit Agreement requires us to maintain compliance with various financial covenants.
During Fiscal 2023 and Fiscal 2022, we did not borrow or repay funds under our Credit Agreement. Letters of credit outstanding were $700,000 at February 3, 2024, and our borrowing capacity was $99.3 million. Our Credit Agreement requires us to maintain compliance with various financial covenants.
See Note 9 – “Debt” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for a further discussion of our Credit Agreement and its covenants. We were in compliance with these covenants as of January 28, 2023.
See Note 9 – “Debt” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for a further discussion of our Credit Agreement and its covenants. We were in compliance with these covenants as of February 3, 2024.
Share Repurchase Program On December 14, 2022, our Board of Directors authorized a share repurchase program for up to $50 million of our outstanding common stock, effective January 1, 2023 (the “2023 Share Repurchase Program”).
Share Repurchase Program On December 14, 2023, our Board of Directors authorized a share repurchase program for up to $50 million of our outstanding common stock, effective January 1, 2024 (the “2024 Share Repurchase Program”).
A more detailed description of the fluctuations among Fiscal 2018 – Fiscal 2021 can be found in our Annual Reports on Form 10-K filed for those previous fiscal years.
A more detailed description of the fluctuations among Fiscal 2019 – Fiscal 2022 can be found in our Annual Reports on Form 10-K filed for those previous fiscal years.
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 Fiscal 2022, net cash used in financing activities was $42.5 million compared to $17.7 million during Fiscal 2021.
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 Fiscal 2023, net cash used in financing activities was $20.5 million compared to $42.5 million during Fiscal 2022.
A discussion of Fiscal 2020 and year-over-year comparisons between Fiscal 2021 and Fiscal 2020 that are not included in this Annual Report on Form 10-K can be found in PART II, ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended January 29, 2022, filed with the United States SEC on March 25, 2022.
A discussion of Fiscal 2021 and year-over-year comparisons between Fiscal 2022 and Fiscal 2021 that are not included in this Annual Report on Form 10-K can be found in PART II, ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended January 28, 2023, filed with the SEC on March 24, 2023.
Unless otherwise stated, references to years 2022, 2021, 2020, 2019 and 2018 relate respectively to the fiscal years ended January 28, 2023, January 29, 2022, January 30, 2021, February 1, 2020 and February 2, 2019. Fiscal years 2022, 2021, 2020, 2019 and 2018 all consisted of 52 weeks.
Unless otherwise stated, references to years 2023, 2022, 2021, 2020 and 2019 relate respectively to the fiscal years ended February 3, 2024, January 28, 2023, January 29, 2022, January 30, 2021 and February 1, 2020. Fiscal 2023 consisted of 53 weeks and fiscal years 2022, 2021, 2020 and 2019 all consisted of 52 weeks.
(6) In fiscal years 2021, 2020, 2019 and 2018, average sales per store and average sales per square foot include only Shoe Carnival banner stores. 38
(7) In fiscal years 2021, 2020 and 2019, average sales per store and average sales per square foot include only Shoe Carnival banner stores.
As part of our growth strategy, we may also pursue additional strategic acquisitions of other footwear retailers. Cash Flow - Operating Activities Net cash generated from operating activities was $50.4 million in Fiscal 2022 compared to $147.9 million during Fiscal 2021.
As part of our growth strategy, we may also pursue additional strategic acquisitions of other footwear retailers. 34 Cash Flow - Operating Activities Net cash generated from operating activities was $122.8 million in Fiscal 2023 compared to $50.4 million during Fiscal 2022.
The 2023 Share Repurchase Program replaced a $50 million share repurchase program that was authorized in December 2021, became effective January 1, 2022 and expired in accordance with its terms on December 31, 2022. Shares totaling 1,134,524 were repurchased during Fiscal 2022 at a cost of $30.5 million.
The 2024 Share Repurchase Program replaced a $50 million share repurchase program that was authorized in December 2022, became effective January 1, 2023 and expired in accordance with its terms on December 31, 2023. Shares totaling 230,696 were repurchased during Fiscal 2023 at a cost of $5.4 million.
