10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended November 2, 2019
or
☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to

Commission File Number:	0-21360
Shoe Carnival, Inc.
(Exact name of registrant as specified in its charter)

Indiana	35-1736614
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
7500 East Columbia Street Evansville, IN	47715
(Address of principal executive offices)	(Zip code)

(812) 867-6471

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SCVL	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  ☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Number of Shares of Common Stock, par value $0.01 per share, outstanding at November 27, 2019 was 14,193,253.

SHOE CARNIVAL, INC.

INDEX TO FORM 10-Q

			Page
Part I	Financial Information
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Shareholders’ Equity	5
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
	Item 4.	Controls and Procedures	23
Part II	Other Information
	Item 1A.	Risk Factors	24
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
	Item 6.	Exhibits	24
	Signature		25

2

SHOE CARNIVAL, INC.PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands, except share data)	November 2, 2019			February 2, 2019			November 3, 2018
Assets
Current Assets:
Cash and cash equivalents	$	33,707		$	67,021		$	39,699
Accounts receivable		2,470			1,219			2,322
Merchandise inventories		298,002			257,539			300,510
Other		10,868			11,534			11,762
Total Current Assets		345,047			337,313			354,293
Property and equipment – net		69,147			70,605			74,471
Deferred income taxes		7,678			9,622			8,866
Other noncurrent assets		3,692			459			389
Operating lease right-of-use assets		222,148		0				0
Total Assets	$	647,712		$	417,999		$	438,019
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	66,089		$	48,715		$	56,270
Accrued and other liabilities		22,052			22,069			28,094
Current portion of operating lease liabilities		42,481			0			0
Total Current Liabilities		130,622			70,784			84,364
Long-term portion of operating lease liabilities		202,138			0			0
Deferred lease incentives		0			22,171			23,478
Accrued rent		0			8,436			8,808
Deferred compensation		13,220			12,108			11,811
Other		984			67			806
Total Liabilities		346,964			113,566			129,267
Shareholders’ Equity:
Common stock, $.01 par value, 50,000,000 shares authorized,    20,527,244 shares, 20,529,227 shares and 20,529,227 shares issued,    respectively		205			205			205
Additional paid-in capital		78,859			75,631			73,103
Retained earnings		393,497			360,443			360,335
Treasury stock, at cost, 6,338,584 shares, 5,154,243    shares and 4,958,854 shares, respectively		(171,813	)		(131,846	)		(124,891	)
Total Shareholders’ Equity		300,748			304,433			308,752
Total Liabilities and Shareholders’ Equity	$	647,712		$	417,999		$	438,019

See notes to Condensed Consolidated Financial Statements.

3

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)	Thirteen Weeks Ended November 2, 2019			Thirteen Weeks Ended November 3, 2018			Thirty-nine Weeks Ended November 2, 2019			Thirty-nine Weeks Ended November 3, 2018
Net sales	$	274,645		$	269,181		$	796,676		$	794,992
Cost of sales (including buying, distribution    and occupancy costs)		189,911			187,963			554,707			552,666
Gross profit		84,734			81,218			241,969			242,326
Selling, general and administrative expenses		66,584			65,202			192,537			194,063
Operating income		18,150			16,016			49,432			48,263
Interest income		(163	)		(273	)		(580	)		(392	)
Interest expense		34			37			155			113
Income before income taxes		18,279			16,252			49,857			48,542
Income tax expense		4,553			4,206			10,426			11,766
Net income	$	13,726		$	12,046		$	39,431		$	36,776
Net income per share:
Basic	$	0.95		$	0.80		$	2.71		$	2.40
Diluted	$	0.94		$	0.76		$	2.66		$	2.36
Weighted average shares:
Basic		14,404			15,071			14,544			15,282
Diluted		14,556			15,812			14,826			15,544

See notes to Condensed Consolidated Financial Statements.

4

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Unaudited

	Thirteen Weeks Ended
	Common Stock								Additional Paid-In			Retained			Treasury
(In thousands, except per share data)	Issued			Treasury			Amount		Capital			Earnings			Stock			Total
Balance at August 3, 2019		20,528			(5,822	)	$	205	$	77,374		$	381,012		$	(155,031	)	$	303,560
Dividends declared ($0.085 per share)													(1,241	)					(1,241	)
Employee stock purchase plan purchases					1					1						43			44
Restricted stock awards		(1	)		7					(178	)					178			0
Shares surrendered by employees to pay taxes    on restricted stock					(3	)										(100	)		(100	)
Purchase of common stock for treasury					(522	)										(16,903	)		(16,903	)
Stock-based compensation expense										1,662									1,662
Net income													13,726						13,726
Balance at November 2, 2019		20,527			(6,339	)	$	205	$	78,859		$	393,497		$	(171,813	)	$	300,748
Balance at August 4, 2018		20,529			(4,440	)	$	205	$	68,892		$	349,549		$	(104,882	)	$	313,764
Dividends declared ($0.080 per share)													(1,257	)					(1,257	)
Employee stock purchase plan purchases					1					10						31			41
Shares surrendered by employees to pay taxes    on restricted stock					(1	)										(37	)		(37	)
Purchase of common stock for treasury					(519	)										(20,003	)		(20,003	)
Stock-based compensation expense										4,201									4,201
Other													(3	)					(3	)
Net income													12,046						12,046
Balance at November 3, 2018		20,529			(4,959	)	$	205	$	73,103		$	360,335		$	(124,891	)	$	308,752

See notes to Condensed Consolidated Financial Statements.

5

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Unaudited

	Thirty-nine Weeks Ended
	Common Stock								Additional Paid-In			Retained			Treasury
(In thousands, except per share data)	Issued			Treasury			Amount		Capital			Earnings			Stock			Total
Balance at February 2, 2019		20,529			(5,154	)	$	205	$	75,631		$	360,443		$	(131,846	)	$	304,433
Adoption of Accounting Standards Codification    842 (see Note 7)													(2,649	)					(2,649	)
Dividends declared ($0.250 per share)													(3,728	)					(3,728	)
Employee stock purchase plan purchases					5					2						146			148
Restricted stock awards		(2	)		67					(1,842	)					1,842			0
Shares surrendered by employees to pay taxes    on restricted stock					(324	)										(11,040	)		(11,040	)
Purchase of common stock for treasury					(933	)										(30,915	)		(30,915	)
Stock-based compensation expense										5,068									5,068
Net income													39,431						39,431
Balance at November 2, 2019		20,527			(6,339	)	$	205	$	78,859		$	393,497		$	(171,813	)	$	300,748
Balance at February 3, 2018		20,529			(3,582	)	$	205	$	65,458		$	326,738		$	(85,099	)	$	307,302
Adoption of Accounting Standards    Codification 606													620						620
Dividends declared ($0.235 per share)													(3,799	)					(3,799	)
Employee stock purchase plan purchases					6					5						143			148
Restricted stock awards					(41	)				577						(577	)		0
Shares surrendered by employees to pay taxes    on restricted stock					(12	)										(312	)		(312	)
Purchase of common stock for treasury					(1,330	)										(39,046	)		(39,046	)
Stock-based compensation expense										7,063									7,063
Net income													36,776						36,776
Balance at November 3, 2018		20,529			(4,959	)	$	205	$	73,103		$	360,335		$	(124,891	)	$	308,752

See notes to Condensed Consolidated Financial Statements.

6

SHOE CARNIVAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In thousands)	Thirty-nine Weeks Ended November 2, 2019			Thirty-nine Weeks Ended November 3, 2018
Cash Flows From Operating Activities
Net income	$	39,431		$	36,776
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,652			16,551
Stock-based compensation		5,207			7,604
Loss/(gain) on retirement and impairment of assets		767			(1,412	)
Deferred income taxes		1,944			(684	)
Non-cash operating lease expense		30,932			0
Lease incentives		0			298
Other		1,111			(6,882	)
Changes in operating assets and liabilities:
Accounts receivable		(1,251	)		4,218
Merchandise inventories		(40,463	)		(40,010	)
Operating lease liabilities		(34,306	)		0
Accounts payable and accrued liabilities		17,173			23,330
Other		(5,165	)		(2,009	)
Net cash provided by operating activities		28,032			37,780
Cash Flows From Investing Activities
Purchases of property and equipment		(15,081	)		(5,021	)
Other		8			1,489
Net cash used in investing activities		(15,073	)		(3,532	)
Cash Flows From Financing Activities
Borrowings under line of credit		20,000			0
Payments on line of credit		(20,000	)		0
Proceeds from issuance of stock		148			148
Dividends paid		(4,466	)		(3,593	)
Purchase of common stock for treasury		(30,915	)		(39,046	)
Shares surrendered by employees to pay taxes on restricted stock		(11,040	)		(312	)
Net cash used in financing activities		(46,273	)		(42,803	)
Net decrease in cash and cash equivalents		(33,314	)		(8,555	)
Cash and cash equivalents at beginning of period		67,021			48,254
Cash and cash equivalents at end of period	$	33,707		$	39,699
Supplemental disclosures of cash flow information:
Cash paid during period for interest	$	155		$	113
Cash paid during period for income taxes	$	6,277		$	9,224
Capital expenditures incurred but not yet paid	$	510		$	397
Dividends declared but not yet paid	$	151		$	206

See notes to Condensed Consolidated Financial Statements.

7

SHOE CARNIVAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1 – Description of Business and Basis of Presentation

Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, providing the convenience of shopping at any of our store locations or online.  We offer customers a broad assortment of moderately-priced dress, casual and athletic footwear for men, women and children with an emphasis on national name brands. We differentiate our retail concept from our competitors by our distinctive, fun and promotional marketing efforts.  We are an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996.  References to “Shoe Carnival,” “we,” “us,” “our” and the “Company” in this Quarterly Report on Form 10-Q refer to Shoe Carnival, Inc. and its subsidiaries.

