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What changed in SHOE CARNIVAL INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SHOE CARNIVAL INC's 2022 and 2023 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 2023 report.

+315 added−314 removedSource: 10-K (2023-03-24) vs 10-K (2022-03-25)

Top changes in SHOE CARNIVAL INC's 2023 10-K

315 paragraphs added · 314 removed · 227 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+32 added−36 removed22 unchanged
Biggest changeShoe Station On December 3, 2021, we acquired substantially all of the assets of privately-held, family-owned Shoe Station, Inc. ("Shoe Station"). The Shoe Station assets were acquired for approximately $70.7 million, inclusive of customary adjustments which are not yet finalized, and funded with cash on hand. This acquisition was the first acquisition in our history.
Biggest changeThe 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.
Customer Relationship Management Our CRM program continues to provide valuable customer insights to our business, resulting in more efficient and effective marketing outreach.
Customer Relationship Management ("CRM") Our CRM program continues to provide valuable customer insights to our business, resulting in more efficient and effective marketing outreach.
Our CRM program allows us to drive customer retention by delivering each customer more individualized shopping opportunities and experiences and aids in gaining a better understanding of our existing customer base as well as identifying new customers.
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.
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.
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.
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 13 October 2012. Mr. Sifford served as Chief Merchandising Officer from October 2012 to March 2016. From June 2001 to October 2012, Mr.
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.
Available Information We make available free of charge through the investor relations portion of our website at www.shoecarnival.com our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.
Available Information We make available free of charge through the investor relations portion of our website at www.shoecarnival.com our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our most significant areas of focus are fuel and packaging material used to deliver merchandise to our distribution center and stores; the HVAC and lighting systems in our stores, distribution center, and corporate office; and recycling methods.
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.
Sifford served as Executive Vice President – General Merchandise Manager and from April 1997 to June 2001, Mr. Sifford served as Senior Vice President – General Merchandise Manager. Prior to joining us, Mr. Sifford served as Merchandise Manager – Shoes for Belk, Inc. Mr.
Sifford served as Executive Vice President – General Merchandise Manager and from April 1997 to June 2001, Mr. Sifford served as Senior Vice President – General Merchandise Manager. Prior to joining us, Mr. Sifford served as Merchandise Manager – Shoes for Belk, Inc. 12 Mr.
Weaver previously served two terms as a Director of Stein Mart, Inc., a publicly traded chain of off-price retail stores, from June 2014 until March 2016 and from November 2000 until April 2008. Mr. Sifford has been employed as Vice Chairman of the Board since October 1, 2021. From September 2019 to September 30, 2021, Mr.
Weaver previously served two terms as a Director of Stein Mart, Inc., a publicly traded chain of off-price retail stores, from June 2014 until March 2016 and from November 2000 until April 2008. Mr. Sifford has been employed as Vice Chairman of the Board since October 2021. From September 2019 to September 2021, Mr.
Prior to joining the Company, Mr. Worden led the Northern European region for S. C. Johnson & Son, Inc. (“SC Johnson”), a manufacturer of household cleaning supplies and products, and was responsible for revenue and share growth objectives across six countries from May 2014 to July 2018. Prior to that, Mr.
Worden led the Northern European region for S. C. Johnson & Son, Inc. (“SC Johnson”), a manufacturer of household cleaning supplies and products, and was responsible for revenue and share growth objectives across six countries from May 2014 to July 2018. Prior to that, Mr.
Our executive officers serve at the discretion of the Board of Directors. There is no family relationship between any of our Directors or executive officers. 14
Our executive officers serve at the discretion of the Board of Directors. There is no family relationship between any of our Directors or executive officers.
This Annual Report on Form 10-K filed with the Securities and Exchange Commission, including the financial statements and schedules thereto, without the accompanying exhibits, is available without charge to shareholders, investment professionals and securities analysts upon written request. Requests should be directed to Investor Relations at our corporate address.
This Annual Report on Form 10-K filed with the SEC, including the financial statements and schedules thereto, without the accompanying exhibits, is available without charge to shareholders, investment professionals and securities analysts upon written request. Requests should be directed to Investor Relations at our corporate address.
Edwards 50 Vice President, Chief Accounting Officer, Corporate Controller and Secretary Mr. Weaver has served as Chairman of the Board since March 1988. From 1978 until February 2, 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.
Edwards 51 Vice President, Chief Accounting Officer, Corporate Controller and Secretary Mr. Weaver has served as Chairman of the Board since March 1988. 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.
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 ® , When You Want To 2 ® , 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 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 ® .
Over the last five fiscal years, we have had no debt outstanding and cash and cash equivalents of at least $48 million at the end of each fiscal year. We believe this approach increases our ability to make impactful long-term decisions and enhances our stakeholder relationships.
Over the last five fiscal years, we have 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.
Broad merchandise assortment Our product assortment is comprised of on-trend branded and private label footwear for the entire family and includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes.
Broad Merchandise Assortment Our product assortment is comprised primarily of on-trend branded footwear for the entire family and includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes.
Worden has been employed as President and Chief Executive Officer and a Director of the Company since October 1, 2021. From September 2019 to September 30, 2021, Mr. Worden served as President and Chief Customer Officer and from September 2018 to September 2019, Mr. Worden served as Executive Vice President – Chief Strategy and Marketing Officer.
Worden has been employed as President and Chief Executive Officer and a Director of the Company since October 2021. From September 2019 to September 2021, Mr. Worden served as President and Chief Customer Officer and from September 2018 to September 2019, Mr. Worden served as Executive Vice President – Chief Strategy and Marketing Officer. Prior to joining the Company, Mr.
The average tenure of the general managers who operate our Shoe Carnival bannered stores was 13 years as of fiscal 2021 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.
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.
These communications afford us additional opportunities to highlight our broad product assortment and promotions. Shoe Perks provides customers with a heightened shopping 7 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.
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.
The POS provides, in addition to other features, full price management (including price look-up), promotion trackin g 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.
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.
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 25, 2022: Name Age Position J. Wayne Weaver 87 Chairman of the Board and Director Clifton E. Sifford 68 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 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.
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 2021, we recorded 51 non COVID-related OSHA recordable incidents, an approximate 20% reduction in incidents compared to three 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 2022, we recorded 71 non COVID-related OSHA recordable incidents, an approximate 7% reduction in incidents compared to five years ago.
Chilton has been employed as Executive Vice President – Chief Retail Operations Officer since April 2021. 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.
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.
E-commerce orders are also fulfilled from our distribution center in Evansville, Indiana. Vendor Drop-Ship Program We 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 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.
Additionally, our CRM program allows us to gain a deeper understanding of the brands and categories that our high-value customers consistently purchase so that we can continue to deliver strong performance at a geographic and store level.
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.
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, including the value of diversity and awareness of bias in all aspects of the employment relationship; • 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”); • Non-discrimination and anti-harassment; • Cybersecurity awareness and responsibility; and • Supply chain security.
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. Similar customer experiences are reflected in our e-commerce platform through special promotions and limited time sales.
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.
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.
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.
We are not aware of any pending claims of infringement or other challenges to our right to use these marks. 12 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.
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.
Jackson held various accounting positions with us. Prior to joining us in 1988, Mr. Jackson was associated with a public accounting firm. He is a Certified Public Accountant. Mr. Scibetta has been employed as Senior Executive Vice President – Chief Merchandising Officer since March 2021. From March 2016 to March 2021, Mr.
Jackson held various accounting positions with us. Prior to joining us in 1988, Mr. Jackson was associated with a public accounting firm. He is a Certified Public Accountant. We announced on September 22, 2022 that Mr. Jackson will be retiring, effective May 2023. Mr. Scibetta has been employed as Senior Executive Vice President – Chief Merchandising Officer since March 2021.
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 January 29, 2022, of our 28 district managers, 64% have been employed for more than 20 years.
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.
With respect to ethnicity, our leadership team identified as 60% Caucasian and 40% non-Caucasian. 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 two-thirds Caucasian and one-third 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% African American, Hispanic or Asian and is more female than male.
