Acquisition Expected to Generate Over $10 Million in Operating
Income Post Integration Completion
Provides Market Leadership in Wisconsin and Expands Retail Store
Presence into Minnesota
Shoe Carnival, Inc. (Nasdaq: SCVL) (the “Company”) announced
today that it has acquired Rogan Shoes, Incorporated (“Rogan’s”), a
53-year-old work and family footwear company with 28 store
locations in Wisconsin, Minnesota, and Illinois, for a purchase
price of $45 million, subject to further adjustments, and funded
entirely with cash on hand.
The acquisition is expected to be immediately accretive to the
Company’s fiscal 2024 earnings and generate approximately $84
million in sales and approximately $10 million in operating income,
excluding transaction and integration costs. The Company has an
18-month integration plan in place and expects to capture an
additional $1.5 million in synergies annually and to realize half
of the profit synergies by fiscal 2025 and the full amount by
fiscal 2026. Strategic and cost synergies will be achieved by
integrating Rogan’s into the Shoe Station growth banner and
leveraging the Company’s existing systems and capabilities.
The Rogan’s acquisition advances the Company’s strategy to be
the nation’s leading family footwear retailer. It immediately
positions the Company as the market leader in Wisconsin, and it
establishes a store base in Minnesota, creating additional
expansion opportunities. Following the integration of the
acquisition into the Company’s Shoe Station growth banner, the
combined banner sales are expected to surpass $200 million by
fiscal 2025. With the acquisition, the Company’s store count
increases to an all-time high of 429, keeping the Company on track
to achieve its target to operate over 500 stores in 2028.
Mark Worden, President & Chief Executive Officer of Shoe
Carnival stated, “Our growth strategy is focused on becoming the
nation’s leading family footwear retailer through a combination of
organic growth initiatives and M&A activity that expands our
geographic footprint and customer base. Over the past five decades
the Rogan family has built a brand that is well known and trusted
throughout the state of Wisconsin. As such, they have established a
clear market leadership position in Wisconsin for work and family
footwear, with a compelling assortment, great customer service, and
a highly committed team of employees.”
“I am excited about the new opportunities for Rogan’s as it
becomes part of the Shoe Carnival family,” said Pat Rogan, Chief
Executive Officer of Rogan’s. “We share a strong focus on customers
and employees and this transaction provides the additional scale
and expertise to drive future growth, create efficiencies and
expand profitability with that shared focus as the foundation,” Mr.
Rogan added.
Fiscal 2023 Preliminary Results
For the fiscal year ended February 3, 2024, the Company achieved
the high end of management’s sales expectations with net sales of
$1.176 billion, driven by strong sales growth during the December
holiday period. Diluted earnings per share are in line with
expectations to be between $2.65 - $2.75, with preliminary results
in the mid-range, excluding any transaction costs related to the
Rogan’s acquisition. The Company’s inventory optimization plan over
delivered annual expectations, reducing inventory levels over $40
million, or over 10 percent, compared to the prior year.
The Company ended fiscal 2023 with over $110 million of cash,
cash equivalents and marketable securities on hand, an increase of
over $45 million versus the prior year. Fiscal year 2023 marks the
19th consecutive year the Company ended the year with no debt,
fully funding operations, new store growth, and store remodels
entirely with cash on hand. Additionally, the Company is funding
the Rogan’s acquisition entirely with cash flow generated in fiscal
2023.
The foregoing expected results are preliminary and remain
subject to the completion of normal quarter and year end accounting
procedures and closing adjustments.
The Company will provide its guidance for fiscal 2024 in March
when it reports final audited financial results for fiscal 2023. On
a preliminary basis, the Company currently expects to grow fiscal
2024 total net sales in the low mid-single digit range, driven by
the newly acquired Rogan’s business, Shoe Station banner growth,
e-commerce growth and continued CRM expansion. Partially offsetting
these growth drivers is the comparison to the 53rd week in fiscal
2023 that will not recur in fiscal 2024 and the expectation of a
challenging economic backdrop continuing in early 2024.
Advisors on the Acquisition
KPMG LLP served as financial and due diligence advisor to Shoe
Carnival and Faegre Drinker Biddle & Reath LLP served as its
legal advisor in connection with the Rogan’s acquisition. TM
Capital served as exclusive financial advisor to Rogan’s.
About Shoe Carnival
Shoe Carnival, Inc. is one of the nation’s largest family
footwear retailers, offering a broad assortment of dress, casual
and athletic footwear for men, women and children with emphasis on
national name brands. As of February 13, 2024, the Company operates
429 stores in 36 states and Puerto Rico under its Shoe Carnival and
Shoe Station banners and offers shopping at www.shoecarnival.com
and www.shoestation.com. Headquartered in Evansville, IN, Shoe
Carnival, Inc. trades on The Nasdaq Stock Market LLC under the
symbol SCVL. Press releases and annual reports are available on the
Company's website at www.shoecarnival.com.
About Rogan’s
Founded in 1971 with its first store in Wisconsin, Rogan’s is
one of the nation’s largest independent shoe retailers, with 28
stores in three midwestern states – Wisconsin, Minnesota and
Illinois. With over 600 employees, Rogan’s carries over 100 name
brands and thousands of styles of footwear for men, women,
children, infants and toddlers.