In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements and notes have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and contain all normal recurring adjustments necessary to present fairly our financial position and the results of our operations and our cash flows for the periods presented. Certain information and disclosures normally included in the notes to Condensed Consolidated Financial Statements have been condensed or omitted according to the rules and regulations of the SEC, although we believe that the disclosures are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

Note 2 - Net Income Per Share

The following tables set forth the computation of basic and diluted earnings per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

	Thirteen Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Net income available for basic common shares and    basic earnings per share	$	13,714			14,404	$	0.95	$	12,002			15,071	$	0.80
Diluted Earnings per Share:
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Adjustment for dilutive potential common shares		0			152				2			741
Net income available for diluted common shares and    diluted earnings per share	$	13,714			14,556	$	0.94	$	12,004			15,812	$	0.76

	Thirty-nine Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Net income available for basic common shares and    basic earnings per share	$	39,365			14,544	$	2.71	$	36,624			15,282	$	2.40
Diluted Earnings per Share:
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Adjustment for dilutive potential common shares		1			282				2			262
Net income available for diluted common shares and    diluted earnings per share	$	39,366			14,826	$	2.66	$	36,626			15,544	$	2.36

8

Our basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. During periods of undistributed losses, however, no effect is given to our participating securities because they do not share in the losses. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. No options to purchase shares of common stock were excluded in the computation of diluted shares for the periods presented.

Note 3 - Recently Issued Accounting Pronouncements

Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which replaced most existing lease accounting guidance. This guidance requires an entity to recognize leased assets and the rights and obligations created by those leased assets on the balance sheet and to disclose key information about the entity's leasing arrangements.  This guidance became effective for us on February 3, 2019 and includes interim periods in fiscal 2019.  We adopted the new guidance using the effective date as the date of initial application; therefore, the comparative periods have not been adjusted and continue to be reported under the previous lease guidance.  All of our retail store locations and our distribution center are subject to operating lease accounting under the new guidance.  As a result, the adoption of this guidance had a material impact on our condensed consolidated balance sheets but did not have a material impact on our condensed consolidated statements of income or our condensed consolidated statements of cash flow.  The adoption of the guidance resulted in the initial recognition of operating lease liabilities of $251.7 million as of February 3, 2019.  This amount was based on the present value of fixed lease payments using our incremental borrowing rate.  We recorded corresponding operating lease right-of-use assets based on the operating lease liabilities, reduced by net accrued rent, unamortized deferred lease incentives and prepaid rent totaling $25.8 million upon adoption.  Under the new guidance, companies may elect certain optional practical expedients.  We elected the practical expedient that permits us not to recognize right-of-use assets and related liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).  In the second quarter of fiscal 2019, we elected the practical expedient that permits us to account for lease and non-lease components as a single lease component for new and modified leases, effective upon adoption of the new guidance.  The impact of this election was not material to the first quarter of fiscal 2019.  We did not elect the transition practical expedient that permit companies to use hindsight when determining lease term and impairment of right-of-use assets. We also did not elect the transition package of practical expedients that is permitted by the guidance; therefore, we were required to reassess previous accounting conclusions regarding whether existing arrangements are or contain leases, the classification of existing leases and the treatment of initial direct costs.  As of the adoption date, we recorded $2.6 million of lease-related capitalized costs to beginning retained earnings, net of tax, that did not meet the definition of initial direct costs in accordance with the guidance.  See Note 7 for additional disclosures required as a result of the adoption of this guidance.

Not Yet Adopted

In August 2018, the FASB issued guidance that adds, removes, and modifies the disclosure requirements related to fair value measurements.  This accounting update is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. We are evaluating the impact of this new guidance and believe the adoption will not have a material impact on our condensed consolidated financial statements.

Note 4 - Fair Value Measurements

The accounting guidance related to fair value measurements defines fair value and provides a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other guidance requires or permits the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels:

• Level 1 –Quoted prices in active markets for identical assets or liabilities;

• Level 2 –Observable market-based inputs or unobservable inputs that are corroborated by market data; and

• Level 3 –Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. Fair values of our long-lived assets are estimated using an income-based approach and are classified within Level 3 of the valuation hierarchy.

9

The following table presents assets that are measured at fair value on a recurring basis at November 2, 2019, February 2, 2019 and November 3, 2018.  We have no material liabilities measured at fair value on a recurring or non-recurring basis.

	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Total
As of November 2, 2019
Cash equivalents - money market mutual funds	$	21,046	$	0	$	0	$	21,046
As of February 2, 2019
Cash equivalents - money market mutual funds	$	68,500	$	0	$	0	$	68,500
As of November 3, 2018
Cash equivalents - money market mutual funds	$	45,061	$	0	$	0	$	45,061

The fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

From time to time, we measure certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. These are typically store-specific assets, which include property and equipment and operating right-of-use assets, which are reviewed for impairment whenever events or changes in circumstances indicate that recoverability of their carrying value is questionable. If the expected undiscounted future cash flows related to a store’s assets are less than their carrying value, an impairment loss would be recognized for the difference between estimated fair value and carrying value and recorded in selling, general and administrative expenses. We estimate the fair value of store property and equipment using an income-based approach considering the cash flows expected over the remaining lease term for each location. These projections are primarily based on management’s estimates of store-level sales, gross margins, direct expenses, exercise of future lease renewal options and resulting cash flows and, by their nature, include judgments about how current initiatives will impact future performance. External factors, such as the local environment in which the store resides, including store traffic and competition, are evaluated in terms of their effect on sales trends. Changes in sales and operating income assumptions or unfavorable changes in external factors can significantly impact the estimated future cash flows. An increase or decrease in the projected cash flow can significantly decrease or increase the fair value of these assets, which would have an effect on the impairment recorded.  We estimate the fair value of operating right-of-use assets using the market value of rents applicable to the leased asset, discounted using the remaining lease term.

During the thirteen weeks ended November 2, 2019, we recorded impairment charges of $561,000 on property and equipment related to three stores, which was included in selling, general and administrative expenses for the period.  Subsequent to this impairment, these long-lived assets were fully depreciated.  During the thirty-nine weeks ended November 2, 2019, we recorded impairment charges of $604,000 on property and equipment related to four stores, which was included in selling, general and administrative expenses for the period. Subsequent to this impairment, these long-lived assets were fully depreciated.  There were no impairments of long-lived assets recorded during the thirteen or thirty-nine weeks ended November 3, 2018.

Note 5 - Stock-Based Compensation

At our 2017 annual meeting of shareholders held on June 13, 2017, our shareholders approved a new equity incentive plan, the Shoe Carnival, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which replaced our 2000 Stock Option and Incentive Plan, as amended (the “2000 Plan”).  We may issue stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to eligible participants under the 2017 Plan.  According to the terms of the 2017 Plan, upon approval of the 2017 Plan by our shareholders, no further awards may be made under the 2000 Plan.  A maximum of 1,000,000 shares of our common stock are available for issuance and sale under the 2017 Plan.  In addition, any shares of our common stock subject to an award granted under the 2017 Plan, or to an award granted under the 2000 Plan that was outstanding on the date our shareholders approved the 2017 Plan, that expires, is cancelled or forfeited, or is settled for cash will, to the extent of such cancellation, forfeiture, expiration or cash settlement, automatically become available for future awards under the 2017 Plan.

Stock-based compensation includes stock options, cash-settled stock appreciation rights, restricted stock awards, restricted stock units and performance stock units.Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our employee stock purchase plan. For the thirteen and thirty-nine weeks ended November 2, 2019, stock-based compensation expense for the employee stock purchase plan was $8,000 before the income tax benefit of $2,000 and $25,000 before the income tax benefit of $5,000, respectively. For the thirteen and thirty-nine weeks ended November 3, 2018, stock-based compensation expense for the employee stock purchase plan was $7,000 before the income tax benefit of $2,000 and $26,000 before the income tax benefit of $6,000, respectively.

10

Restricted Stock

The following table summarizes transactions for our restricted stock awards pursuant to our stock-based compensation plans:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock at February 2, 2019		825,281		$	23.94
Granted		13,548			26.58
Vested		(711,701	)		23.89
Forfeited or expired		(42,345	)		24.27
Restricted stock at November 2, 2019		84,783		$	24.62

The weighted-average grant date fair value of restricted stock awards granted during the thirty-nine week periods ended November 2, 2019 and November 3, 2018 was $26.58 and $32.74, respectively. The total fair value at grant date of restricted stock awards that vested during the thirty-nine week periods ended November 2, 2019 and November 3, 2018 was $17.0 million and $970,000, respectively.

As of November 2, 2019, approximately $297,000 of unrecognized compensation expense remained related to both our performance-based and service-based restricted stock awards. The cost is expected to be recognized over a weighted average period of approximately 0.4 years.

The following table summarizes transactions for our restricted stock units and performance stock units pursuant to the 2017 Plan:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock units and performance stock units at    February 2, 2019		202,667		$	24.98
Granted		187,745			31.29
Vested		(92,759	)		24.55
Forfeited		(13,161	)		26.82
Restricted stock units and performance stock units at    November 2, 2019		284,492		$	29.20

As of November 2, 2019, approximately $4.3 million of unrecognized compensation expense remained related to both our restricted stock units and performance stock units. The cost is expected to be recognized over a weighted average period of approximately 0.9 years.

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards, restricted stock units and performance stock units:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the    recognized income tax benefit	$	1,655	$	4,193	$	5,043	$	7,037
Income tax benefit	$	412	$	1,085	$	1,055	$	1,706

Cash-Settled Stock Appreciation Rights

Our cash-settled stock appreciation rights (“SARs”) were granted during the first quarter of fiscal 2019 to certain non-executive employees and will vest and become fully exercisable on March 31, 2020. Any unexercised SARs will expire on March 31, 2022.  Each SAR entitles the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our stock on the date of exercise less the exercise price, with a maximum amount of gain defined.  The SARs granted during the first quarter of fiscal 2019 were issued with a defined maximum gain of $10.00 over the exercise price of $34.95.  