We are an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996. References to “Shoe Carnival” and “Shoe Station” are to the individual banners, not the entire company. References to “we,” “us,” “our” and the “Company” in this Annual Report on Form 10-K refer to Shoe Carnival, Inc. and its subsidiaries.
References to our store banners “Shoe Carnival” and “Shoe Station” are to the individual banners, not the entire company. References to “we,” “us,” “our” and the “Company” in this Annual Report on Form 10-K refer to Shoe Carnival, Inc. and its subsidiaries.
We are uniquely focused on training within our store-level, customer-facing operations. Employees must obtain necessary certifications in order to be responsible for the keys to a store and eventually to become a general manager.
Training and Code of Business Conduct and Ethics We are dedicated to strengthening our culture and execution through ongoing training for all associates. We are uniquely focused on training within our store-level, customer-facing operations. Employees must obtain necessary 10 certifications in order to be responsible for the keys to a store and eventually to become a general manager.
Worden 48 President and Chief Executive Officer and Director W. Kerry Jackson 60 Senior Executive Vice President - Chief Financial and Administrative Officer and Treasurer Carl N. Scibetta 63 Senior Executive Vice President - Chief Merchandising Officer Marc A. Chilton 52 Executive Vice President - Chief Retail Operations Officer Patrick C.
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.
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. Our employee-centric culture aided us during the COVID-19 pandemic.
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.
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 2021 operating results. Our Banners Shoe Carnival Our Shoe Carnival retail concept is differentiated from competitors by our distinctive, fun and promotional marketing efforts.
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.
In our corporate leadership roles (senior director-level employees through our named executive officers), the portion identifying as female has significantly increased over the last four years from 5% to 27%. Our human resources, marketing, and supply chain departments, as well as portions of our merchandising and technology departments, are led by those that identify as female.
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.
The use of digital media continues to grow in importance in our marketing mix, particularly as we leverage data that comes directly 9 from our customers as part of our CRM solution, allowing us to directly communicate with our core customers. In fiscal 2021, our advertising spend was directed primarily to digital media.
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.
In fiscal 2021 and 2020, two total board members exited our Board as their terms expired, creating space 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 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.
Competitive pricing for our customers Our customer is primarily a moderate income, value-conscious consumer seeking name brand footwear across all ages, with our Shoe Station banner targeting a higher price point and more suburban customer.
Competitive Pricing For Our Customers Our customer is primarily a value-conscious consumer seeking name brand footwear across all ages, with our Shoe Station banner targeting a higher price point and more suburban customer. We believe that by offering a wide selection of popular styles of primarily name brand merchandise at competitive prices, we generate broad customer appeal.
These include competitive wages and incentives, including stock appreciation rights for mid-level managers; an employee stock purchase plan with a discount off the fair value of our common stock; employer-subsidized medical plans with dental and vision benefits; qualified and unqualified defined contribution plans with employer matching contributions; and merchandise discounts, among other benefits. 11 Training and Code of Business Conduct and Ethics We are dedicated to strengthening our culture and execution through ongoing training for all associates.
These include competitive wages and incentives; an employee stock purchase plan with a discount off the fair value of our common stock; employer-subsidized medical plans with dental and vision benefits; qualified and unqualified defined contribution plans with employer matching contributions; and merchandise discounts, among other benefits.
We take great pride in our store-level training programs that provide the foundation for long-term careers and our ability to promote from within. We are proud to support the first-time jobs for many of our associates where they gain workforce experiences that may grow into long-term careers with us, with others, or the skills to open their own business.
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.
The facility utilizes cross docking/store replenishment and redistribution methods to fill store product requirements. 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.
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.
At the Board level, we are also focused on increasing our diversity. Currently 40% of our non-employee Board members are female, up from 20% last year. We are continuing to refresh our Board and assess long-term succession as well as the diversity of the Board’s collective skill set.
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.
This program allows stores to fulfill online orders and has been implemented on a chain-wide basis (with limited exceptions). By fulfilling e-commerce orders principally from our store level inventory, we are able to minimize out-of-stocks, offer our customers an expanded online assortment and leverage store level inventory and overhead.
Our Ship-From-Store program is a core element of our omnichannel strategy. Online orders are primarily fulfilled using physical stores. By fulfilling e-commerce orders principally from our store level inventory and staff, we are able to minimize out-of-stocks, offer our customers an expanded online assortment and leverage store level inventory and overhead.
Throughout packing, allocating, storing and shipping, our distribution process is essentially paperless. 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. Competition The retail footwear business is highly competitive.
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.
Revenues attributed to the Shoe Station banner generated from the acquisition date through January 29, 2022 totaled $16.6 million. 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.
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.
Disciplined Approach to Capital Management We remain focused on funding our operations and any future acquisitions similar to the Shoe Station acquisition without leverage. We ended fiscal 2021 with no debt and $132.4 million of cash and cash equivalents and marketable securities, even after funding the purchase of Shoe Station with cash on hand during our fiscal fourth quarter.
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.
We believe these marks are valuable and, accordingly, we intend to maintain the marks and the related registrations.
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.
Using the POS, store personnel and centralized merchandising staff are able to monitor sales, cost of sales, and the success of product promotions in real-time. Our centralized network connects our corporate office to our distribution center and retail stores via a wide area network, providing up-to-date sales and inventory information as required.
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.
The foundation of our omnichannel strategy is providing customers easy access to our wide assortment of merchandise via their choice of device and delivery channel. 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.
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 believe that by offering a wide selection of popular styles of name brand and private label merchandise at competitive prices, we generate broad customer appeal. Additionally, the time-conscious customer appreciates the convenience of one-stop shopping for the entire family, whether this occurs at any of our store locations or through our other omnichannel choices.
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.
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 iconic spin-n-win wheel, and a mic-person who runs in-store specials.
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.
Fiscal Years 2021 2020 2019 2018 2017 Non-Athletics: Women's 24 % 22 % 25 % 24 % 24 % Men's 14 14 14 14 14 Children's 6 5 5 5 5 Total 44 41 44 43 43 Athletics: Women's 16 18 17 18 17 Men's 20 22 20 21 22 Children's 14 13 14 14 14 Total 50 53 51 53 53 Accessories 5 5 5 4 4 Other 1 1 0 0 0 Total 100 % 100 % 100 % 100 % 100 % Building Brand Awareness Our goal is to communicate a consistent brand image for both of our banners across all aspects of our operations and throughout our marketing strategies.
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.
We believe that the diversity of our workforce and management is a tremendous asset. We are firmly committed to providing equal opportunities in all aspects of employment and believe that all individuals should be treated with respect and dignity. Diversity is an important element in our ongoing annual mandatory training for all employees and managers.
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.
Through a combination of both organic and acquired store growth, we aim to add more than 10 new stores in fiscal 2022, over 20 new stores in fiscal 2023, and over 25 new stores annually by fiscal 2024, across both banners.
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 do not tolerate harassment or unlawful discrimination of any kind. We have clear policies encouraging strong relationships and protecting open lines of communication with management at every level. This, coupled with our non-retaliation policy, encourages employees to raise issues and seek immediate redress of those issues if they should arise.
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.
Key Competitive Strengths We believe our financial success is due to a number of key competitive strengths that make our banners, Shoe Carnival and Shoe Station, destinations of choice for today’s retail consumer. 4 Distinctive shopping experience Our staff is dedicated to customer service and assists and educates customers with the features and location of merchandise, as well as finding sizes, styles and colors.
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.
We highlight our banners and the merchandise brands we carry, including specific styles of product, using lifestyle and product imagery to showcase merchandise brands.
Digital Media to Build Brand Awareness Our goal is to communicate a consistent brand image for both of our banners across all aspects of our operations and throughout our marketing strategies. We highlight our banners and the name brands we carry, including specific styles of product, using lifestyle and product imagery to showcase merchandise brands.
We believe the principal competitive factors in our industry are merchandise selection, price, fashion, quality, location, shopping environment and service. We compete with department stores, shoe stores, sporting goods stores, e-commerce retailers and mass merchandisers. Our specific competitors vary from market to market. We compete with most department stores and traditional shoe stores by offering competitive prices.