The increase in net cash used in financing activities was primarily due to the repurchase of $30.5 million of shares in Fiscal 2022, compared to the repurchase of $7.1 million of shares in Fiscal 2021, associated with our Board of Directors’ authorized share repurchase program.
The decrease in net cash used in financing activities was primarily due to the repurchase of $5.4 million of shares in Fiscal 2023, compared to the repurchase of $30.5 million of shares in Fiscal 2022, associated with our Board of Directors’ authorized share repurchase program.
(In thousands, except per share and operating data) Fiscal years (1) 2022 2021 2020 2019 2018 Income Statement Data: Net sales $ 1,262,235 $ 1,330,394 $ 976,765 $ 1,036,551 $ 1,029,650 Gross profit $ 468,164 $ 526,787 $ 279,982 $ 311,869 $ 308,992 Operating income $ 146,444 $ 207,654 $ 21,865 $ 54,209 $ 49,760 Net income $ 110,068 $ 154,881 $ 15,991 $ 42,914 $ 38,135 Diluted net income per share $ 3.96 $ 5.42 $ 0.56 $ 1.46 $ 1.23 Dividends declared per share $ 0.360 $ 0.280 $ 0.178 $ 0.168 $ 0.158 Balance Sheet Data: Cash and cash equivalents $ 51,372 $ 117,443 $ 106,532 $ 61,899 $ 67,021 Total assets (2) $ 989,781 $ 812,264 $ 642,747 $ 628,374 $ 417,999 Long-term debt $ 0 $ 0 $ 0 $ 0 $ 0 Total shareholders’ equity $ 525,568 $ 452,533 $ 310,176 $ 297,363 $ 304,433 Operating Data: Stores open at end of year 397 393 383 392 397 Comparable store sales (3) -11.1 % 35.3 % -5.3 % 1.9 % 4.3 % Square footage of store space at year end (000’s) 4,505 4,419 4,146 4,220 4,268 Average sales per store (000’s) (4)(6) $ 3,159 $ 3,473 $ 2,503 $ 2,475 $ 2,473 Average sales per square foot (5)(6) $ 281 $ 321 $ 237 $ 245 $ 236 (1) Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.
(In thousands, except per share and operating data) Fiscal years (1) 2023 2022 2021 2020 2019 Income Statement Data: Net sales $ 1,175,882 $ 1,262,235 $ 1,330,394 $ 976,765 $ 1,036,551 Gross profit $ 421,390 $ 468,164 $ 526,787 $ 279,982 $ 311,869 Operating income $ 93,505 $ 146,444 $ 207,654 $ 21,865 $ 54,209 Net income $ 73,348 $ 110,068 $ 154,881 $ 15,991 $ 42,914 Diluted net income per share $ 2.68 $ 3.96 $ 5.42 $ 0.56 $ 1.46 Dividends declared per share $ 0.440 $ 0.360 $ 0.280 $ 0.178 $ 0.168 Balance Sheet Data: Cash and cash equivalents $ 99,000 $ 51,372 $ 117,443 $ 106,532 $ 61,899 Total assets (3) $ 1,042,025 $ 989,781 $ 812,264 $ 642,747 $ 628,374 Long-term debt $ 0 $ 0 $ 0 $ 0 $ 0 Total shareholders’ equity $ 583,389 $ 525,568 $ 452,533 $ 310,176 $ 297,363 Operating Data: Stores open at end of year 400 397 393 383 392 Comparable store sales (2)(4) -8.8 % -11.1 % 35.3 % -5.3 % 1.9 % Square footage of store space at year end (000’s) 4,569 4,505 4,419 4,146 4,220 Average sales per store (000’s) (2)(5)(7) $ 2,897 $ 3,159 $ 3,473 $ 2,503 $ 2,475 Average sales per square foot (2)(6)(7) $ 255 $ 281 $ 321 $ 237 $ 245 (1) Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.