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During the first quarter of fiscal 2015, SARs were granted to certain non-executive employees, such that one-third of the shares underlying the SARs vested and became fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a five-year term from the date of grant, after which any unexercised SARs would expire.  Each SAR entitled the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our stock on the date of exercise less the exercise price, with a defined maximum gain of $10.00 over the exercise price of $24.26.  During the second quarter of fiscal 2018, all remaining SARs granted during the first quarter of fiscal 2015 were exercised.

The following table summarizes the SARs activity:

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at February 2, 2019		0	$	0.00
Granted		43,900		34.95
Forfeited		0		0.00
Exercised		0		0.00
Outstanding at November 2, 2019		43,900	$	34.95		2.4

The fair value of these liability awards will be remeasured, using a trinomial lattice model, at each reporting period until the date of settlement. Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. The weighted-average fair value of outstanding, non-vested SAR awards as of November 2, 2019 was $5.56.

The fair value was estimated using a trinomial lattice model with the following assumptions:

	November 2, 2019
Risk free interest rate yield curve	1.53% - 1.58%
Expected dividend yield	1.0%
Expected volatility	50.03%
Maximum life	2.4 Years
Exercise multiple		1.29
Maximum payout	$	10.00
Employee exit rate	2.2% - 9.0%

The risk free interest rate was based on the U.S. Treasury yield curve in effect at the end of the reporting period. The expected dividend yield was based on our historical quarterly cash dividends, with the assumption that quarterly dividends would continue at that rate. Expected volatility was based on the historical volatility of our common stock. The exercise multiple and employee exit rate were calculated based on historical option data.

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the recognized    income tax benefit	$	104	$	0	$	139	$	129
Income tax benefit	$	26	$	0	$	29	$	30

As of November 2, 2019, approximately $106,000 in unrecognized compensation expense remained related to non-vested SARs. This expense is expected to be recognized over a period of approximately 0.4 years.

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Note 6 – Revenue

Disaggregation of Revenue by Product Category

Revenue is disaggregated by product category below. Net sales and percentage of net sales for the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018 were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019				Thirteen Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	61,126	22	%	$	59,510	22	%
Men’s		35,446	13			33,946	13
Children’s		14,713	5			13,155	5
Total		111,285	40			106,611	40
Athletics:
Women’s		46,742	17			47,409	18
Men’s		56,112	20			56,608	20
Children’s		46,081	17			45,264	17
Total		148,935	54			149,281	55
Accessories and Other		14,425	6			13,289	5
Total	$	274,645	100	%	$	269,181	100	%

(In thousands)	Thirty-nine Weeks Ended November 2, 2019				Thirty-nine Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	187,834	24	%	$	185,525	23	%
Men’s		111,417	14			107,633	14
Children’s		40,649	5			38,186	5
Total		339,900	43			331,344	42
Athletics:
Women’s		139,457	18			143,583	18
Men’s		166,253	21			170,453	22
Children’s		112,605	14			113,069	14
Total		418,315	53			427,105	54
Accessories and Other		38,461	4			36,543	4
Total	$	796,676	100	%	$	794,992	100	%

Returns and Refunds

Our policy is to allow customers to exchange or return products for a refund within a limited period of time.  We have established a returns allowance based upon historical experience in order to estimate these transactions.  This allowance is recorded as a reduction in sales with a corresponding refund liability recorded in accrued and other liabilities.  The estimated cost of merchandise inventory is recorded as a reduction to cost of sales and an increase in merchandise inventories.  At each of November 2, 2019 and February 2, 2019, approximately $600,000 of refund liabilities and $410,000 of right of return assets associated with estimated product returns were recorded in our condensed consolidated balance sheets.  At November 3, 2018, approximately $706,000 of refund liabilities and $474,000 of right of return assets associated with estimated product returns were recorded in our condensed consolidated balance sheet.

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Contract Liabilities

We sell gift cards in our brick-and-mortar stores and through our e-commerce and mobile platforms.  Gift card purchases are recorded as an increase to contract liabilities at the time of purchase and a decrease to contract liabilities when a customer redeems a gift card.  Estimated breakage is determined based on historical breakage percentages and recognized as revenue based on expected gift card usage.  We do not record breakage revenue when escheat liability to relevant jurisdictions exists.At November 2, 2019, February 2, 2019 and November 3, 2018, approximately $1.1 million, $1.6 million and $1.2 million, respectively, of contract liabilities associated with unredeemed gift cards were recorded in our condensed consolidated balance sheets.  We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions within two years.  Breakage revenue associated with our gift cards of $29,000 and $91,000 was recognized in net sales during the thirteen and thirty-nine weeks ended November 2, 2019, respectively.  Breakage revenue associated with our gift cards of $34,000 and $111,000 was recognized in net sales during the thirteen and thirty-nine weeks ended November 3, 2018, respectively.  

We offer our customers the opportunity to enroll in our Shoe Perks loyalty rewards program (“Shoe Perks”), which accrues points and provides customers with the opportunity to earn rewards.  Points under Shoe Perks are earned primarily by making purchases either in-store or through our online platform.  Once a certain threshold of accumulated points is reached, the customer earns a reward certificate, which is redeemable at any of our stores or online.  When a Shoe Perks customer makes a purchase, we allocate the transaction price between the goods and the loyalty reward points based on the relative standalone selling price.  The portion allocated to the material right is recorded as a contract liability for rewards that are expected to be redeemed.  We then recognize revenue based on an estimate of when customers exercise their rights to redeem the rewards, which incorporates an estimate of points expected to expire using historical rates.At November 2, 2019, February 2, 2019 and November 3, 2018, approximately $533,000, $245,000 and $286,000, respectively, of contract liabilities associated with loyalty rewards were recorded in our condensed consolidated balance sheets. We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions in less than one year.  Deferred revenue associated with our loyalty program of $632,000 and $1.5 millionwas recognized in net sales during the thirteen and thirty-nine weeks ended November 2, 2019, respectively.  Deferred revenue associated with our loyalty program of $473,000 and $1.1 million was recognized in net sales during the thirteen and thirty-nine weeks ended November 3, 2018, respectively.  

Note 7 – Leases

Effective February 3, 2019, we adopted Accounting Standards Codification Topic No. 842 – Leases.  This guidance requires us to recognize leased assets and the rights and obligations created by those leased assets on the balance sheet as operating right-of-use (“ROU”) assets and operating lease liabilities.  ROU assets and operating lease liabilities are calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or our incremental borrowing rate (“IBR”).  As the rate implicit in the lease is not readily determinable for our leases, we utilized our IBR, which was determined through the development of a synthetic credit rating and was based on the information available at the adoption date.  Adoption of the guidance resulted in the initial recognition of operating lease liabilities of $251.7 million as of February 3, 2019.  We recorded corresponding operating lease ROU assets based on the operating lease liabilities, reduced by net accrued rent, unamortized deferred lease incentives and prepaid rent totaling $25.8 million.  Moreover, as of the adoption date, we recorded $2.6 million of lease-related capitalized costs to beginning retained earnings, net of tax, that did not meet the definition of initial direct costs in accordance with the new guidance.    

Operating lease liabilities are increased by interest and reduced by payments each period, and ROU assets are amortized over the lease term.  Interest on operating lease liabilities and the amortization of ROU assets results in straight-line rent expense over the lease term.  If the operating ROU asset is impaired, we would amortize the remaining ROU asset in accordance with the subsequent-measurement guidance that applies to finance leases — typically, on a straight-line basis over the remaining lease term. However, in periods after the impairment, we would continue to present the ROU asset reduction and interest accretion related to the operating lease liability in selling, general and administrative expenses on the income statement.  We record variable lease expense primarily associated with contingent rent and reduced rent due to co-tenancy violations when incurred.

For new leases, renewals or amendments, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.  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 ROU assets.  The amount of depreciation and amortization, interest and rent expense would vary if different estimates and assumptions were used.  

We lease all of our retail stores and our single distribution center, which has a current lease term of 15 years, expiring in 2034.  We also enter into leases of equipment, copiers and billboards.  All of our leases are operating leases.  Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of November 2, 2019.  

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Our leases typically provide for fixed minimum rental payments, and certain leases provide for contingent rental payments based upon various specified percentages of sales above minimum levels.  In addition to rental payments, we are required to pay certain non-lease components, such as real estate taxes, insurance and common area maintenance (“CAM”), on most of our real estate leases.  Such non-lease components are typically variable in nature and are not included in the measurement of the lease liability, ROU asset or straight-line operating lease expense.  Certain real estate leases also contain escalation clauses for increases in minimum rentals, operating costs and taxes.

Our real estate leases typically include one or more options to renew, with renewal terms that typically extend the lease term for five years or more.  The exercise of lease renewal options is at our sole discretion.  When determining the lease term, we include option periods that are reasonably certain to be exercised.  Many of our leases also contain “co-tenancy” provisions, including the required presence and continued operation of certain anchor tenants in the adjoining retail space.  If a co-tenancy provision is triggered, we could have the right to terminate the lease early or to a reduction of rent.  In addition to co-tenancy provisions, certain leases contain “go-dark” provisions that allow us to cease operations while continuing to pay rent through the end of the lease term.