We compete with department stores, shoe stores, sporting goods stores, e-commerce retailers and mass merchandisers. We compete with most department stores and traditional shoe stores by offering competitive prices. We compete with off-price retailers, mass merchandisers and discount stores by offering a wider and deeper selection of merchandise.
Including e-commerce sales in close proximity to a physical store, our physical stores each generated an average of $3.5 million in annual sales in fiscal 2021 and over $300 per square foot. As of January 29, 2022, we operated 372 stores in 35 states and Puerto Rico under the Shoe Carnival banner and offered online shopping at www.shoecarnival.com.
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.
Two branded suppliers, Nike, Inc. and Skechers USA, Inc., collectively accounted for approximately 39% of our net sales in fiscal 2021 and approximately 43% in fiscal 2020 (Nike, Inc. approximately 28% in fiscal 2021 and 33% in fiscal 2020 and Skechers USA, Inc. approximately 11% in fiscal 2021 and 10% in fiscal 2020).
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.
Number of Employees At January 29, 2022, we had approximately 5,800 employees, of which approximately 3,200 were employed on a part-time basis. The number of employees fluctuates during the year primarily due to seasonality. None of our employees are represented by a labor union.
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.
Our data warehouse enables our merchandising and store operations staff to analyze sales, margin and inventory levels by location, by day, down to the size of shoe. Using this information, our merchandise managers meet regularly with vendors to compare their product sales and margins and return on inventory investment against previously stated objectives.
Using this information, our merchandise managers meet regularly with vendors to compare product sales and margins and return on inventory investment against previously stated objectives. We believe timely access to key business data has enabled us to drive our comparable store sales, manage our markdown activity and improve inventory turnover.
As of January 29, 2022, we operated 21 locations across the Southeast under the Shoe Station banner. The addition of this banner and retail locations creates a complementary retail platform to serve a broader family footwear customer base across both urban and suburban demographics and provides an additional near-term growth opportunity for us.
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.
We believe our current store footprint provides for growth to new markets within the United States as well as fill-in opportunities within existing markets. In the near term, we expect to pursue fill-in opportunities for store growth across large and mid-size markets as we continue to leverage customer data from our customer relationship management (“CRM”) program.
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 understand the value of diversity at all levels, whether of gender, race, ethnicity, background or experience. As of January 29, 2022, our workforce identified as 63% female and 37% male. 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.
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.
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 technology department monitors and regularly tests compliance with our protocols, provides regular updates to employees and management, and conducts annual training.
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.
Heavy reliance on information technology growth strategy We have invested significant resources in information technology. Our proprietary inventory management and advanced point-of-sale (“POS”) syste ms provide corporate management, buyers and store managers with the timely information necessary to monitor and control all phases of operations.
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.
ITEM 1. BUSINESS Our Company Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, providing the convenience of shopping at any of our store locations, our mobile apps or online. We offer customers a broad assortment of dress, casual and athletic footwear for the entire family with an emphasis on national name brands.
ITEM 1. BUSINESS Our Company Shoe Carnival, Inc. is one of the nation’s largest omnichannel sellers of family footwear. We operate a retail focused business model that aims to deliver the leading footwear shopping experience with the national name brands desired by our customers.
Television, radio, print media (including inserts, direct mail and newspaper advertising) and outdoor advertising accounted for the balance of our total advertising budget. Distribution We operate a single 410,000 square foot distribution center located in Evansville, Indiana. Our facility can support the processing and distribution needs for up to 460 stores based on our current configuration.
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.
These specials include contests and games and hot deals of the moment to encourage customers to take immediate advantage of our special, in-store pricing. On average, our Shoe Carnival physical stores are approximately 10,900 square feet and carry inventory of approximately 25,700 pairs of shoes per location.
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.
We continue to expect our e-commerce platform to be a significant sales channel for us. E-commerce sales represented approximately 12% of our merchandise sales in fiscal 2021, 19% in fiscal 2020 and 6% in fiscal 2019. Ship-From-Store Our Ship-From-Store program is a core element of our omnichannel strategy.
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 remain focused on expanding our Shoe Perks enrollment. In fiscal 2021, our Shoe Perks membership grew to 28.5 million members. Purchases from Shoe Perks members were approximately 68% of our comparable net sales.
We are focused on expanding our Shoe Perks enrollment. In Fiscal 2022, our Shoe Perks membership grew to 32.1 million members, representing an increase in new customers of 34% compared to pre-pandemic Fiscal 2019 year end 6 and 13% compared to Fiscal 2021 year end.
During fiscal 2021, we grew our net sales by 36% compared to fiscal 2020 and 28% compared to fiscal 2019. The diluted net income per share earned in fiscal 2021 of $5.42 exceeded the diluted net income per share earned during the last six years combined.
Our total Diluted Net Income per Share earned over the past two fiscal years of $9.38 ($3.96 in Fiscal 2022 and $5.42 in Fiscal 2021) exceeded the Diluted Net Income per Share earned over the preceding 13 years combined. As of our Fiscal 2022 year end, we operated 397 stores across 35 states and Puerto Rico.
These promotions include both advertised limited time sale offerings in addition to in-store and online timed specials. The table below sets forth our percentage of sales by product category.
The table below sets forth our percentage of sales by product category over the last five fiscal years.
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On average, our Shoe Station physical stores are approximately 16,700 square feet and carry an average inventory of 43,300 pairs of shoes per location. D ue to the size of the stores and a targeted more affluent family footwear customer, these locations provide for a primary destination shopping experience. We will also offer online shopping under this banner at www.shoestation.com.
Added
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.
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Our knowledge of these interests, combined with our vendor relationships and distribution process, allows us to react quickly to emerging trends or special events. Approximately 160 of our Shoe Carnival stores have athletic shops that highlight leading athletic brands. We expect to continue growing our "athletic shop" in-store concept across our fleet in the years ahead.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe merchandise we sell generally consists of discretionary items. Adverse economic conditions and macroeconomic uncertainty, and any related decrease in consumer confidence and spending may result in reduced consumer demand for discretionary items. 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.
Biggest changeFederal 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.
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 our omnichannel initiatives, which requires substantial investment in technology.
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.
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; 19 • 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, 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.
These include, but are not limited to: • changes in the public’s perception of the reputation and brand of the business partner as a result of matters such as its labor and wage standards, business practices or marketing campaigns; • our inability to properly manage a business partner; • any data losses or information security lapses by a business partner that results in the compromise of personal information or the improper use or disclosure of sensitive information; and 21 • any misconduct by a business partner involving matters such as fraud or other improper or unethical activities conducted by the business partner or its non-compliance with our policies and procedures or with laws and regulations, including laws and regulations regarding the use and safeguarding of information, labor practices, environmental, health or safety matters and lobbying or similar activities.
These include, but are not limited to: • changes in the public’s perception of the reputation and brand of the business partner as a result of matters such as its labor and wage standards, business practices or marketing campaigns; • our inability to properly manage a business partner; • any data losses or information security lapses by a business partner that results in the compromise of personal information or the improper use or disclosure of sensitive information; and • any misconduct by a business partner involving matters such as fraud or other improper or unethical activities conducted by the business partner or its non-compliance with our policies and procedures or with laws and regulations, including laws and regulations regarding the use and safeguarding of information, labor practices, environmental, health or safety matters and lobbying or similar activities.
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; 16 • 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; 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.
Our facilities, including our distribution center, our corporate headquarters 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 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.
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.
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.
The acquired Shoe Station business 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.
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.
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.
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.
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.
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.
Further, due to the cyclical nature and current hardening of the insurance markets, we cannot provide assurance that insurance coverage will continue to be available on terms similar to those presently in place. 23 We are subject to periodic litigation and other regulatory proceedings, which could result in the unexpected expenditure of time and resources.
Further, due to the cyclical nature and current hardening of the insurance markets, we cannot provide assurance that insurance coverage will continue to be available on terms similar to those presently in place. We are subject to periodic litigation and other regulatory proceedings, which could result in the unexpected expenditure of time and resources.
We could be adversely affected if our information technology systems fail to operate effectively, are disrupted or are compromised. We rely on our existing information technology systems in operating and monitoring major aspects of our business, including sales, warehousing, distribution, purchasing, inventory control, merchandise planning and replenishment, point-of-sale support and financial systems.