Capital Expenditures – Fiscal 2023 Capital expenditures for Fiscal 2023 are expected to be between $60 million and $70 million, with approximately $55 million to $60 million to be used for new stores and modernization and approximately $5 million to $10 million for upgrades to our distribution center and e-commerce platform, various other store improvements, continued investments in technology and normal asset replacement activities.
Capital Expenditures – Fiscal 2024 Capital expenditures for Fiscal 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 platform, various other store improvements, continued investments in technology and normal asset replacement activities.
Merchandise Inventories as of January 28, 2023 totaled $390.4 million, representing approximately 39% of total assets. Merchandise Inventories as of January 29, 2022 totaled $285.2 million, representing approximately 35% of total assets. Given the significance of inventories to our consolidated financial statements, the determination of net realizable value is a critical accounting estimate.
Merchandise Inventories as of February 3, 2024 totaled $346.4 million, representing approximately 33% of total assets. Merchandise Inventories as of January 28, 2023 totaled $390.4 million, representing approximately 39% of total assets. Given the significance of inventories to our consolidated financial statements, the determination of net realizable value is a critical accounting estimate.
As part of our long-term growth strategy, we expect to pursue opportunities for store growth across large and mid-size markets as we continue to leverage customer data from our customer relationship management program and more attractive real estate options become available. Over the last several years, we performed a store improvement plan.
As part of our long-term growth strategy, we expect to pursue opportunities for store growth across large and mid-size markets as we continue to leverage customer data from our CRM program and more attractive real estate options become available.
Our estimate of fair value exceeded the carrying amounts and therefore resulted in no impairment. Leases – We lease our retail stores, our single distribution center and office space for our Southern office. We also enter into leases of equipment, copiers and billboards. All of our leases are operating leases.
Significant changes in our estimates and assumptions could affect our fair value calculations. Our estimate of fair value exceeded the carrying amounts and therefore resulted in no impairment. Leases – We lease our retail stores, our Evansville distribution center and office space for our Southern office. We also enter into leases of equipment, copiers and billboards.
Selling, General and Administrative Expenses ("SG&A") SG&A increased $2.6 million in Fiscal 2022 to $321.7 million compared to $319.1 million in Fiscal 2021. This increase was primarily attributable to our Shoe Station operations and increased depreciation expense resulting from our investment in property and equipment related to our store portfolio modernization plan.
Selling, General and Administrative Expenses ("SG&A") SG&A increased $6.2 million in Fiscal 2023 to $327.9 million compared to $321.7 million in Fiscal 2022. The increase was primarily attributable to new and modernized store costs, including increased depreciation expense resulting from our investment in property and equipment related to our store portfolio modernization plan.
In addition to non-cash impairment charges, store closing costs can include fixed asset write-offs, employee severance, lease termination fees, store tear-down and clean-up expenses and acceleration of expenses and deferred lease incentives. In total, store opening and closing costs impacting SG&A expenses were $1.0 million in Fiscal 2022 and $1.9 million in Fiscal 2021.
There were no non-cash impairment charges recognized in Fiscal 2023 and Fiscal 2022. In addition to non-cash impairment charges, store closing costs can include fixed asset write-offs, employee severance, 37 lease termination fees, store tear-down and clean-up expenses and acceleration of expenses and deferred lease incentives.
As of the date of adoption of ASC 842, for new leases, renewals or amendments and when we make material investments in leased properties pursuant to our store modernization plan, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.
The weighted average discount rate utilized in Fiscal 2023 and Fiscal 2022 was 4.2%. For new leases, renewals or amendments and when we make material investments in leased properties pursuant to our store modernization plan, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.
In instances when underperformance indicates the carrying value of a store’s assets may not be recoverable, we impair the store. Although store closings could reduce our overall Net Sales volume, we believe that the store closings we effected in the last several fiscal years resulted in long-term improvements to our Operating Income and Diluted Net Income per Share.
Although store closings could reduce our overall Net Sales volume, we believe that the store closings we effected in the last several fiscal years resulted in long-term improvements to our Operating Income and Diluted Net Income per Share.