Lease-related costs reported in our condensed consolidated statements of income were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 2, 2019
Operating lease cost	$	13,700	$	41,094
Variable lease cost		447		874
CAM, property taxes and insurance		4,935		15,119
Total	$	19,082	$	57,087

Other information related to leases, including supplemental cash flow information, consists of:

(In thousands)	Thirty-nine Weeks Ended November 2, 2019
Cash paid for amounts included in the measurement of    operating lease liabilities	$	34,306
ROU assets obtained in exchange for operating lease liabilities	$	27,211
	As of November 2, 2019
Weighted-average remaining lease term for operating leases    (in years)	6.3
Weighted-average discount rate for operating leases		5.5	%

The following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the operating lease liabilities on the consolidated balance sheet as of November 2, 2019:

(In thousands)	Operating Leases
2019 (excluding the first nine fiscal months)	$	20,214
2020		55,232
2021		55,167
2022		47,956
2023		41,335
Thereafter to 2034		87,019
Total undiscounted lease payments		306,923
Less: Imputed interest		62,304
Total operating lease liabilities		244,619
Less: Current portion of operating lease liabilities		42,481
Long-term portion of operating lease liabilities	$	202,138

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Our future minimum lease payments for operating leases as of February 2, 2019, in accordance with legacy lease accounting guidance, were as follows:

(In thousands)	Operating Leases
2019	$	60,807
2020		51,937
2021		50,687
2022		41,536
2023		34,035
Thereafter to 2031		56,437
Total	$	295,439

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

Factors That May Affect Future Results

This quarterly report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. 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: general economic conditions in the areas of the continental United States in which our stores are located and the impact of the ongoing economic crisis in Puerto Rico on sales at, and cash flows of, our stores located in Puerto Rico; the effects and duration of economic downturns and unemployment rates; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; our ability to generate increased sales at our stores; 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; our ability to attract customers to our e-commerce website and to successfully grow our e-commerce sales; the potential impact of national and international security concerns on the retail environment; changes in our relationships with 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; changes in weather patterns, 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 effectiveness of our inventory management; the impact of natural disasters on our stores, as well as on consumer confidence and purchasing in general; 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 cyber-security breach; our ability to manage our third-party vendor relationships; our ability to successfully execute our business strategy, including the availability of desirable store locations at acceptable lease terms, 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; the impact of regulatory changes in the United States and the countries where our manufacturers are located; the resolution of litigation or regulatory proceedings in which we are or may become involved; our ability to meet our labor needs while controlling costs; and future stock repurchases under our stock repurchase program and future dividend payments. For a more detailed discussion of certain risk factors, see the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information to assist the reader in better understanding and evaluating our financial condition and results of operations. We encourage you to read this in conjunction with our Condensed Consolidated Financial Statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 as filed with the SEC.

Overview of Our Business

Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, providing the convenience of shopping at any of our store locations or online at shoecarnival.com.  Our stores combine competitive pricing with a fun and promotional, in-store marketing effort that encourages customer participation and injects fun and surprise into every shopping experience.  We believe this fun and promotional atmosphere results in 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.  A similar customer experience is reflected in our e-commerce site through special promotions and limited time sales, along with relevant product stories featured on our home page.  

Our objective is to be the destination retailer-of-choice for a wide range of consumers seeking value-priced, current season name brand and private label footwear.  Our product assortment includes dress and casual shoes, sandals, boots and a wide assortment of athletic shoes for the entire family in four general categories - women’s, men’s, children’s and athletics.  In addition to footwear, our stores carry selected accessory items such as socks, belts, shoe care items, handbags, sport bags, backpacks and wallets.  Our e-commerce site offers customers an opportunity to choose from a large selection of products in all of the same categories of footwear with a depth of sizes and colors that may not be available in our stores and introduces our concept to consumers who are new to Shoe Carnival in both existing and new markets.

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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. However, because future events and economic conditions are inherently uncertain, our actual results could differ materially from these estimates. Our accounting policies that require more significant judgments include those with respect to merchandise inventories, valuation of long-lived assets, insurance reserves, leases and income taxes.  Other than our new accounting policy on leases, which we adopted in the first quarter of fiscal 2019 and is discussed in Note 7 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the accounting policies that require more significant judgment are discussed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

With the exception of our newly adopted accounting policy on leases, there have been no material changes to our critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019. See Note 3 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information on recently issued accounting pronouncements.

Results of Operations Summary Information

	Number of Stores								Store Square Footage
	Beginning						End of		Net			End		Comparable
Quarter Ended	Of Period		Opened		Closed		Period		Change			of Period		Store Sales
May 4, 2019		397		0		2		395		(22,000	)		4,246,000		(0.2	)%
August 3, 2019		395		0		2		393		(16,000	)		4,230,000		1.4	%
November 2, 2019		393		1		1		393		1,000			4,231,000		3.5	%
Year-to-date		397		1		5		393		(37,000	)		4,231,000		1.6	%
May 5, 2018		408		0		3		405		(31,000	)		4,360,000		1.3	%
August 4, 2018		405				3		402		(36,000	)		4,324,000		6.7	%
November 3, 2018		402		3		3		402		(5,000	)		4,319,000		4.5	%
Year-to-date		408		3		9		402		(72,000	)		4,319,000		4.2	%

Comparable store sales for the periods indicated include stores that have been open for 13 full months after such store’s grand opening prior to the beginning of the period, including those stores that have been relocated or remodeled. Therefore, stores opened or closed during the periods indicated are not included in comparable store sales. We include e-commerce sales in our comparable store sales. Due to our multi-channel retailer strategy, we view e-commerce sales as an extension of our physical stores.

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

	Thirteen Weeks Ended November 2, 2019			Thirteen Weeks Ended November 3, 2018			Thirty-nine Weeks Ended November 2, 2019			Thirty-nine Weeks Ended November 3, 2018
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales (including buying, distribution and    occupancy costs)		69.1			69.8			69.6			69.5
Gross profit		30.9			30.2			30.4			30.5
Selling, general and administrative expenses		24.3			24.3			24.2			24.4
Operating income		6.6			5.9			6.2			6.1
Interest income		(0.1	)		(0.1	)		(0.1	)		0.0
Income tax expense		1.7			1.5			1.3			1.5
Net income		5.0	%		4.5	%		5.0	%		4.6	%

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Executive Summary for Third Quarter EndedNovember 2, 2019

During the third quarter of fiscal 2019, we achieved a comparable store sales increase of 3.5%, which was in addition to the 4.5% comparable store sales increase in the third quarter of fiscal 2018. Our broad-based sales growth, which was across all product categories, geographies, and sales channels, was primarily driven by non-athletic sales.  Fiscal year 2019 marked the 17^th consecutive year we have recognized a comparable store sales increase during the month of August, our peak back-to-school season.  During the third quarter of fiscal 2019, our brick-and-mortar store and e-commerce traffic and store conversion increased, which also contributed to the $5.5 million increase in net sales year-over-year.  We ended the quarter with inventory up 1.4% on a per-store basis as we continued to purchase inventory ahead of any new tariffs that might go into effect in the future.

Highlights for the third quarter of fiscal 2019 and a brief discussion of some key initiatives are as follows:

• Net sales increased 2.0% to $274.6 million, compared to the third quarter last year.  

• Diluted earnings per share was a quarterly record of $0.94, a 23.7% increase over the third quarter of fiscal 2018.

• Gross profit margin for the third quarter increased 0.7% to 30.9% compared to 30.2% in the third quarter of fiscal 2018.  This was driven by an increase in sales of women’s fashion product, which typically carry a higher margin, along with the leveraging effect of higher sales on lower distribution costs.

• We purchased 521,800 shares of our common stock during the third quarter of fiscal 2019 at a total cost of $16.9 million.

• We ended the quarter with $33.7 million in cash and cash equivalents and no outstanding debt.

• We continue to invest in our Customer Relationship Management (“CRM”) program, and our initial implementation of CRM was placed into service during the third quarter of fiscal 2019.  We believe that our holistic approach to CRM will be a sales driver and that the data received and the insight our real estate team and merchants are gaining as a result of our CRM program will allow us to better merchandise our stores, market to specific customers and aid in identifying new store opportunities.  

• We believe early results of our CRM program have enabled us to grow our Shoe Perks customer loyalty membership to over 23 million members at the end of the third quarter of fiscal 2019, an 11% increase over the third quarter of the prior year.  Additionally, we experienced a 61% increase in Gold membership status as of the end of the third quarter of fiscal 2019 compared to as of the end of the third quarter of the prior year.  During the first nine months of fiscal 2019, Gold members spent on average over $15 more per transaction than basic members spent per transaction.  As we continue to leverage our CRM capabilities, we believe we will continue to convert additional loyalty members to Gold status and grow our active shopper database.

• We expect to open six to eight new stores in fiscal 2020 within our existing 35-state geographic footprint, leading to flat to slightly positive net store growth in fiscal 2020.

Results of Operations for the Third Quarter Ended November 2, 2019

Net Sales

Net sales increased $5.5 million to $274.6 million during the third quarter of fiscal 2019, a 2.0% increase over the prior year’s third quarter net sales of $269.2 million. Of this change in net sales, $9.2 million was attributable to the 3.5% increase in comparable store sales and $1.2 million was attributable to the four new stores opened since the beginning of the third quarter of fiscal 2018.  These increases were partially offset by a loss in sales of $4.2 million from the 13 stores closed over the same period and a decrease in sales of $0.7 million year-over-year attributable to our other non-comparable stores.  The increase in comparable store sales, including e-commerce sales, was primarily driven by higher traffic and store conversion.

Gross Profit

Gross profit increased $3.5 million to $84.7 million during the third quarter of fiscal 2019 compared to gross profit of $81.2 million for the third quarter of fiscal 2018 primarily due to higher sales. Our gross profit margin increased to 30.9% compared to 30.2% in the third quarter of fiscal 2018. The increased profit margin was positively impacted by an increase in sales of women’s non-athletic product, which typically carry a higher margin, lower distribution costsand the leveraging of expenses against a higher sales base.      

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $1.4 million in the third quarter of fiscal 2019 to $66.6 million compared to $65.2 million in the third quarter of fiscal 2018. As a percentage of sales, these expenses remained flat at 24.3% compared to the third quarter of fiscal 2018. Significant changes in selling, general and administrative expenses for the third quarter included increases in payroll, incentive compensation, employee benefits and store closing costs, which were partially offset by decreases in equity compensation, depreciation and advertising expenses and the impact of operating fewer stores during the quarter.  Additionally, during the third quarter of fiscal 2018, we recorded a net gain of $911,000 associated with insurance recoveries related to our Puerto Rico operations, which reduced selling, general and administrative expenses in that year.    