We could be adversely affected if our information technology systems fail to operate effectively, are disrupted or are compromised. We rely on our information technology systems in operating and monitoring major aspects of our business, including sales, warehousing, distribution, purchasing, inventory control, merchandise planning and replenishment, point-of-sale support and financial systems.
We must continue to document, test and evaluate our internal control over financial reporting in order to satisfy the requirements of Section 404 of the 24 Sarbanes-Oxley Act of 2002, which requires annual reports by management regarding the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm attesting to the effectiveness of our internal control over financial reporting.
We must continue to document, test and evaluate our internal control over financial reporting in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual reports by management regarding the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm attesting to the effectiveness of our internal control over financial reporting.
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.
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.
Other factors that may affect our quarterly results of operations include: • fashion trends; • the timing and amount of income tax refunds to customers; 22 • the effectiveness of our inventory management; • changes in general economic conditions, including inflation and consumer spending patterns; and • actions of competitors or co-tenants.
Other factors that may affect our quarterly results of operations include: • fashion trends; • the timing and amount of income tax refunds to customers; • the effectiveness of our inventory management; • changes in general economic conditions, including inflation and consumer spending patterns; and • actions of competitors or co-tenants.
In addition, their interests may differ from, or be opposed to, the interests of our other shareholders, and their ownership may have the effect of delaying or preventing a change in control that may be favored by other shareholders. 25 Provisions of our organizational documents and Indiana law might deter acquisition bids for us.
In addition, their interests may differ from, or be opposed to, the interests of our other shareholders, and their ownership may have the effect of delaying or preventing a change in control that may be favored by other shareholders. Provisions of our organizational documents and Indiana law might deter acquisition bids for us.
Our comparable store sales results have fluctuated in the past, and we believe such fluctuations may continue. The unpredictability of our comparable store sales may cause our revenue and results of operations to vary from quarter to quarter, and an unanticipated decline in revenues or operating income may cause our stock price to fluctuate significantly.
Our comparable store sales results have fluctuated in the past, and we believe such fluctuations may continue. The unpredictability of our comparable store sales may cause our revenue and results of operations to vary from quarter to quarter and year to year, and an unanticipated decline in revenues or operating income may cause our stock price to fluctuate significantly.
If our long-lived assets become impaired, we may need to record significant non-cash impairment charges. Periodically, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, and certain intangible assets, such as goodwill, are evaluated annually regardless of triggering events.
If our long-lived assets become impaired, we may need to record significant non-cash impairment charges. Periodically, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, and certain intangible assets, such as goodwill and non-amortizing tradenames, are evaluated annually regardless of triggering events.
Any significant interruptions in the operations of our third-party providers, over which we have no control, could have an adverse effect on our e-commerce business.
Any significant interruptions in the operations of our third-party providers, over which we have no control, could have an adverse effect on our e-commerce operations.
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, 2022.
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.
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.
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 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 impact 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 any such proceedings. An unfavorable outcome could have an adverse effect on our business, financial condition and results of operations.
In addition, as we create more opportunities to connect with our customers through our omnichannel initiatives and as we adjust the number of our physical stores, we may be unable to hire a sufficient number of qualified personnel or successfully integrate the omnichannel initiatives or new or acquired stores into our business.
In addition, as we create more opportunities to connect with our customers through our omnichannel initiatives and as we grow the number of our physical stores, we may be unable to hire a sufficient number of qualified personnel or successfully integrate the omnichannel initiatives or new or acquired stores into our business.
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 facility 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 utilize our credit agreement to fund working capital, including inventory purchases, and special purpose standby letters of credit, as needed.
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 the outbreak 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 or testing 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.
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.
The rising popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination.
The rising popularity of 20 social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination.
Significant decreases in cash flow from operations could result in our borrowing under the credit facility to fund operational needs. If we borrow funds under our credit facility 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 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.
Financial and Liquidity Risks We will require significant funds to implement our business strategy and meet our other liquidity needs. We may not generate sufficient cash flow from operations or obtain sufficient borrowings under our credit facility to finance our business strategy and meet our other liquidity needs.
Financial and Liquidity Risks We will require significant funds to implement our business strategy and meet our other liquidity needs. We may not generate sufficient cash flow from operations or obtain sufficient borrowings under our credit agreement to finance our business strategy and meet our other liquidity needs.
Disasters occurring at our distribution center, our corporate headquarters, our retail stores, or the infrastructure of a key third-party vendor or service provider also could result in us being unable to deliver 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, 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.
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 website at www.shoecarnival.com and our related mobile app. We fulfill substantially all e-commerce orders from our store locations and from our distribution center.
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.
Should the COVID-19 pandemic 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.
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.
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 30.2% 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 32.0% of our outstanding common stock. Mr.
Our Amended and Restated Articles of Incorporation, our By-Laws and Indiana corporate laws contain provisions that may discourage other persons from attempting to acquire control of us, including, without limitation, a Board of Directors that has staggered terms for its members, supermajority voting provisions, restrictions on the ability of shareholders to call a special meeting of shareholders and procedural requirements in connection with shareholder proposals or director nominations.
Our Amended and Restated Articles of Incorporation, our By-Laws and Indiana corporate laws contain provisions that may discourage other persons from attempting to acquire control of us, including, without limitation, a Board of Directors that has staggered three-year terms for its members, supermajority voting provisions, restrictions on the ability of shareholders to call a special meeting of shareholders and advance notice requirements in connection with shareholder proposals or director nominations.
If we fail to successfully implement our growth strategy, our business, financial condition or results of operations could be adversely effected.
If we fail to successfully implement our growth strategy, our business, financial condition or results of operations could 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, such as less disposable income due to the impact of higher prices on consumer goods; • 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.
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.
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 • increasing our borrowing costs or limiting other potential sources of financing available to us.
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.
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.
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.
Indiana corporate law also contains control share acquisition provisions that limit the ability of certain shareholders to vote their shares unless their control share acquisition is approved. In certain circumstances, the fact that corporate devices are in place that inhibit or discourage takeover attempts could reduce the market value of our common stock. ITEM 1B. Unresolv ed staff comments None.
Indiana corporate law also contains control share acquisition provisions that limit the ability of certain shareholders to vote their shares unless their control share acquisition is approved. In certain circumstances, the fact that corporate devices are in place that inhibit or discourage takeover attempts could reduce the market value of our common stock. 24 ITEM 1B.
We recently completed transitions of key members of our executive management team. Our business would be adversely affected if we fail to retain key executives, or to adequately plan for the succession of the other members of our executive management team.
Our business would be adversely affected if we fail to retain key executives, or to adequately plan for the succession of members of our executive management team.
If we are unable to attract and retain quality sales associates and management or market conditions or changes to minimum wage laws result in the need for higher wages paid to employees, our ability to meet 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 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 maintain recent market share gains in our e-commerce sales or continue to grow our e-commerce sales, our sales, comparable store 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.
If we are unable to continue to grow our e-commerce sales, our sales, comparable store 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.
Reduced consumer demand could result in reduced traffic in our physical stores and to our e-commerce platform; limit the prices we can charge for our merchandise; result in inventory markdowns and increased selling and promotional expenses; and cause us to close underperforming stores, which could result in higher than anticipated closing costs.
Reduced consumer demand could result in reduced traffic in our physical stores and to our e-commerce platform, increased selling and promotional expenses and inventory markdowns, and could cause us to close underperforming stores, which could result in higher than anticipated closing costs.
Two branded suppliers, Nike, Inc. and Skechers USA, Inc., collectively accounted for approximately 39% of our net sales in fiscal 2021 and approximately 43% in fiscal 2020 (Nike, Inc. approximately 28% in fiscal 2021 and 33% in fiscal 2020 and Skechers USA, Inc. approximately 11% in fiscal 2021 and 10% in fiscal 2020).
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).
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. 18 A failure to increase sales at our existing stores may adversely affect our stock price and affect our results of operations.
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.
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. Successful marketing efforts require the ability to reach customers through their desired mode of communication, utilizing various media outlets.
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.