The number of new store openings and relocations will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending. 33 Dividends Four quarterly cash dividends of $0.09 per share were approved and paid during Fiscal 2022, and in Fiscal 2021 four quarterly dividends of $0.07 per share were approved and paid.
The number of new store openings and relocations will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending. 35 Dividends During Fiscal 2023, we paid quarterly cash dividends of $0.10 per share in our first and second fiscal quarters and $0.12 per share in the third and fourth fiscal quarters.
We include e-commerce sales in our comparable store sales. Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores. (4) Average sales per store includes e-commerce sales that are in close proximity to a physical store. (5) Average sales per square foot includes net e-commerce sales.
Therefore, stores opened, acquired or closed during the periods indicated are not included in comparable store sales. We include e-commerce sales in our comparable store sales. Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores. (5) Average sales per store includes e-commerce sales that are in close proximity to a physical store.
See Note 3 — “Acquisition of Shoe Station” in our Notes to Consolidated Financial 29 Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for additional information on the acquisition. Comparable Store Sales Comparable store sales is a key performance indicator for us.
More information about this acquisition can be found in Note 16 - “Subsequent Events” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K. 31 Comparable Store Sales Comparable store sales is a key performance indicator for us.
The 21 original Shoe Station stores acquired and the www.shoestation.com e-commerce site that went live in early February 2023 will be included in comparable store sales calculations beginning in the first quarter of the fiscal year ending February 3, 2024 (Fiscal 2023).
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 the first quarter of Fiscal 2023. The 53 rd week in Fiscal 2023 caused a one-week shift in our fiscal calendar.
Given the significant impact of the COVID-19 pandemic on our Fiscal 2021 and Fiscal 2020 results, we have included certain comparisons in this MD&A between Fiscal 2022 and Fiscal 2019 to provide further context regarding our Fiscal 2022 results of operations.
We have included certain comparisons in this MD&A between Fiscal 2023 and Fiscal 2019 to provide further context regarding our Fiscal 2023 results of operations.
Additional information regarding the Shoe Station acquisition can be found in Note 3 -“Acquisition of Shoe Station” and regarding the marketable securities can be found in Note 4 - “Fair Value of Financial Instruments” to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.
Additional information regarding the Rogan’s acquisition can be found in Note 16 - “Subsequent Events” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K.
The initial average inventory investment for the new stores in Fiscal 2022 was $1.4 million, capital expenditures were $1.6 million and lease incentives received from our landlords were $212,000. In Fiscal 2021, we opened one new store. The initial inventory investment for the new store was $469,000, capital expenditures were $299,000 and lease incentives received from our landlord were $100,000.
The initial average inventory investment for the new stores in Fiscal 2023 was $1.0 million, capital expenditures were $1.7 million and lease incentives received from our landlords were $480,000. In Fiscal 2022, we opened four new stores.
Income Taxes The effective income tax rate for Fiscal 2022 was 25.2% compared to 25.3% for Fiscal 2021. Liquidity and Capital Resources Our primary sources of liquidity are $63.0 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of Fiscal 2022, cash generated from operations and availability under our $100 million Credit Agreement.
Liquidity and Capital Resources Our primary sources of liquidity are $111.2 million of Cash, Cash Equivalents and Marketable Securities on hand at the end of Fiscal 2023, cash generated from operations and availability under our $100 million Credit Agreement.
However, because future events and economic conditions are inherently uncertain, our actual results could differ materially from these estimates. The accounting policies that require more significant judgment are included below.
This judgment involves estimates based in part on our historical experience and incorporates the impact of the current general economic climate and company-specific circumstances. However, because future events and economic conditions are inherently uncertain, our actual results could differ materially from these estimates. The accounting policies that require more significant judgment are included below.
Pre-opening expenses for the four stores opened in Fiscal 2022 included in Cost of Sales and SG&A expenses were approximately $1.3 million, or an average of $320,000 per store. Items classified as pre-opening expenses include rent, freight, advertising, salaries and supplies.