Store closing costs included in selling, general and administrative expenses were $639,000 in the third quarter of fiscal 2019 and $580,000 in the third quarter last year.  We closed one store in the third quarter of 2019 and three stores in the third quarter of fiscal 2018.  Included in store closing costs were non-cash impairments of fixed assets of $561,000 on three stores recorded during the third quarter of fiscal 2019.  There were no impairments of long-lived assets recorded in the same prior year period.  

Pre-opening expenses included in selling, general and administrative expenses were $43,000 in the third quarter of fiscal 2019 compared to $108,000 in the third quarter of fiscal 2018. We opened one new store in the third quarter of fiscal 2019 compared to three new stores in the third quarter of fiscal 2018. Pre-opening costs, such as advertising, payroll and supplies, incurred prior to the opening of a new store are charged to expense in the period in which they are incurred.  The total amount of pre-opening expense incurred will vary by store depending on the specific market and the promotional activities involved.

Income Taxes

The effective income tax rate for the third quarter of fiscal 2019 was 24.9% as compared to 25.9% for the same period in fiscal 2018.  The lower tax rate in the quarter was primarily driven by the reversal of a valuation allowance associated with our Puerto Rico operations.

Results of Operations for the Nine-Month Period Ended November 2, 2019

Net Sales

Net sales increased $1.7 million to $796.7 million for the nine-month period ended November 2, 2019, a 0.2% increase compared to net sales of $795.0 million for the nine-month period ended November 3, 2018.  Of this change in net sales, $12.5 million was attributable to the 1.6% increase in comparable store sales and $3.9 million was attributable to the four new stores opened since the beginning of fiscal 2018.  These increases were partially offset by a loss in sales of $12.4 million from the 19 stores closed over the same period and a decrease in sales of $2.3 million year-over-year attributable to our other non-comparable stores.  

Gross Profit

Gross profit decreased $357,000 to $242.0 million during the first nine months of fiscal 2019 compared to gross profit of $242.3 million for the first nine months of fiscal 2018, as increased sales and lower merchandise costs were more than offset by higher occupancy costs. The gross profit margin for the first nine months of fiscal 2019 decreased to 30.4% from 30.5% in the comparable prior year period primarily due to the increase in occupancy costs resulting from higher property taxes and common area maintenance passed through from landlords.   Additionally, occupancy expense was lower during the first nine months of fiscal 2018 as a result of a $1.0 million lease termination benefit recognized for two stores in Puerto Rico where the landlord failed to make contractually required repairs.  

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $1.5 million in the first nine months of fiscal 2019 to $192.5 million compared to $194.1 million in the same period last year. As a percentage of sales, these expenses decreased to 24.2% in the first nine months of fiscal 2019 from 24.4% in the first nine months of fiscal 2018.  The overall decrease in selling, general and administrative expenses during the first nine months of fiscal 2019 was primarily due to a decrease in incentive and stock-based compensation, lower depreciation expense, lower store closing costs and the impact ofoperating fewer stores during the first nine months of fiscal 2019.  These decreases were partially offset by higher store level payroll and benefit costs recognized in the first nine months of fiscal 2019 compared to the first nine months of fiscal 2018 and the net gain associated with insurance recoveries recognized in the first nine months of fiscal 2018.

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Store closing costsincluded in selling, general and administrative expenses were $1.1 million in the first nine months of fiscal 2019 and $1.9 millionin the first nine months of last year.  We closed five stores in the first nine months of fiscal 2019 and nine stores in the first nine months of fiscal 2018.  Included in store closing costs were non-cash impairments of fixed assets of $604,000 on four stores recorded during the first nine months of fiscal 2019.  There were no impairments of long-lived assets recorded during the first nine months of fiscal 2018.  

Pre-opening expenses included in selling, general and administrative expenses were $43,000 in the first nine months of fiscal 2019 and $112,000 in the first nine months of fiscal 2018.  We opened one new store in the first nine months of fiscal 2019 compared to three new stores in the first nine months of fiscal 2018.  Pre-opening costs, such as advertising, payroll and supplies, incurred prior to the opening of a new store are charged to expense in the period in which they are incurred.  The total amount of pre-opening expense incurred will vary by store depending on the specific market and the promotional activities involved.  

Income Taxes

The effective income tax rate for the first nine months of fiscal 2019 was 20.9% compared to 24.2% for the same period in fiscal 2018.  The change in the effective tax rate for the first nine months of fiscal 2019 was primarily due to the third quarter reversal of a valuation allowance and a $1.9 million tax benefit related to the vesting of stock-based compensation recognized during the first quarter of fiscal 2019.  Our provision for income tax expense is based on the current estimate of our annual effective tax rate and is adjusted as necessary for quarterly events.  For the full year of fiscal 2019, we expect our tax rate to be approximately 21.3% compared to 24.3% last year.  The reduction in our expected annual tax rate for fiscal 2019 is primarily the result of the reversal of the valuation allowance and the tax benefit related to the vesting of stock-based compensation described above.  

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents on hand, cash generated from operations and availability under our credit facility.  We believe these resources will be sufficient to fund our cash needs, as they arise, for at least the next 12 months. Our primary uses of cash are for working capital, which are principally inventory purchases; store initiatives; potential dividend payments; potential share repurchases under our share repurchase program; the financing of capital projects, including investments in new systems and various other commitments and obligations.

Cash Flow - Operating Activities

Our net cash provided by operating activities was $28.0 million in the first nine months of fiscal 2019 compared to $37.8 million in the first nine months of fiscal 2018. These amounts reflect our income from operations adjusted for non-cash items and working capital changes.  The $9.7 million decrease in operating cash flow was primarily due to the timing of payments for inventory and payments related to developing our CRM and order management projects, which are hosted arrangements. The current ratio was 2.6 as of November 2, 2019 compared to 4.2 as of November 3, 2018.  This decrease was primarily due to classifying a portion of our operating lease liabilities as current in fiscal 2019 due to the adoption of the new lease accounting guidance.  

Cash Flow - Investing Activities

Our cash outflows for investing activities are primarily for capital expenditures. During the first nine months of fiscal 2019, we expended $15.1 million for the purchase of property and equipment, of which approximately $7 million was for the purchase of our corporate headquarters and the remainder was for remodels of existing stores, investments in technology and normal asset replacement activities. During the first nine months of fiscal 2018, we expended $5.0 million for the purchase of property and equipment, primarily related to remodels of existing stores, investments in technology and normal asset replacement activities.

Cash Flow - Financing Activities

Our cash outflows for financing activities were primarily for cash dividend payments, share repurchases and payments on our credit facility described below. Shares of our common stock can be either acquired as part of a publicly announced repurchase program or withheld by us in connection with employee payroll tax withholding upon the vesting of equity awards. Our cash inflows from financing activities have represented purchases under our Employee Stock Purchase Plan and borrowings under our credit facility.

During the first nine months of fiscal 2019, net cash used in financing activities was $46.3 million compared to $42.8 million in the first nine months of fiscal 2018. The increase in net cash used in financing activities was primarily due to a $10.7 million increase for shares withheld upon the vesting of equity awards and an $873,000 increase in dividends paid during the first nine months of fiscal 2019 compared to the first nine months of fiscal 2018, partially offset by a $8.1 million decrease in common stock repurchased in the first nine months of fiscal 2019 compared to the first nine months of fiscal 2018.

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Capital Expenditures

Capital expenditures for fiscal 2019, including actual expenditures during the first nine months, are expected to be between $18 million and $19 million, with approximately $11 million to be used for one new store, relocations, remodels and the purchase of our corporate headquarters, which we purchased in the first quarter of fiscal 2019 for $7 million.  The remaining capital expenditures are expected to be, or have been, incurred for other store improvements, continued investments in technology and normal asset replacement activities.  Lease incentives to be received from landlords during fiscal 2019, including actual amounts received during the first nine months, are expected to be approximately $1.9 million. The actual amount of cash required for capital expenditures for store operations depends in part on the number of new stores opened and relocated, the amount of lease incentives, if any, received from landlords and the number of stores remodeled.  

Store Openings and Closings

Increasing market penetration by opening new stores has historically been a key component of our growth strategy, and our focus continues to be on generating positive long-term financial performance for our store portfolio.  As we leverage customer data from our CRM program, and as more attractive real estate opportunities become available, we will continue to pursue opportunities for brick-and-mortar store growth across existing large and mid-size markets.  In fiscal 2020, we expect to open six to eight new stores within our existing 35-state geographic footprint, and we expect flat to slightly positive net store growth.  The opening of new stores is 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 in areas we target for expansion.  We utilize a formal review process in our evaluation of potential new store sites as well as for decisions surrounding leases on existing store locations.  Our approach is both qualitative and quantitative in nature.  We look to continually enhance this process with tools such as real estate software used for portfolio analysis that aid in identifying viable locations for future expansion and identifying potential store closings and relocations, as well as additional information we learn about customers from our CRM program.  

We opened one store in the first nine months of fiscal 2019 and do not expect to open any new stores in the fourth quarter of fiscal 2019.  Pre-opening expenses, including rent, freight, advertising, salaries and supplies, are presently expected to total approximately $43,000 for fiscal 2019.  During fiscal 2018, we opened three new stores and expended $288,000 on pre-opening expenses, or an average of $96,000 per store.