Wayne Weaver 2020 Grantor Retained Annuity Trust for Leigh Anne Weaver, and, as a result, beneficially owns approximately 5.3% 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 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.
Our inability to achieve the anticipated benefits of any future acquisitions and other investments could adversely affect our business, results of operations and financial condition. 20 Natural disasters, other public health crises, political crises and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend and could impact our supply chain and access to customers.
Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend and could impact our supply chain and access to customers.
Our business and results of operations were significantly impacted by the temporary closure of our physical stores in the first quarter of fiscal 2020. 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.
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.
We may experience difficulties in integrating the Shoe Station business and realizing the expected operating results, growth opportunities and other benefits of the acquisition. The success of the Shoe Station acquisition will depend, in part, on our ability to realize the expected operating results, growth opportunities and other benefits from acquiring the Shoe Station assets.
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.
Substantially all of our footwear product is manufactured overseas, including the merchandise we import directly from overseas manufacturers and the merchandise we purchase from domestic vendors. Our primary footwear manufacturers are located in China. Currently, most retailers, including us, are experiencing some form of disruption in their supply chains involving goods imported from Asian countries.
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.
To date, such disruption has increased our costs but has not materially impacted our access to merchandise; however, 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.
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.
If imported merchandise becomes more expensive or unavailable, the transition to alternative sources may not occur in time to meet our demands. Products from alternative sources may be of lesser quality and more expensive than those we currently import.
Products from alternative sources may be of lesser quality and more expensive than those we currently import.
Stagnating consumer preferences could also result in lower sales and would require us to take higher markdowns to reduce excess inventories. Failure to successfully manage and execute our marketing initiatives could have a negative impact on our business .
Stagnating consumer preferences could also result in lower sales and would require us to take higher markdowns to reduce excess inventories. Our failure to effectively manage our real estate portfolio may negatively impact our results of operations. Effective management of our real estate portfolio is critical to our omnichannel strategy.
Media placement decisions are generally made months in advance of the scheduled release date. Our inability to accurately predict our customers’ preferences, to utilize their desired mode of communication, or to ensure availability of advertised products could adversely affect our business 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.
Our operations and the markets in which we operate, procure merchandise and raise capital are continuing to experience significant disruption and financial market volatility associated with the outbreak of a novel strain of 15 coronavirus (“COVID-19”). The World Health Organization has declared COVID‑19 a pandemic. The U.S.
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.
Government, as well as state and local governments, have taken unprecedented measures to control the spread of COVID-19 and to provide stimulus as a mitigating measure to deteriorating economic conditions and increasing unemployment. Many businesses, schools, and other institutions closed, or adjusted operations, to further the practice of “social distancing” as a method to slow the outbreak.
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.
Inadequate response by us, perceived or otherwise, could impact our costs, our reputation, and/or our ability to recruit a qualified workforce. An increase in the cost, or a disruption in the flow, of imported goods may decrease our sales and profits. We rely on imported goods to sell in our stores.
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 .
Any of these impacts could have an adverse effect on our business, results of operations and financial condition. The COVID-19 pandemic has adversely impacted, and may continue to adversely impact, our business and our results of operations.
Our inability to achieve the anticipated benefits of any future acquisitions and other investments could adversely affect our business, results of operations and financial condition.
Removed
The amount of any future stimulus payments and duration of the impact of such payments is uncertain, and our sales and profitability may decline in future periods.
Added
Consumer confidence remains hypersensitive to a variety of uncertain factors, including inflation, recessionary fears, a pandemic resurgence and military conflicts, among other macroeconomic and political uncertainty and instability. Any adverse change in these factors could result in a decrease in consumer demand for our merchandise.
Removed
Furthermore, the increasing conflict between Russia and Ukraine and/or rising inflation could also erode consumer confidence and lead to lower levels of discretionary income for our customers and reduce the demand for our merchandise.
Added
Reduced demand may result in higher than normal inventory positions across our competitive landscape and may limit the prices we can charge for our merchandise and force us to adjust our promotional intensity. Any of these factors, including becoming more promotional, could have an adverse effect on our business, results of operations and financial condition.
Removed
In addition, our stock price and the stock prices of our peer companies have been volatile.
Added
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.
Removed
We may not realize these operating results, 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.
Added
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
The attention of our management may be diverted from our current operations while trying to integrate the Shoe Station business. We may not be able to successfully integrate Shoe Station’s operations, logistics, information technologies, communications, purchasing, accounting, marketing, administration and other systems, establish internal controls into Shoe Station’s operations or retain key Shoe Station employees.
Added
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
In addition, our competitors may spend more on marketing or use different marketing approaches, which could provide them with a competitive advantage. 17 Our failure to effectively manage our real estate portfolio may negatively impact our results of operations. Effective management of our real estate portfolio is critical to our omnichannel strategy.
Added
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.
Removed
Weaver’s adult daughter is the sole trustee of the J. Wayne Weaver 2018 Grantor Retained Annuity Trust for Leigh Anne Weaver, the sole trustee of the J. Wayne Weaver 2019 Grantor Retained Annuity Trust for Leigh Anne Weaver and the sole trustee of the J.
Added
A failure to increase sales at our existing stores may adversely affect our stock price and affect our results of operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of January 29, 2022, we leased 393 stores in 35 states and Puerto Rico. Approximately 98% of the leases for our existing stores provide for fixed minimum rentals and approximately 53% provide for contingent rental payments based upon various specified percentages of sales.
Biggest changeITEM 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.
We own our corporate headquarters located in Evansville, Indiana and lease office space for our Southern buying and marketing teams in Mobile, Alabama.
Corporate Headquarters We own our corporate headquarters located in Evansville, Indiana and lease office space for our Southern office located in Fort Mill, South Carolina.
Removed
Certain leases also contain escalation clauses for increases in minimum rentals, operating costs and taxes. In February 2006, we entered into an operating lease with an independent third party to lease our 410,000 square foot distribution center located in Evansville, Indiana. The lease had an initial term of 15 years.
Added
Certain leases also contain escalation clauses for increases in minimum rentals, operating costs and taxes. Our traditional Shoe Carnival store prototype typically utilizes between 8,000 and 12,000 square feet of leased space and our Shoe Station store prototype utilizes between 12,000 to 20,000 square feet of leased space.
Removed
In April 2019, we extended this lease for a term of 15 years, expiring in 2034. We have the right to further extend the lease term for up to eight additional periods of five years each, and to expand the facility by up to 200,000 square feet.
Added
The sales area comprises substantially all (greater than 80%) of our typical gross store footprint.
Removed
For additional information with respect to our properties, see PART I, ITEM 1, "Business – Growth Strategy” and “–Distribution” as well as PART II, ITEM 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K.
Added
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.
Added
As 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.
Added
While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years.
Added
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.
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee Note 9 - "Debt" to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K regarding restrictions in our amended and restated credit facility entered into on March 23, 2022.
Biggest changeSee 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
We did not sell any unregistered equity securities during fiscal 2021, 2020 or 2019. On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock.
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.
Throughout fiscal 2021, 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 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.
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 2021.
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.
Cash Dividends During fiscal 2021, we paid quarterly cash dividends of $0.07 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.
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.
We also repurchased 87,881 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 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.
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 21, 2022, there were approximately 126 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 17, 2023, there were approximately 123 holders of record of our common stock.
On March 10, 2022, the Board of Directors increased the quarterly cash dividend from $0.07 to $0.09 per share, an increase of 29%, in the first quarter of fiscal 2022. The quarterly cash dividend of $0.09 per share will be paid on April 18, 2022 to shareholders of record as of the close of business on April 4, 2022.
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.
Removed
Our credit agreement in place at the end of fiscal 2021 permits the payment of cash dividends as long as no default or event of default exists under the credit agreement both immediately before and immediately after giving effect to the cash dividends, and the aggregate amount of cash dividends for a fiscal year does not exceed $10 million.
Added
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.
Removed
During the fourth quarter of fiscal 2021, no shares were delivered to or withheld by us in connection with the vesting of equity awards under our equity compensation plans. ITEM 6 . [RESERVED] 27
Added
(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.
Added
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.
Added
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.