Items classified as pre-opening expenses include rent, freight, advertising, salaries and supplies. During Fiscal 2022, we expended approximately $1.3 million, or an average of $320,000 per store, in pre-opening expenses for the four new stores. Total store closing costs were $83,000 associated with closing two stores in Fiscal 2023 and there were no store closing costs in Fiscal 2022.
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.
Seasonality We have three distinct peak selling periods: Easter, back-to-school and Christmas. Our operating results depend significantly upon the sales generated during these periods. 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.
Deferred tax assets and liabilities are measured using the tax rates enacted and expected to be in effect in the years when those temporary differences are expected to reverse.
Deferred tax assets and liabilities are measured using the tax rates enacted and expected to be in 39 effect in the years when those temporary differences are expected to reverse. Deferred tax assets are reduced, if necessary, by a valuation allowance to the extent future realization of those tax benefits are uncertain.
We believe our distinctive shopping experiences give us various competitive advantages, including increased multiple unit sales; the building of a loyal, repeat customer base; the creation of word-of-mouth advertising; and enhanced sell-through of in-season goods.
We believe our distinctive shopping experiences give us various competitive advantages, including the building of a loyal, repeat customer base; the creation of word-of-mouth advertising; and enhanced sell-through of in-season goods. Recent Acquisitions On December 3, 2021, we acquired the physical stores and substantially all of the other assets and liabilities of Shoe Station, Inc.
The change in operating cash flow was primarily driven by increased earnings in Fiscal 2021 and replenishing merchandise inventory levels in Fiscal 2022. Working capital increased on a year-over-year basis and totaled $312.4 million at January 28, 2023 compared to $288.4 million at January 29, 2022.
The increase in operating cash flow was primarily driven by reduced inventory purchases, partially offset by decreased Net Income in Fiscal 2023 compared to Fiscal 2022. Working capital increased on a year-over-year basis and totaled $353.5 million at February 3, 2024 compared to $312.4 million at January 28, 2023.
During Fiscal 2022 and Fiscal 2021, we returned $10.0 million and $8.0 million, respectively, in cash to our shareholders through our quarterly dividends.
In Fiscal 2022 four quarterly dividends of $0.09 per share were approved and paid. During Fiscal 2023 and Fiscal 2022, we returned $12.2 million and $10.0 million, respectively, in cash to our shareholders through our quarterly dividends.
Interest Income and Interest Expense Changes in our interest income and expense increased our income before taxes by $1.1 million in Fiscal 2022 compared to Fiscal 2021. This increase was primarily due to higher interest earned on invested cash balances and lower unused commitment fees under the Credit Agreement as compared to our prior credit agreement.
Interest Income and Interest Expense Changes in our interest income and expense increased our income before taxes by $2.0 million in Fiscal 2023 compared to Fiscal 2022. This increase was primarily due to higher interest earned on invested cash balances. Income Taxes The effective income tax rate for Fiscal 2023 was 23.7% compared to 25.2% for Fiscal 2022.
Store Openings and Closings – Fiscal 2023 Increasing market penetration by adding new stores is a key component of our growth strategy. Through a combination of both organic and acquired store growth, we aim to operate approximately 10 to 20 new stores in Fiscal 2023, with additional store growth acceleration in 2024 and beyond.
Store Openings and Closings – Fiscal 2024 Increasing market penetration by adding new stores is a key component of our growth strategy.
With respect to the trade name, we also tested its carrying amount for impairment at the Shoe Station banner level using the same revenue growth and discount rate assumptions and an assumed royalty rate. Significant changes in our estimates and assumptions could affect our fair value calculations.
The guideline transaction market approach included 20 majority stake acquisition transactions in the footwear and apparel retail industries over the last 12 years. With respect to the trade name, we also tested its carrying amount for impairment at the Shoe Station banner level using the same revenue growth and discount rate assumptions and an assumed royalty rate.
As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in our consolidated financial statements. Although we believe we have no uncertain tax positions, tax authorities could assess tax liabilities in open tax periods not presently foreseen.
Although we believe we have no uncertain tax positions, tax authorities could assess tax liabilities in open tax periods not presently foreseen.