We closed five stores during the first nine months of fiscal 2019. There are no expected store closures for the fourth quarter of fiscal 2019.  Over the past several years, we have analyzed our entire portfolio of stores, with a concentration on underperforming stores, to meet our long-term goal of increasing shareholder value through increasing operating income. Our objective is to identify and address underperforming stores that produce low or negative contribution and either renegotiate lease terms, relocate or close the stores.  Even though this could reduce our overall net sales volume, we believe this strategy has realized, and will continue to realize, long-term improvement in operating income and diluted earnings 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. The timing and actual amount of expense recorded in closing a store can vary significantly depending, in part, on the period in which management commits to a closing plan, the remaining basis in the fixed assets to be disposed of at closing, and the amount of any lease buyout. We will continue to review our store portfolio based on our view of the internal and external opportunities and challenges in the marketplace.

Dividends

On September 19, 2019, our Board of Directors approved the payment of our third quarter cash dividend to our shareholders. The dividend of $0.085 per share was paid on October 21, 2019 to shareholders of record as of the close of business on October 7, 2019.

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. Our Credit Agreement (as defined below) 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 do not exceed $10.0 million.

Credit Facility

On March 27, 2017, we entered into a second amendment of our current unsecured credit agreement (the “Credit Agreement”) to extend the expiration date by five years to March 27, 2022 and to renegotiate certain terms and conditions.  The Credit Agreement, as amended,continues to provide for up to $50.0 million in cash advances and commercial and standby letters of credit with borrowing limits based on eligible inventory, which amount may be increased from time to time by up to an additional $50.0 million, without the consent of any lender, if certain conditions are met.  The Credit Agreement contains covenants which stipulate:  (1) Total Shareholders’ Equity (as defined in the Credit Agreement) will not fall below $250.0 million at the end of each fiscal quarter; (2) the ratio of funded debt plus three times rent to EBITDA (as defined in the Credit Agreement) plus rent will not exceed 2.5 to 1.0; (3) the aggregate amount of cash dividends for a fiscal year will not exceed $10.0 million; and (4) distributions in the form of redemptions of Equity Interests (as defined

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in the Credit Agreement) can be made solely with cash on hand so long as before and immediately after such distributions there are no revolving loans outstanding under the Credit Agreement.  We were in compliance with these covenants as of November 2, 2019.  Should a default condition be reported, the lenders may preclude additional borrowings and call all loans and accrued interest at their discretion.  The credit facility bears interest, at our option, at (1) the agent bank’s prime rate as defined in the Credit Agreement plus 1%, with the prime rate defined as the greater of (a) the Federal Fund rate plus 0.50% or (b) the interest rate announced from time to time by the agent bank as its “prime rate” or (2) LIBOR plus 1.25% to 2.50%, depending on our achievement of certain performance criteria.  A commitment fee is charged at 0.20% to 0.35% per annum, depending on our achievement of certain performance criteria, on the unused portion of the bank group’s commitment.  There were no borrowings outstanding under the credit facility and letters of credit outstanding were $1.2 million at November 2, 2019.  As of November 2, 2019, $48.8million was available to us for additional borrowings under the credit facility.

Share Repurchase Program

On December 13, 2018, our Board of Directors authorized a new share repurchase program for up to $50.0 million of outstanding common stock, effective January 1, 2019. The purchases may be made in the open market or through privately negotiated transactions from time to time through December 31, 2019 and in accordance with applicable laws, rules and regulations. The share repurchase program may be amended, suspended or discontinued at any time and does not commit us to repurchase shares of our common stock. We have funded, and intend to continue to fund, the share repurchase program from cash on hand, and any shares acquired will be available for stock-based compensation awards and other corporate purposes.  The actual number and value of the shares to be purchased will depend on the performance of our stock price and other market conditions.  

During the third quarter of fiscal 2019, we repurchased 521,800 shares of common stock at a total cost of $16.9 million under the new share repurchase program. During the first nine months of fiscal 2019, we repurchased 932,968 shares of common stock at a total cost of $30.9 million under the share repurchase program. The amount that remained available under the share repurchase program at November 2, 2019 was $19.1 million.  

Seasonality and Quarterly Results

Our quarterly results of operations have fluctuated, and are expected to continue to fluctuate in the future, primarily as a result of seasonal variances and the timing of sales and costs associated with opening new stores and closing underperforming stores.  Non-capital expenditures, such as advertising and payroll incurred prior to the opening of a new store, are charged to expense as incurred. The timing and actual amount of expense recorded in closing an individual store can vary significantly depending, in part, on the period in which management commits to a closing plan, the remaining basis in the fixed assets to be disposed at closing and the amount of any lease buyout.  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.

We have three distinct peak selling periods: Easter, back-to-school and Christmas.  To prepare for our peak shopping seasons, we must order and keep in stock significantly more merchandise than we would carry during other parts of the year.  Any unanticipated decrease in demand for our products during these peak shopping seasons could require us to sell excess inventory at a substantial markdown, which could reduce our net sales and gross margins and negatively affect our profitability.  Our operating results depend significantly upon the sales generated during these periods.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in that the interest payable under 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. We had no borrowings under our credit facility during the third quarter of fiscal 2019, and a 1% change in the weighted average interest rate charged under our credit facility would not have yielded a material fluctuation of interest expense for the nine months ended November 2, 2019.  

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of November 2, 2019, that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no significant changes in our internal control over financial reporting that occurred during the quarter ended November 2, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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SHOE CARNIVAL, INC.

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number Of Shares Purchased as Part of Publicly Announced Programs (2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under Programs (2)
August 4, 2019 to August 31, 2019		0	$	0		0	$	35,988,000
September 1, 2019 to October 5, 2019		375,693	$	31.97		373,260	$	24,055,000
October 6, 2019 to November 2, 2019		149,265	$	33.45		148,540	$	19,085,000
		524,958				521,800

(1) Total number of shares purchased includes 3,158 shares withheld by us in connection with employee payroll tax withholding upon the vesting of restricted stock awards.

(2) On December 13, 2018, our Board of Directors authorized a new share repurchase program for up to $50.0 million of our outstanding common stock, effective January 1, 2019 and expiring on December 31, 2019.

ITEM 6. EXHIBITS

EXHIBIT INDEX

		Incorporated by Reference To
Exhibit No.	Description	Form	Exhibit	Filing Date	Filed Herewith
3-A	Amended and Restated Articles of Incorporation of Registrant	8-K	3-A	06/14/2013
3-B	By-laws of Registrant, as amended to date	8-K	3-B	06/14/2013
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101	The following materials from Shoe Carnival, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2019, formatted in XBRL (Extensible Business Reporting Language): (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Shareholders’ Equity, (4) Condensed Consolidated Statements of Cash Flows, and (5) Notes to Condensed Consolidated Financial Statements.				X

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SHOE CARNIVAL, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed, on its behalf by the undersigned thereunto duly authorized.

Date:  December 5, 2019	SHOE CARNIVAL, INC.
	(Registrant)

By: /s/ W. Kerry Jackson
W. Kerry Jackson
Senior Executive Vice President,
Chief Financial and Administrative Officer and Treasurer

(Duly Authorized Officer and Principal Financial Officer)

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EX-31.1

Exhibit 31.1

SHOE CARNIVAL, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Clifton E. Sifford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Shoe Carnival, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  December 5, 2019 By: /s/ Clifton E. Sifford
Clifton E. Sifford
Vice Chairman and
Chief Executive Officer

EX-31.2

Exhibit 31.2

SHOE CARNIVAL, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, W. Kerry Jackson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Shoe Carnival, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  December 5, 2019 By: /s/ W. Kerry Jackson
W. Kerry Jackson
Senior Executive Vice President,
Chief Financial and Administrative Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C.

SECTION 1350,

AS ADOPTED PURSUANT TO SECTION

906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Shoe Carnival, Inc. (the “Company”) on Form 10-Q for the period ending November 2, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifton E. Sifford, Vice Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  December 5, 2019 By: /s/ Clifton E. Sifford
Clifton E. Sifford
Vice Chairman and
Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C.

SECTION 1350,

AS ADOPTED PURSUANT TO SECTION

906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Shoe Carnival, Inc. (the “Company”) on Form 10-Q for the period ending November 2, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Kerry Jackson, Senior Executive Vice President, Chief Financial and Administrative Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  December 5, 2019 By: /s/ W. Kerry Jackson
W. Kerry Jackson
Senior Executive Vice President,
Chief Financial and Administrative Officer and Treasurer

XML

Revenue

9 Months Ended

Nov. 02, 2019

Revenue From Contract With Customer [Abstract]

Revenue

Note 6 – Revenue

Disaggregation of Revenue by Product Category

Revenue is disaggregated by product category below. Net sales and percentage of net sales for the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018 were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019				Thirteen Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	61,126	22	%	$	59,510	22	%
Men’s		35,446	13			33,946	13
Children’s		14,713	5			13,155	5
Total		111,285	40			106,611	40
Athletics:
Women’s		46,742	17			47,409	18
Men’s		56,112	20			56,608	20
Children’s		46,081	17			45,264	17
Total		148,935	54			149,281	55
Accessories and Other		14,425	6			13,289	5
Total	$	274,645	100	%	$	269,181	100	%

(In thousands)	Thirty-nine Weeks Ended November 2, 2019				Thirty-nine Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	187,834	24	%	$	185,525	23	%
Men’s		111,417	14			107,633	14
Children’s		40,649	5			38,186	5
Total		339,900	43			331,344	42
Athletics:
Women’s		139,457	18			143,583	18
Men’s		166,253	21			170,453	22
Children’s		112,605	14			113,069	14
Total		418,315	53			427,105	54
Accessories and Other		38,461	4			36,543	4
Total	$	796,676	100	%	$	794,992	100	%

Returns and Refunds

Our policy is to allow customers to exchange or return products for a refund within a limited period of time.  We have established a returns allowance based upon historical experience in order to estimate these transactions.  This allowance is recorded as a reduction in sales with a corresponding refund liability recorded in accrued and other liabilities.  The estimated cost of merchandise inventory is recorded as a reduction to cost of sales and an increase in merchandise inventories.  At each of November 2, 2019 and February 2, 2019, approximately $600,000 of refund liabilities and $410,000 of right of return assets associated with estimated product returns were recorded in our condensed consolidated balance sheets.  At November 3, 2018, approximately $706,000 of refund liabilities and $474,000 of right of return assets associated with estimated product returns were recorded in our condensed consolidated balance sheet.