Added
However, as long as our consolidated EBITDA is positive and there are either no or low borrowings outstanding under the Credit Agreement, we expect these restrictions would have no impact on our ability to pay cash dividends or execute share repurchases from cash on hand.
Added
The Credit Agreement stipulates that cash dividends and share repurchases of $15 million or less per fiscal year can be made without restriction as long as there is no default or event of default before and immediately after such distributions.
Added
We are also permitted to pay cash dividends or repurchase shares of our common stock in excess of $15 million in a fiscal year provided that (a) no default or event of default exists before and immediately after the distribution, and (b) on a proforma basis, the ratio of (i) the sum of (A) our consolidated funded indebtedness plus (B) three times our consolidated rental expense to (ii) the sum of (A) our consolidated EBITDA plus (B) our consolidated rental expense is less than 3.5 to 1.0.

Item 7. Management's Discussion & Analysis

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

80 edited+35 added−39 removed25 unchanged
Biggest changeFiscal 2022 Plans Following is a summary of certain strategic initiatives and goals for fiscal 2022: • Continue modernizing our stores through design enhancements, as we expect to have 100 more stores completed by the end of fiscal 2022 and to complete our modernization program by the end of fiscal 2024. • Leverage our Customer Relationship Management ("CRM") capabilities to increase personalized, segmented marketing, and continue with limited, to no, reliance on broad-based promotional activities, and enhance our vendor relationships. • Continue to grow the recently acquired Shoe Station banner and further integrate its supply chain. • Continue to manage the effect of COVID-19 on our operations and protect the health and safety of our customers, employees and vendor partners. • Continue to navigate and manage supply chain disruption and other macroeconomic uncertainties. • Maintain the growth and market share of our omnichannel platform. • Continue implementation of upgrades to merchandise planning and allocation systems and continue to increase the productivity of other recently implemented systems. 30 Results of Operations The following table sets forth our results of operations expressed as a percentage of net sales for the following fiscal years: 2021 2020 2019 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (including buying, distribution, and occupancy costs) 60.4 71.3 69.9 Gross profit 39.6 28.7 30.1 Selling, general and administrative expenses 24.0 26.5 24.9 Operating income 15.6 2.2 5.2 Interest income (0.0 ) 0.0 (0.1 ) Interest expense 0.0 0.0 0.0 Income before income taxes 15.6 2.2 5.3 Income tax expense 4.0 0.6 1.2 Net income 11.6 % 1.6 % 4.1 % Fiscal 2021 Compared to Fiscal 2020 Net Sales Net sales were a record $1.33 billion during fiscal 2021 and increased 36.2% compared to fiscal 2020 and 28.3% compared to fiscal 2019.
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.
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” to 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 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 estimates and assumptions can impact: (1) lease classification and the related accounting treatment; (2) rent holidays, escalations or deferred lease incentives, which are taken into consideration when calculating straight-line expense; (3) the term over which leasehold improvements for each store are amortized; and (4) the values and lives of adjustments to initial right-of-use assets.
These estimates and assumptions can impact: (1) lease classification and the related accounting treatment; (2) rent holidays, escalations or deferred lease incentives, which are taken into consideration when calculating straight-line expense; (3) the term over which leasehold improvements for each store are amortized; and (4) the values and lives of adjustments to initial and modified right-of-use assets.
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 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, 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.
See 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 for additional information on the acquisition. Comparable Store Sales Comparable store sales is a key performance indicator for us.
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.
Deferred tax assets are reduced, if necessary, by a valuation allowance to the extent future realization of those tax benefits are uncertain. 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.
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.
These charges were comprised of non-recurring expense related 28 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.
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.
The purchases may be made in the open market or through privately negotiated transactions from time-to-time through December 31, 2022 and in accordance with applicable laws, rules and regulations. The 2022 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, 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.
(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. Therefore, stores opened, acquired or closed during the periods indicated are not included in comparable store sales.
(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.
However, given the significant impact of the COVID-19 pandemic on our fiscal 2020 results, we have included certain comparisons in this MD&A between fiscal 2021 and fiscal 2019 to provide further context regarding our fiscal 2021 results of operations.
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.
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. Dividends In fiscal 2021, four quarterly cash 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. 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.
Assets are grouped and the evaluation performed at the lowest level for which there are identifiable cash flows, which is generally at a store leve l.
Assets are grouped and the evaluation performed at the lowest level for which there are identifiable cash flows, which is generally at a store level.
This section of this Annual Report on Form 10-K generally discusses fiscal 2021 and fiscal 2020 and year-over-year comparisons between fiscal 2021 and fiscal 2020.
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.
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 $147.9 million in fiscal 2021 compared to $63.4 million during fiscal 2020.
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.
In addition to 35 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 $1.9 million in fiscal 2021 and $4.1 million in fiscal 2020.
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.
(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.
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.
See Note 9 – “Debt” to 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 facility and its covenants. We were in compliance with these covenants as of January 29, 2022.
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.
A more detailed description of the fluctuations among fiscal 2017 – fiscal 2020 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 2018 – Fiscal 2021 can be found in our Annual Reports on Form 10-K filed for those previous fiscal years.
Store opening and closing costs included in cost of sales was expense of $50,000 in fiscal 2021 and $500,000 in fiscal 2020. 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.
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.
(2) In fiscal 2019, we adopted Accounting Standards Codification No. 842 on a modified retrospective basis, which requires us to recognize leased assets and obligations on our balance sheet. See Note 10 – “Leases” contained in the Notes to Consolidated Financial Statements included in PART II, ITEM 8 of this Annual Report on Form 10-K for further discussion.
(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.
A discussion of fiscal 2019 and year-over-year comparisons between fiscal 2020 and fiscal 2019 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 the fiscal year ended January 30, 2021, filed with the United States Securities and Exchange Commission on March 26, 2021.
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.
Our cash inflows from financing activities generally reflect stock issuances to employees under our Employee Stock Purchase Plan and borrowings under our credit facility. During fiscal 2021, net cash used in financing activities was $17.7 million compared to $6.7 million during fiscal 2020.
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.
Capital Expenditures – Fiscal 2022 Capital expenditures for fiscal 2022 are expected to be between $55 million and $65 million, with approximately $50 million to $55 million to be used for new stores, relocations and remodels 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 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.
The 2022 Share Repurchase Program replaced a $50 million share repurchase program that was authorized in December 2020, became effective January 1, 2021 and expired in accordance with its terms on December 31, 2021. Shares totaling 208,662 were repurchased during fiscal 2021 at a cost of $7.1 million.
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.
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.
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.
We recorded non-cash impairment charges on a majority of these stores and also recognized impairment charges on other underperforming stores during these years. Included in store closing costs were non-cash impairment charges of $1.3 million in fiscal 2021 and $3.1 million in fiscal 2020.
We recorded non-cash impairment charges on a majority of these stores and also recognized impairment charges on other underperforming stores in Fiscal 2021. There were no non-cash impairment charges recognized in Fiscal 2022, while non-cash impairment charges of $1.3 million were included in store closing costs in Fiscal 2021.
During fiscal 2021, we did not borrow or repay funds under our credit facility. During fiscal 2020, we borrowed and repaid $24.9 million under our credit facility. Letters of credit outstanding were $700,000 at January 29, 2022, and our borrowing capacity was $99.3 million. Our credit facility requires us to maintain compliance with various financial covenants.
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.