(3) Comparable store sales for the periods indicated include stores that have been open for 13 full months after such stores’ acquisition or grand opening prior to the beginning of the period, including those stores that have been relocated or remodeled. Therefore, stores opened, acquired or closed during the periods indicated are not included in comparable store sales.
See Note 10 – “Leases” in our Notes to Consolidated Financial Statements included in PART II, ITEM 8 of this Annual Report on Form 10-K for further discussion. 40 (4) Comparable store sales for the periods indicated include stores that have been open for 13 full months after such stores’ acquisition or grand opening prior to the beginning of the period, including those stores that have been relocated or remodeled.
Acquisition of Shoe Station On December 3, 2021, we acquired the physical stores and substantially all of the other assets and liabilities of Shoe Station, Inc. ("Shoe Station"), a privately-held, family-owned shoe retailer. The Shoe Station assets were acquired for approximately $70.4 million, funded with cash on hand.
("Shoe Station"), a privately-held, family-owned shoe retailer. The Shoe Station assets were acquired for approximately $70.4 million, funded with cash on hand. We continue to operate the original 21 locations acquired under the Shoe Station banner and have opened seven new Shoe Station bannered stores since the acquisition.
(Unaudited, in thousands, except per share amounts) Fiscal 2022 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 317,527 $ 312,268 $ 341,661 $ 290,779 Gross profit 112,863 113,130 130,849 111,322 Operating income 35,384 38,789 43,577 28,694 Net income 26,897 28,909 32,652 21,610 Net income per share – Diluted 1 $ 0.95 $ 1.04 $ 1.18 $ 0.79 34 Fiscal 2021 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 328,457 $ 332,230 $ 356,336 $ 313,371 Gross profit 130,158 135,752 144,056 116,821 Operating income 57,603 59,714 62,424 27,913 Net income 43,242 44,212 46,836 20,591 Net income per share – Diluted 1 $ 1.51 $ 1.54 $ 1.64 $ 0.72 1) Per share amounts are computed independently for each of the quarters presented.
(Unaudited, in thousands, except per share amounts) Fiscal 2023 First Quarter Second Quarter Third Quarter Fourth Quarter (2) Net sales $ 281,184 $ 294,615 $ 319,914 $ 280,169 Gross profit 98,517 105,465 117,701 99,707 Operating income 20,939 24,662 27,935 19,969 Net income 16,526 19,441 21,861 15,520 Net income per share – Diluted 1 $ 0.60 $ 0.71 $ 0.80 $ 0.57 36 Fiscal 2022 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 317,527 $ 312,268 $ 341,661 $ 290,779 Gross profit 112,863 113,130 130,849 111,322 Operating income 35,384 38,789 43,577 28,694 Net income 26,897 28,909 32,652 21,610 Net income per share – Diluted 1 $ 0.95 $ 1.04 $ 1.18 $ 0.79 1) Per share amounts are computed independently for each of the quarters presented.
(2) In Fiscal 2019, we adopted ASC 842 on a modified retrospective basis, which required us to recognize leased assets and obligations on our balance sheet. See Note 10 – “Leases” in our Notes to Consolidated Financial Statements included in PART II, ITEM 8 of this Annual Report on Form 10-K for further discussion.
(3) In Fiscal 2019, we adopted ASC 842 on a modified retrospective basis, which required us to recognize leased assets and obligations on our balance sheet.
These increases were partially offset by lower incentive compensation and advertising expense. As a percentage of Net Sales, SG&A was 25.5% in Fiscal 2022 compared to 24.0% in Fiscal 2021. Fiscal 2021 SG&A included $3.2 million of transaction costs and integration related charges related to the Shoe Station acquisition.
As a percentage of Net Sales, SG&A was 27.8% in Fiscal 2023 compared to 25.5% in Fiscal 2022. Fiscal 2023 SG&A included $0.8 million of transaction costs related to the Rogan's acquisition.