Contract Liabilities

We sell gift cards in our brick-and-mortar stores and through our e-commerce and mobile platforms.  Gift card purchases are recorded as an increase to contract liabilities at the time of purchase and a decrease to contract liabilities when a customer redeems a gift card.  Estimated breakage is determined based on historical breakage percentages and recognized as revenue based on expected gift card usage.  We do not record breakage revenue when escheat liability to relevant jurisdictions exists.At November 2, 2019, February 2, 2019 and November 3, 2018, approximately $1.1 million, $1.6 million and $1.2 million, respectively, of contract liabilities associated with unredeemed gift cards were recorded in our condensed consolidated balance sheets.  We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions within two years.  Breakage revenue associated with our gift cards of $29,000 and $91,000 was recognized in net sales during the thirteen and thirty-nine weeks ended November 2, 2019, respectively.  Breakage revenue associated with our gift cards of $34,000 and $111,000 was recognized in net sales during the thirteen and thirty-nine weeks ended November 3, 2018, respectively.  

We offer our customers the opportunity to enroll in our Shoe Perks loyalty rewards program (“Shoe Perks”), which accrues points and provides customers with the opportunity to earn rewards.  Points under Shoe Perks are earned primarily by making purchases either in-store or through our online platform.  Once a certain threshold of accumulated points is reached, the customer earns a reward certificate, which is redeemable at any of our stores or online.  When a Shoe Perks customer makes a purchase, we allocate the transaction price between the goods and the loyalty reward points based on the relative standalone selling price.  The portion allocated to the material right is recorded as a contract liability for rewards that are expected to be redeemed.  We then recognize revenue based on an estimate of when customers exercise their rights to redeem the rewards, which incorporates an estimate of points expected to expire using historical rates.At November 2, 2019, February 2, 2019 and November 3, 2018, approximately $533,000, $245,000 and $286,000, respectively, of contract liabilities associated with loyalty rewards were recorded in our condensed consolidated balance sheets. We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions in less than one year.  Deferred revenue associated with our loyalty program of $632,000 and $1.5 millionwas recognized in net sales during the thirteen and thirty-nine weeks ended November 2, 2019, respectively.  Deferred revenue associated with our loyalty program of $473,000 and $1.1 million was recognized in net sales during the thirteen and thirty-nine weeks ended November 3, 2018, respectively.  

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Stock-Based Compensation (Tables)

9 Months Ended

Nov. 02, 2019

Summary of Restricted Stock Awards Transactions

The following table summarizes transactions for our restricted stock awards pursuant to our stock-based compensation plans:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock at February 2, 2019		825,281		$	23.94
Granted		13,548			26.58
Vested		(711,701	)		23.89
Forfeited or expired		(42,345	)		24.27
Restricted stock at November 2, 2019		84,783		$	24.62

Summary of SARs Activity

The following table summarizes the SARs activity:

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at February 2, 2019		0	$	0.00
Granted		43,900		34.95
Forfeited		0		0.00
Exercised		0		0.00
Outstanding at November 2, 2019		43,900	$	34.95		2.4

Schedule of SARs Assumptions

The fair value was estimated using a trinomial lattice model with the following assumptions:

	November 2, 2019
Risk free interest rate yield curve	1.53% - 1.58%
Expected dividend yield	1.0%
Expected volatility	50.03%
Maximum life	2.4 Years
Exercise multiple		1.29
Maximum payout	$	10.00
Employee exit rate	2.2% - 9.0%

Restricted Stock Units and Performance Stock Units [Member]

Summary of Stock Compensation Expense

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards, restricted stock units and performance stock units:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the    recognized income tax benefit	$	1,655	$	4,193	$	5,043	$	7,037
Income tax benefit	$	412	$	1,085	$	1,055	$	1,706

Stock Appreciation Rights (SARs) [Member]

Summary of Stock Compensation Expense

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the recognized    income tax benefit	$	104	$	0	$	139	$	129
Income tax benefit	$	26	$	0	$	29	$	30

Restricted Stock Units and Performance Stock Units [Member]

Summary of Restricted Stock Awards Transactions

The following table summarizes transactions for our restricted stock units and performance stock units pursuant to the 2017 Plan:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock units and performance stock units at    February 2, 2019		202,667		$	24.98
Granted		187,745			31.29
Vested		(92,759	)		24.55
Forfeited		(13,161	)		26.82
Restricted stock units and performance stock units at    November 2, 2019		284,492		$	29.20

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Undiscounted Cash Flows to Operating Lease Liabilities on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 03, 2019	Feb. 02, 2019	Nov. 03, 2018
Leases [Abstract]
2019 (excluding the first nine fiscal months)	$ 20,214
2020	55,232
2021	55,167
2022	47,956
2023	41,335
Thereafter to 2034	87,019
Total undiscounted lease payments	306,923
Less: Imputed interest	62,304
Total operating lease liabilities	244,619	$ 251,700
Current portion of operating lease liabilities	42,481		$ 0	$ 0
Long-term portion of operating lease liabilities	$ 202,138		$ 0	$ 0

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Revenue (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018	Feb. 02, 2019
Revenue From Contract With Customer [Abstract]
Refund liabilities	$ 600,000	$ 706,000	$ 600,000	$ 706,000
Return assets		474,000		474,000	$ 410,000
Contract liabilities associated with unredeemed gift cards	1,100,000	1,200,000	1,100,000	1,200,000	1,600,000
Breakage revenue	29,000	34,000	91,000	111,000
Contract liabilities associated with loyalty rewards	533,000	286,000	533,000	286,000	$ 245,000
Deferred revenue	$ 632,000	$ 473,000	$ 1,500,000	$ 1,100,000

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Income Statement [Abstract]
Net sales	$ 274,645	$ 269,181	$ 796,676	$ 794,992
Cost of sales (including buying, distribution and occupancy costs)	189,911	187,963	554,707	552,666
Gross profit	84,734	81,218	241,969	242,326
Selling, general and administrative expenses	66,584	65,202	192,537	194,063
Operating income	18,150	16,016	49,432	48,263
Interest income	(163)	(273)	(580)	(392)
Interest expense	34	37	155	113
Income before income taxes	18,279	16,252	49,857	48,542
Income tax expense	4,553	4,206	10,426	11,766
Net income	$ 13,726	$ 12,046	$ 39,431	$ 36,776
Net income per share:
Basic	$ 0.95	$ 0.80	$ 2.71	$ 2.40
Diluted	$ 0.94	$ 0.76	$ 2.66	$ 2.36
Weighted average shares:
Basic	14,404	15,071	14,544	15,282
Diluted	14,556	15,812	14,826	15,544

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Description of Business and Basis of Presentation

9 Months Ended

Nov. 02, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Note 1 – Description of Business and Basis of Presentation

Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, providing the convenience of shopping at any of our store locations or online.  We offer customers a broad assortment of moderately-priced dress, casual and athletic footwear for men, women and children with an emphasis on national name brands. We differentiate our retail concept from our competitors by our distinctive, fun and promotional marketing efforts.  We are an Indiana corporation that was initially formed in Delaware in 1993 and reincorporated in Indiana in 1996.  References to “Shoe Carnival,” “we,” “us,” “our” and the “Company” in this Quarterly Report on Form 10-Q refer to Shoe Carnival, Inc. and its subsidiaries.

In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements and notes have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and contain all normal recurring adjustments necessary to present fairly our financial position and the results of our operations and our cash flows for the periods presented. Certain information and disclosures normally included in the notes to Condensed Consolidated Financial Statements have been condensed or omitted according to the rules and regulations of the SEC, although we believe that the disclosures are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

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Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 03, 2019	Feb. 02, 2019	Nov. 03, 2018
New Accounting Pronouncements And Changes In Accounting Principles [Abstract]
Operating Lease, Liability	$ 244,619	$ 251,700
Operating lease right-of-use assets	$ 222,148	25,800	$ 0	$ 0
Capital Lease Obligations		$ 2,600

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Stock-Based Compensation (Summary of Restricted Stock Awards Transactions) (Details)	9 Months Ended
	Nov. 02, 2019 $ / shares shares
Restricted Stock [Member]
Number of Shares
Outstanding at February 2, 2019 | shares	825,281
Granted | shares	13,548
Vested | shares	(711,701)
Forfeited or expired | shares	(42,345)
Outstanding at November 2, 2019 | shares	84,783
Weighted-Average Grant Date Fair Value
Outstanding at February 2, 2019 | $ / shares	$ 23.94
Granted | $ / shares	26.58
Vested | $ / shares	23.89
Forfeited or expired | $ / shares	24.27
Outstanding at November 2, 2019 | $ / shares	$ 24.62
Restricted Stock Units and Performance Stock Units [Member]
Number of Shares
Outstanding at February 2, 2019 | shares	202,667
Granted | shares	187,745
Vested | shares	(92,759)
Forfeited or expired | shares	(13,161)
Outstanding at November 2, 2019 | shares	284,492
Weighted-Average Grant Date Fair Value
Outstanding at February 2, 2019 | $ / shares	$ 24.98
Granted | $ / shares	31.29
Vested | $ / shares	24.55
Forfeited or expired | $ / shares	26.82
Outstanding at November 2, 2019 | $ / shares	$ 29.20