(In thousands, except per share and operating data) Fiscal years (1) 2021 2020 2019 2018 2017 Income Statement Data: Net sales $ 1,330,394 $ 976,765 $ 1,036,551 $ 1,029,650 $ 1,019,154 Gross profit $ 526,787 $ 279,982 $ 311,869 $ 308,992 $ 296,269 Operating income $ 207,654 $ 21,865 $ 54,209 $ 49,760 $ 37,701 Net income $ 154,881 $ 15,991 $ 42,914 $ 38,135 $ 18,933 Diluted net income per share $ 5.42 $ 0.56 $ 1.46 $ 1.23 $ 0.58 Dividends declared per share $ 0.280 $ 0.178 $ 0.168 $ 0.158 $ 0.148 Balance Sheet Data: Cash and cash equivalents $ 117,443 $ 106,532 $ 61,899 $ 67,021 $ 48,254 Total assets (2) $ 812,264 $ 642,747 $ 628,374 $ 417,999 $ 415,580 Long-term debt $ 0 $ 0 $ 0 $ 0 $ 0 Total shareholders’ equity $ 452,533 $ 310,176 $ 297,363 $ 304,433 $ 307,302 Selected Operating Data: Stores open at end of year 393 383 392 397 408 Comparable store sales (3)(4) 35.3 % -5.3 % 1.9 % 4.3 % 0.3 % Square footage of store space at year end (000’s) 4,419 4,146 4,220 4,268 4,391 Average sales per store (000’s) (3)(5)(7) $ 3,473 $ 2,503 $ 2,475 $ 2,473 $ 2,419 Average sales per square foot (3)(6)(7) $ 321 $ 237 $ 245 $ 236 $ 229 (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) 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.
As a part of this process, deferred tax assets and liabilities are recognized based on the difference between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Our temporary timing differences relate primarily to inventory, depreciation, accrued expenses, right-of-use assets, operating lease liabilities and stock-based compensation.
As a part of this process, deferred tax assets and liabilities are recognized based on the difference between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Our temporary timing differences relate primarily to inventory, property and equipment, right-of-use assets, operating lease liabilities, goodwill and non-amortizing intangible assets.
Unless otherwise stated, references to years 2021, 2020, 2019, 2018, and 2017 relate respectively to the fiscal years ended January 29, 2022, January 30, 2021, February 1, 2020, February 2, 2019, and February 3, 2018. Fiscal year 2017 consisted of 53 weeks and the other fiscal years consisted of 52 weeks.
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.
While the effects of the COVID-19 pandemic and other macroeconomic uncertainty make our operating cash flow less predictable, we believe our resources will be sufficient to fund our cash needs, a s they arise, for at least the next 12 months.
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.
As we are contractually obligated to make lease payments to landlords, estimated future payments to landlords and lease-related charges are expected to be significant in future years and will increase in future years due to the acquisition of Shoe Station and other expected store growth.
As we are contractually obligated to make lease payments to landlords, estimated future payments to landlords and lease-related charges are expected to be significant in future years and will increase in future years due to expected organic and acquired store growth.
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, fi nancial 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, subject to the restrictions in our Credit Agreement.
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) In fiscal years 2021, 2020, 2019, and 2018, average sales per store includes e-commerce sales that are in close proximity to a physical store.
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.
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. 32 Cash Flow - Financing Activities Our cash outflows for financing activities are typically for cash dividend payments, share repurchases or payments on our credit facility.
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.
Prior to the purchase of our corporate headquarters in fiscal 2019, it was also leased. 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.
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.
See Note 2 — “Summary of Significant Accounting Policies” to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for additional information on the stock split.
Recent Accounting Pronouncements See Note 2 — “Summary of Significant Accounting Policies” in our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements and related impacts.
Due to the larger average size of our Shoe Station stores and the targeted customer, these locations provide for a primary destination shopping experience. 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 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.
Footwear in our Shoe Carnival physical stores is organized by category and brand, creating strong brand statements within the aisles. These brand statements are underscored by branded signage on endcaps and in-line signage throughout the store.
Our stores under the Shoe Carnival banner combine competitive pricing with a high-energy in-store environment that encourages customer participation. Footwear in our Shoe Carnival physical stores is organized by category and brand, creating strong brand statements within the aisles. These brand statements are underscored by branded signage on endcaps and in-line signage throughout the store.
We generally include e-commerce sales in our comparable store sales as a result of our omnichannel retailer strategy. Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores.
We generally include e-commerce sales in our comparable store sales as a result of our omnichannel retailer strategy. Due to our omnichannel retailer strategy, we view e-commerce sales as an extension of our physical stores. E-commerce platforms associated with a physical store acquisition will not be included in comparable store sales until the initial physical stores are included.
Given the significance of inventories to our consolidated financial statements, the determination of net realizable value is a critical accounting estimate. Material changes in the factors noted above could have a significant impact on the actual net realizable value of our inventory and our reported operating results.
Material changes in the factors noted above could have a significant impact on the actual net realizable value of our inventory and our reported operating results.
Acquisition of Shoe Station On December 3, 2021, we acquired substantially all of the assets of Shoe Station, a privately-held, family-owned shoe retailer. The Shoe Station assets were acquired for $70.7 million, inclusive of customary adjustments which are not yet finalized, and funded with cash on hand.
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.
Store Openings, Closings and Impairment Charges – Impact on Fiscal 2021 and Fiscal 2020 In fiscal 2021, we opened one new store. The initial inventory investment for the new store in fiscal 2021 was $469,000, capital expenditures were $299,000 and lease incentives received from our landlord were $100,000. In fiscal 2020, we opened four new stores.
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 actual number and value of the shares to be purchased will depend on the performance of our stock price and other market and economic factors, including impacts caused by the COVID-19 pandemic.
The actual number and value of the shares to be purchased will depend on the performance of our stock price and other market and economic factors, subject to the restrictions in our Credit Agreement.
At the end of this section of this Annual Report on Form 10-K, we have included historical data for the past five fiscal years to facilitate trend analysis of key data reported in our consolidated financial statements and other select operating data. Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31.
At the end of this section of this Annual Report on Form 10-K, we have included historical data for the past five fiscal years to facilitate trend analysis of key data reported in our consolidated financial statements and other select operating data. Overview of Our Business Shoe Carnival, Inc. is one of the nation’s largest omnichannel family footwear retailers.
(7) Average sales per store and average sales per square foot include only Shoe Carnival banner stores. 38
(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
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 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 increase in net cash used in financing activities was primarily due to the repurchase of $7.1 million of shares in fiscal 2021 associated with our Board of Directors’ authorized share repurchase program. In fiscal 2021 we also increased our dividend payments and more shares were withheld upon the vesting of stock-based compensation awards.
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 weighted average discount rate utilized in fiscal 2021 and fiscal 2020 was 5.2%. As of the date of adoption of ASC 842 and for new leases, renewals or amendments, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.
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 increase was primarily attributable to increased cash and marketable securities positions. Our current ratio was 2.9 as of January 29, 2022, compared to 2.7 as of January 30, 2021. Cash Flow - Investing Activities Our cash outflows for investing activities are normally for capital expenditures.
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.
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 and private label footwear for the entire family.
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.
The increase in operating cash flow was primarily driven by higher cash receipts on increased sales, partially offset by increased inventory purchases and payments for operating expenses and income taxes. Working capital increased on a year-over-year basis and totaled $288.4 million at January 29, 2022 compared to $224.4 million at January 30, 2021.
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.
With the recent acquisition of Shoe Station, we expect the level of temporary timing differences to increase as a result of tax deductible goodwill and trade names. 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 effect in the years when those temporary differences are expected to reverse.
(Unaudited, In thousands, except per share amounts) 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 34 Fiscal 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 147,495 $ 300,794 $ 274,579 $ 253,897 Gross profit 31,464 82,605 87,761 78,152 Operating income/(loss) (23,261 ) 14,398 20,163 10,565 Net income/(loss) (16,190 ) 10,060 14,678 7,443 Net income/(loss) per share – Diluted 1 $ (0.58 ) $ 0.35 $ 0.51 $ 0.26 1) Per share amounts are computed independently for each of the quarters presented.
(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.
During fiscal 2021, we expended $31.4 million for the purchase of property and equipment, primarily related to our store portfolio modernization plan.
During Fiscal 2022 and Fiscal 2021, we expended $77.3 million and $31.4 million, respectively, for the purchases of property and equipment, primarily related to our store portfolio modernization plan. During Fiscal 2021, we acquired the physical stores and substantially all of the assets and liabilities of Shoe Station and finalized the purchase price in Fiscal 2022, paying approximately $70.4 million.
We are continuing to operate the 21 locations acquired under the Shoe Station banner. Shoe Station contributed net sales of $16.6 million during the period from the acquisition date through January 29, 2022. 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.
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.
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. Our future store strategies may continue to be impacted by the current economic uncertainty, including uncertainty associated with the COVID-19 pandemic.