Our current ratio was 3.0 as of January 28, 2023, compared to 2.9 as of January 29, 2022. 32 Cash Flow - Investing Activities Our cash outflows for investing activities are normally for capital expenditures.
The increase was primarily attributable to higher cash and lower Accounts Payable balances, partially offset by lower Merchandise Inventories levels. Our current ratio was 3.8 as of February 3, 2024, compared to 3.0 as of January 28, 2023. Cash Flow - Investing Activities Our cash outflows for investing activities are normally for capital expenditures.
Store opening and closing costs included in Cost of Sales were expenses of $178,000 in Fiscal 2022 and $50,000 in Fiscal 2021. Critical Accounting Policies We use judgment in reporting our financial results. This judgment involves estimates based in part on our historical experience and incorporates the impact of the current general economic climate and company-specific circumstances.
In total, store opening and closing costs impacting SG&A expenses were $0.9 million in Fiscal 2023 and $1.0 million in Fiscal 2022. Store opening and closing costs included in Cost of Sales were expenses of $376,000 in Fiscal 2023 and $178,000 in Fiscal 2022. Critical Accounting Policies We use judgment in reporting our financial results.
For per share amounts, the sum of the quarters may not equal the total year due to the impact of changes in weighted shares outstanding and differing applications of earnings as prescribed by accounting guidance. Seasonality We have three distinct peak selling periods: Easter, back-to-school and Christmas. Our operating results depend significantly upon the sales generated during these periods.
For per share amounts, the sum of the quarters may not equal the total year due to the impact of changes in weighted shares outstanding and differing applications of earnings as prescribed by accounting guidance. 2) The fourth quarter of Fiscal 2023 consisted of 14 weeks compared to 13 weeks in all other quarters presented.
We must presume that taxing authorities will examine all uncertain tax positions and that they have full knowledge of all relevant information. However, interpretations of guidance surrounding income tax laws and regulations are often complex, ambiguous and frequently change over time, and a number of years may elapse before a particular issue is resolved.
However, interpretations of guidance surrounding income tax laws and regulations are often complex, ambiguous and frequently change over time, and a number of years may elapse before a particular issue is resolved. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in our consolidated financial statements.
We are continuing to operate the 21 locations acquired under the Shoe Station banner and have opened three new Shoe Station bannered stores since the acquisition. Shoe Station contributed Net Sales of $16.6 million during the period from the acquisition date through January 29, 2022 in Fiscal 2021 and $99.9 million in Fiscal 2022.
Net Sales attributed to the Shoe Station banner were $104.5 million and $99.9 million in Fiscal 2023 and Fiscal 2022, respectively, and $16.6 million from the acquisition date through January 29, 2022.
Deferred tax assets are reduced, if necessary, by a valuation allowance to the extent future realization of those tax benefits are uncertain. 37 We are also required to make many subjective assumptions and judgments regarding our income tax exposures when accounting for uncertain tax positions associated with our income tax filings.
We are also required to make many subjective assumptions and judgments regarding our income tax exposures when accounting for uncertain tax positions associated with our income tax filings. We must presume that taxing authorities will examine all uncertain tax positions and that they have full knowledge of all relevant information.
While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years. When we identify a store that produces or may potentially produce low or negative contribution, we either renegotiate lease terms, relocate or close the store.
When we identify a store that produces or may potentially produce low or negative contribution, we either renegotiate lease terms, relocate or close the store. In instances when underperformance indicates the carrying value of a store’s assets may not be recoverable, we impair the store.
Shares totaling 208,662 were repurchased during Fiscal 2021 at a cost of $7.1 million and no repurchases were made in Fiscal 2020. Share repurchase activity in Fiscal 2021 and Fiscal 2020 was impacted by the COVID-19 pandemic. Leases Rent-related payments made in Fiscal 2022 totaled $83.9 million.
Shares totaling 1,134,524 were repurchased during Fiscal 2022 at a cost of $30.5 million. Leases Rent-related payments made in Fiscal 2023 totaled $94.4 million.
Cash Flow - Financing Activities Our cash outflows for financing activities are typically for cash dividend payments, share repurchases or payments on our Credit Agreement.