Cautionary Statement Regarding Forward-Looking
Information
As used herein, “we”, “our” and “us” refer to Shoe Carnival,
Inc. This press release contains forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995, that involve a number of risks and uncertainties, such as
statements about our preliminary financial results for fiscal 2023,
our preliminary sales expectations for fiscal 2024, the expected
impact of the Rogan’s acquisition on our operations, financial
results, markets and strategies, the integration of the Rogan’s
business, our expected future store count and store growth, our
ability to grow the Rogan’s brand, and our ability to achieve the
strategic objectives, synergies, efficiencies and other benefits
expected to be realized from our acquisition of the Rogan’s
business.
A number of factors could cause our actual results, performance,
achievements or industry results to be materially different from
any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include,
but are not limited to: our ability to effectively integrate
Rogan’s, retain Rogan’s employees, and achieve the expected
operating results, synergies, efficiencies and other benefits from
the Rogan’s acquisition within the expected time frames, or at all;
risks that the Rogan’s acquisition may disrupt our current plans
and operation or negatively impact our relationship with our
vendors and other suppliers; our ability to control costs and meet
our labor needs in a rising wage, inflationary, and/or supply chain
constrained environment; our ability to maintain current
promotional intensity levels; the effects and duration of economic
downturns and unemployment rates; our ability to achieve expected
operating results, synergies, and other benefits from the Shoe
Station acquisition within expected time frames, or at all; the
potential impact of national and international security concerns,
including those caused by war and terrorism, on the retail
environment; general economic conditions in the areas of the
continental United States and Puerto Rico where our stores are
located; changes in the overall retail environment and more
specifically in the apparel and footwear retail sectors; our
ability to generate increased sales; our ability to successfully
navigate the increasing use of online retailers for fashion
purchases and the impact on traffic and transactions in our
physical stores; the success of the open-air shopping centers where
many of our stores are located and its impact on our ability to
attract customers to our stores; our ability to attract customers
to our e-commerce platform and to successfully grow our omnichannel
sales; the effectiveness of our inventory management, including our
ability to manage key merchandise vendor relationships and
direct-to-consumer initiatives; changes in our relationships with
other key suppliers; changes in the political and economic
environments in, the status of trade relations with, and the impact
of changes in trade policies and tariffs impacting, China and other
countries which are the major manufacturers of footwear; the impact
of competition and pricing; our ability to successfully manage and
execute our marketing initiatives and maintain positive brand
perception and recognition; our ability to successfully manage our
current real estate portfolio and leasing obligations; changes in
weather, including patterns impacted by climate change; changes in
consumer buying trends and our ability to identify and respond to
emerging fashion trends; the impact of disruptions in our
distribution or information technology operations; the impact of
natural disasters, public health and political crises, civil
unrest, and other catastrophic events on our operations and the
operations of our suppliers, as well as on consumer confidence and
purchasing in general; the duration and spread of a public health
crisis, such as COVID-19, and the mitigating efforts deployed,
including the effects of government stimulus on consumer spending;
risks associated with the seasonality of the retail industry; the
impact of unauthorized disclosure or misuse of personal and
confidential information about our customers, vendors and
employees, including as a result of a cybersecurity breach; our
ability to successfully execute our business strategy, including
the availability of desirable store locations at acceptable lease
terms, our ability to identify, consummate or effectively integrate
future acquisitions, our ability to implement and adapt to new
technology and systems, our ability to open new stores in a timely
and profitable manner, including our entry into major new markets,
and the availability of sufficient funds to implement our business
plans; higher than anticipated costs associated with the closing of
underperforming stores; the inability of manufacturers to deliver
products in a timely manner; an increase in the cost, or a
disruption in the flow, of imported goods; the impact of regulatory
changes in the United States, including minimum wage laws and
regulations, and the countries where our manufacturers are located;
the resolution of litigation or regulatory proceedings in which we
are or may become involved; continued volatility and disruption in
the capital and credit markets; future stock repurchases under our
stock repurchase program and future dividend payments.; and other
factors described in the Company’s SEC filings, including the
Company’s latest Annual Report on Form 10-K. In addition, these
forward-looking statements necessarily depend upon assumptions,
estimates and dates that may be incorrect or imprecise and involve
known and unknown risks, uncertainties and other factors.
Accordingly, any forward-looking statements included in this press
release do not purport to be predictions of future events or
circumstances and may not be realized. Forward-looking statements
can be identified by, among other things, the use of
forward-looking terms such as “believes,” “expects,” “aims,” “on
track,” “may,” “will,” “should,” “seeks,” “pro forma,”
“anticipates,” “intends” or the negative of any of these terms, or
comparable terminology, or by discussions of strategy or
intentions. Given these uncertainties, we caution investors not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. We disclaim any obligation to
update any of these factors or to publicly announce any revisions
to the forward-looking statements contained in this press release
to reflect future events or developments.
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version on businesswire.com: https://www.businesswire.com/news/home/20240213733559/en/
Steve R. Alexander Shoe Carnival – Vice President Investor
Relations (812) 306-6176
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