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.
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. Our typical physical store carries shoes in two general categories – athletics and non-athletics with subcategories for men's, women's, and children's, as well as a broad range of accessories.
Our typical physical store carries shoes in two general categories – athletics and non-athletics with subcategories for men's, women's and children's, as well as a broad range of accessories. In addition to our physical stores, our e-commerce platform offers customers the same assortment of merchandise in all categories of footwear with expanded options in certain instances.
The initial average inventory investment for the new stores was $578,000, capital expenditures were $973,000 and lease incentives received from our landlord were $448,000. Pre-opening expenses for the one store opened in fiscal 2021 included in cost of sales and SG&A expenses were approximately $77,000. Items classified as pre-opening expenses include rent, freight, advertising, salaries and supplies.
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.
Liquidity and Capital Resources Our primary sources of liquidity are $132. 4 million of cash, cash equivalents and marketable securities on hand at the end of fiscal 2021, cash generated from operations, plus availability under our $100 million credit facility, which was amended and restated on March 23, 2022 to, among other things, extend the term until March 23, 2027 (the “ New Credit Agreement ” ).
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.
During fiscal 2021, we acquired substantially all of the assets of Shoe Station for approximately $70.7 million and invested on a net basis approximately $17.2 million in publicly traded mutual funds designed to mitigate income statement volatility associated with our nonqualified deferred compensation plan.
In Fiscal 2021 we also invested on a net basis approximately $17.2 million in publicly traded mutual funds designed to mitigate income statement volatility associated with our nonqualified deferred compensation plan. The balance of these Marketable Securities, net of sales and mark to market activity, was $11.6 million at January 28, 2023, compared to $15.0 million at January 29, 2022.
These restrictions have changed a result of entering into the New Credit Agreement after our fiscal year end. See Note 9 – “Debt” to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K. Leases Rent-related payments made in fiscal 2021 totaled $82.2 million.
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 restrictions.
Non-capital expenditures, such as advertising and payroll incurred prior to the opening of a new store, are charged to expense as incurred.
Depending upon the results of lease negotiations with certain landlords of underperforming stores, we may increase or decrease the number of store closures in future periods. Non-capital expenditures, such as advertising and payroll incurred prior to the opening of a new store, are charged to expense as incurred.
The addition of the Shoe Station banner and retail locations creates a complementary retail platform to serve a broader family footwear customer base across both urban and suburban demographics. The Shoe Station concept targets a more affluent family footwear customer and has a strong track record of capitalizing on emerging footwear fashion trends and introducing new brands.
The Shoe Station concept targets a more affluent family footwear customer and has a strong track record of capitalizing on emerging footwear fashion trends and introducing new brands. Due to the larger average size of our Shoe Station stores and the targeted, more affluent customer, these locations provide for a primary destination shopping experience.
Store Openings and Closings – Fiscal 2022 Increasing market penetration by adding new stores is expected to reemerge as a key component of our growth strategy.
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.
See Note 9 – “Debt” to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of this Annual Report on Form 10-K. 33 Share Repurchase Program On December 16, 2021, our Board of Directors authorized a share repurchase program for up to $50 million of our outstanding common stock, effective January 1, 2022 (the “2022 Share Repurchase Program”).
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”).
During fiscal 2020, we expended $590,000 in pre-opening expenses, or an average of $147,000 per store. Total store closing costs were $1.9 million in fiscal 2021 and $4.0 million in fiscal 2020. We closed 12 stores during fiscal 2021 and 13 stores during fiscal 2020.
During Fiscal 2021, we expended $77,000 in pre-opening expenses for the one new store. 35 There were no store closing costs in Fiscal 2022 and total store closing costs were $1.9 million associated with closing 12 stores in Fiscal 2021.
Assets subject to impairment are adjusted to estimated fair value and, if applicable, an impairment loss is recorded in selling, general and administrative expenses. 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.
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.
Similar to our physical stores, e-commerce platforms that are acquired will not be included in comparable store sales for 13 months after the acquisition of the platform. Our method for calculating comparable store sales for fiscal 2021, therefore, does not include any sales activity from Shoe Station.
Our method for calculating comparable store sales in Fiscal 2022 and Fiscal 2021, therefore, does not include any sales activity from Shoe Station.
During fiscal 2020, the first quarter dividend was in the amount of $0.0425 per share and the dividends for the remaining three quarters were $0.0450 per share. During fiscal years 2021 and 2020, we returned $8.0 million and $5.1 million, respectively, in cash to our shareholders through our quarterly dividends.
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.
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.
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.
We reduce the value of our inventory to its estimated net realizable value where cost exceeds the estimated future selling price. Merchandise inventories as of January 29, 2022 totaled $285.2 million, representing approximately 35% of total assets. Merchandise inventories as of January 30, 2021 totaled $233.3 million, representing approximately 36% of total assets.
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.
No repurchases were made in fiscal 2020, and share repurchases pursuant to previously Board-approved share repurchase programs that have now expired were approximately 2,234,000 shares at an aggregate cost of $37.8 million in fiscal 2019. Share repurchase activity in fiscal 2021 and fiscal 2020 was impacted by the COVID-19 pandemic.
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.
Recent Accounting Pronouncements See Note 2 — “Summary of Significant Accounting Policies” in the accompanying notes included in PART II, ITEM 8 of this Annual Report on Form 10-K for a description of recent accounting pronouncements that may have an impact on our consolidated financial statements when adopted. 37 Historical Financial Data The following historical financial data is included for the convenience of assessing trends in our financial condition and results of operations over the previous five fiscal years.
Historical Financial and Operating Data The following historical financial data is included for the convenience of assessing trends in our financial condition and results of operations over the previous five fiscal years.
As a percentage of net sales, SG&A was leveraged to 24.0% in fiscal 2021 compared to 26.5% in fiscal 2020 and 24.9% in fiscal 2019.
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.
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. Approximately 160 of our Shoe Carnival stores have athletic shops that highlight leading athletic brands. We expect to continue growing our "athletic shop" in-store concept across our fleet in the years ahead.
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.
The diluted net income per share of $5.42 earned in fiscal 2021, which included the Shoe Station acquisition-related charges incurred during the fourth quarter of fiscal 2021, exceeded the diluted net income per share earned during the last six fiscal years combined.
Our total Diluted Net Income per Share earned over the past two fiscal years of $9.38 ($3.96 in Fiscal 2022 and $5.42 in Fiscal 2021) exceeded the Diluted Net Income per Share earned over the preceding 13 years combined.
Comparable store sales in fiscal 2021 increased 35.3% compared to fiscal 2020 and increased 28.3% compared to fiscal 2019.
On a comparable store basis, non-athletic sales were flat compared to Fiscal 2021 and increased 29.5% compared to Fiscal 2019. Net Sales attributed to athletic sales were 42% in Fiscal 2022, compared to 50% in Fiscal 2021 and 51% in Fiscal 2019.
Executive Summary Fiscal 2021 was a record-breaking year for us. Results in fiscal 2021 were the highest in terms of net sales, gross profit, operating income and diluted net income per share in our history.
For Fiscal 2022, Diluted Net Income per Share was the second highest year in our history and was only surpassed by Fiscal 2021. Our Diluted Net Income per Share in Fiscal 2022 grew in each quarter compared to Fiscal 2019's pre-pandemic results with growth compared to Fiscal 2019 of 107%, 160%, 151%, and 558%, respectively.
Although store closings could reduce our overall net sales volume, we believe this strategy will realize long-term improvement in operating income and diluted net income per share. Depending upon the results of lease negotiations with certain landlords of underperforming stores, we may increase or decrease the number of store closures in future periods.
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.

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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 facility during fiscal 2021.
Biggest changeWe had no borrowings under our credit agreement during Fiscal 2022.
ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk in that the interest payable on our credit facility is based on variable interest rates and therefore is affected by changes in market rates. We do not use interest rate derivative instruments to manage exposure to changes in market interest rates.
ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk in that the interest payable on our credit agreement is based on variable interest rates and therefore is affected by changes in market rates. We do not use interest rate derivative instruments to manage exposure to changes in market interest rates.

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