During Fiscal 2023 and Fiscal 2022, we expended $56.3 million and $77.3 million, respectively, for the purchases of property and equipment, primarily related to our store portfolio modernization plan. Cash Flow - Financing Activities Our cash outflows for financing activities are typically for cash dividend payments, share repurchases or payments on our Credit Agreement.
Net Sales attributable to new stores, mostly the Shoe Station stores, partially offset the decrease in comparable store sales. E-commerce sales were approximately 10% of merchandise sales in Fiscal 2022, compared to 12% in Fiscal 2021. 31 Gross Profit Gross Profit was $468.2 million in Fiscal 2022, a decrease of $58.6 million compared to Fiscal 2021.
We believe the lower physical store traffic and e-commerce sales in Fiscal 2023 were primarily due to persistent inflation, higher interest rates and a reduction in first quarter 2023 federal tax refunds compared to 2022. Net Sales attributable to new stores, mostly new Shoe Station stores, partially offset the decrease in comparable store sales.
While the effects of the COVID-19 pandemic and other economic uncertainty associated with inflation and constrained supply chains, among other macroeconomic uncertainty, make our operating cash flow less predictable, we believe our resources will be sufficient to fund our cash needs, as they arise, for at least the next 12 months.
Subsequent to Fiscal 2023 year end, we acquired Rogan's and paid cash totaling approximately $45 million on the closing date of the acquisition. We believe our resources will be sufficient to fund our cash needs, as they arise, for at least the next 12 months.
Gross profit margin in Fiscal 2022 was 37.1% compared to 39.6% in Fiscal 2021. Buying, distribution and occupancy costs increased 1.9 percentage points and merchandise margin decreased 0.6 percentage points as a percentage of Net Sales compared to Fiscal 2021.
E-commerce sales were approximately 10% of merchandise sales in both Fiscal 2023 and Fiscal 2022. Gross Profit Gross Profit was $421.4 million in Fiscal 2023, a decrease of $46.8 million compared to Fiscal 2022. Gross profit margin in Fiscal 2023 was 35.8% compared to 37.1% in Fiscal 2022.
Removed
We incurred acquisition and integration-related charges of $4.3 million ($3.2 million after tax, or $0.11 on a diluted per share basis) during Fiscal 2021.
Added
More information about this acquisition can be found in Note 3 - "Acquisition of Shoe Station" in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K. Subsequent to Fiscal 2023 year end, on February 13, 2024, we acquired all the stock of Rogan Shoes, Incorporated ("Rogan's").
Removed
These charges were comprised of non-recurring expense related to the fair value adjustment to acquisition-date inventory of $1.1 million recorded in Cost of Goods Sold and $3.2 million of transaction costs and integration-related charges recorded in Selling, General and Administrative Expenses.
Added
To minimize the effect of this fiscal calendar shift on comparable store sales, our reported annual comparable store sales results for Fiscal 2023 compare the 52-week period ended January 27, 2024 to the 52-week period ended January 28, 2023. Net Sales in the 53 rd week of Fiscal 2023 totaled $14.4 million.
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Our method for calculating comparable store sales in Fiscal 2022 and Fiscal 2021, therefore, does not include any sales activity from Shoe Station.
Added
Executive Summary In Fiscal 2023, our results were impacted by continuing inflation, higher interest rates, and reduced tax refunds. These economic factors particularly impacted our Shoe Carnival banner and its lower income customers and more urban markets. Our Diluted Net Income per Share ("EPS") earned in Fiscal 2023 was $2.68 compared to $3.96 earned in Fiscal 2022.
Removed
Executive Summary In Fiscal 2022, we delivered operating income margins and overall profitability more than double those generated pre-pandemic. These Fiscal 2022 results demonstrate the sustainability of our business and set the new benchmark for us going forward.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe had no borrowings under our credit agreement during Fiscal 2022.
Biggest changeWe had no borrowings under our credit agreement during Fiscal 2023.

Other SCVL 10-K year-over-year comparisons