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Revenue (Schedule of Revenue Disaggregation by Product Category) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Disaggregation Of Revenue [Line Items]
Net sales	$ 274,645	$ 269,181	$ 796,676	$ 794,992
Non-Athletics [Member]
Disaggregation Of Revenue [Line Items]
Net sales	111,285	106,611	339,900	331,344
Non-Athletics [Member] | Women' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	61,126	59,510	187,834	185,525
Non-Athletics [Member] | Men' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	35,446	33,946	111,417	107,633
Non-Athletics [Member] | Children' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	14,713	13,155	40,649	38,186
Athletics [Member]
Disaggregation Of Revenue [Line Items]
Net sales	148,935	149,281	418,315	427,105
Athletics [Member] | Women' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	46,742	47,409	139,457	143,583
Athletics [Member] | Men' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	56,112	56,608	166,253	170,453
Athletics [Member] | Children' s [Member]
Disaggregation Of Revenue [Line Items]
Net sales	46,081	45,264	112,605	113,069
Accessories and Other [Member]
Disaggregation Of Revenue [Line Items]
Net sales	$ 14,425	$ 13,289	$ 38,461	$ 36,543
Sales Revenue Net [Member] | Geographic Concentration Risk [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	100.00%	100.00%	100.00%	100.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Non-Athletics [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	40.00%	40.00%	43.00%	42.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Non-Athletics [Member] | Women' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	22.00%	22.00%	24.00%	23.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Non-Athletics [Member] | Men' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	13.00%	13.00%	14.00%	14.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Non-Athletics [Member] | Children' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	5.00%	5.00%	5.00%	5.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Athletics [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	54.00%	55.00%	53.00%	54.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Athletics [Member] | Women' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	17.00%	18.00%	18.00%	18.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Athletics [Member] | Men' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	20.00%	20.00%	21.00%	22.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Athletics [Member] | Children' s [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	17.00%	17.00%	14.00%	14.00%
Sales Revenue Net [Member] | Geographic Concentration Risk [Member] | Accessories and Other [Member]
Disaggregation Of Revenue [Line Items]
Percentage of net sales	6.00%	5.00%	4.00%	4.00%

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Net Income Per Share

9 Months Ended

Nov. 02, 2019

Earnings Per Share Basic [Abstract]

Net Income Per Share

Note 2 - Net Income Per Share

The following tables set forth the computation of basic and diluted earnings per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

	Thirteen Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Net income available for basic common shares and    basic earnings per share	$	13,714			14,404	$	0.95	$	12,002			15,071	$	0.80
Diluted Earnings per Share:
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Adjustment for dilutive potential common shares		0			152				2			741
Net income available for diluted common shares and    diluted earnings per share	$	13,714			14,556	$	0.94	$	12,004			15,812	$	0.76

	Thirty-nine Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Net income available for basic common shares and    basic earnings per share	$	39,365			14,544	$	2.71	$	36,624			15,282	$	2.40
Diluted Earnings per Share:
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Adjustment for dilutive potential common shares		1			282				2			262
Net income available for diluted common shares and    diluted earnings per share	$	39,366			14,826	$	2.66	$	36,626			15,544	$	2.36

Our basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. During periods of undistributed losses, however, no effect is given to our participating securities because they do not share in the losses. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. No options to purchase shares of common stock were excluded in the computation of diluted shares for the periods presented.

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]
Balance at Feb. 03, 2018	$ 307,302	$ 205	$ (85,099)	$ 65,458	$ 326,738
Balance, shares at Feb. 03, 2018		20,529	(3,582)
Cumulative Effect on Retained Earnings, Net of Tax | Adoption of Accounting Standards Codification 606	620				620
Dividends declared	(3,799)				(3,799)
Employee stock purchase plan purchases	148		$ 143	5
Employee stock purchase plan purchases, shares			6
Restricted stock awards	0		$ (577)	577
Restricted stock awards, shares			(41)
Shares surrendered by employees to pay taxes on restricted stock	(312)		$ (312)
Shares surrendered by employees to pay taxes on restricted stock, shares			(12)
Purchase of common stock for treasury	(39,046)		$ (39,046)
Purchase of common stock for treasury, shares			(1,330)
Stock-based compensation expense	7,063			7,063
Net income	36,776				36,776
Balance at Nov. 03, 2018	308,752	$ 205	$ (124,891)	73,103	360,335
Balance, shares at Nov. 03, 2018		20,529	(4,959)
Balance at Aug. 04, 2018	313,764	$ 205	$ (104,882)	68,892	349,549
Balance, shares at Aug. 04, 2018		20,529	(4,440)
Dividends declared	(1,257)				(1,257)
Employee stock purchase plan purchases	41		$ 31	10
Employee stock purchase plan purchases, shares			1
Shares surrendered by employees to pay taxes on restricted stock	(37)		$ (37)
Shares surrendered by employees to pay taxes on restricted stock, shares			(1)
Purchase of common stock for treasury	(20,003)		$ (20,003)
Purchase of common stock for treasury, shares			(519)
Stock-based compensation expense	4,201			4,201
Other	(3)				(3)
Net income	12,046				12,046
Balance at Nov. 03, 2018	308,752	$ 205	$ (124,891)	73,103	360,335
Balance, shares at Nov. 03, 2018		20,529	(4,959)
Balance at Feb. 02, 2019	304,433	$ 205	$ (131,846)	75,631	360,443
Balance, shares at Feb. 02, 2019		20,529	(5,154)
Cumulative Effect on Retained Earnings, Net of Tax | Adoption of Accounting Standards Codification 842	(2,649)				(2,649)
Dividends declared	(3,728)				(3,728)
Employee stock purchase plan purchases	148		$ 146	2
Employee stock purchase plan purchases, shares			5
Restricted stock awards	0		$ 1,842	(1,842)
Restricted stock awards, shares		(2)	67
Shares surrendered by employees to pay taxes on restricted stock	(11,040)		$ (11,040)
Shares surrendered by employees to pay taxes on restricted stock, shares			(324)
Purchase of common stock for treasury	(30,915)		$ (30,915)
Purchase of common stock for treasury, shares			(933)
Stock-based compensation expense	5,068			5,068
Net income	39,431				39,431
Balance at Nov. 02, 2019	300,748	$ 205	$ (171,813)	78,859	393,497
Balance, shares at Nov. 02, 2019		20,527	(6,339)
Balance at Aug. 03, 2019	303,560	$ 205	$ (155,031)	77,374	381,012
Balance, shares at Aug. 03, 2019		20,528	(5,822)
Dividends declared	(1,241)				(1,241)
Employee stock purchase plan purchases	44		$ 43	1
Employee stock purchase plan purchases, shares			1
Restricted stock awards	0		$ 178	(178)
Restricted stock awards, shares		(1)	7
Shares surrendered by employees to pay taxes on restricted stock	(100)		$ (100)
Shares surrendered by employees to pay taxes on restricted stock, shares			(3)
Purchase of common stock for treasury	(16,903)		$ (16,903)
Purchase of common stock for treasury, shares			(522)
Stock-based compensation expense	1,662			1,662
Net income	13,726				13,726
Balance at Nov. 02, 2019	$ 300,748	$ 205	$ (171,813)	$ 78,859	$ 393,497
Balance, shares at Nov. 02, 2019		20,527	(6,339)

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Document and Entity Information - shares	9 Months Ended
	Nov. 02, 2019	Nov. 27, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 02, 2019
Entity Registrant Name	SHOE CARNIVAL INC
Entity Central Index Key	0000895447
Trading Symbol	SCVL
Current Fiscal Year End Date	--02-02
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		14,193,253
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	0-21360
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1736614
Title of 12(b) Security	Common Stock, par value $0.01 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Entity Address, Address Line One	7500 East Columbia Street
Entity Address, City or Town	Evansville
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47715
City Area Code	812
Local Phone Number	867-6471
Document Quarterly Report	true
Document Transition Report	false

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Stock Based Compensation (Schedule of SARs Assumptions) (Details) - Stock Appreciation Rights (SARs) [Member] - $ / shares	3 Months Ended	9 Months Ended
	Apr. 28, 2015	Nov. 02, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate yield curve, minimum		1.53%
Risk free interest rate yield curve, maximum		1.58%
Expected dividend yield		1.00%
Expected volatility		50.03%
Maximum life		2 years 4 months 24 days
Exercise multiple		$ 1.29
Maximum payout	$ 10.00	$ 10.00
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee exit rate		2.20%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee exit rate		9.00%

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Basic Earnings per Share:
Net income	$ 13,726	$ 12,046	$ 39,431	$ 36,776
Amount allocated to participating securities	(12)	(44)	(66)	(152)
Net income available for basic common shares and basic earnings per share	$ 13,714	$ 12,002	$ 39,365	$ 36,624
Basic	14,404	15,071	14,544	15,282
Basic	$ 0.95	$ 0.80	$ 2.71	$ 2.40
Diluted Earnings per Share:
Net income	$ 13,726	$ 12,046	$ 39,431	$ 36,776
Amount allocated to participating securities	(12)	(44)	(66)	(152)
Adjustment for dilutive potential common shares	0	2	1	2
Net income available for diluted common shares and diluted earnings per share	$ 13,714	$ 12,004	$ 39,366	$ 36,626
Adjustment for dilutive potential common shares	152	741	282	262
Net income available for diluted common shares and diluted earnings per share, Shares	14,556	15,812	14,826	15,544
Diluted	$ 0.94	$ 0.76	$ 2.66	$ 2.36

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Stock Based Compensation (Narrative) (Details) - USD ($)	3 Months Ended			9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Apr. 28, 2015	Nov. 02, 2019	Nov. 03, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available to be issued and sold pursuant to the 2017 Plan	1,000,000			1,000,000
Stock-based compensation expense for ESPP	$ 8,000	$ 7,000		$ 25,000	$ 26,000
Income tax benefit - ESPP	2,000	$ 2,000		$ 5,000	$ 6,000
Restricted stock awards granted weighted average grant date fair value				$ 26.58	$ 32.74
Fair value of stock awards vested during period				$ 17,000,000	$ 970,000
Unrecognized compensation cost, recognition period				4 months 24 days
Unrecognized compensation expense related to SARs	106,000			$ 106,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	297,000			$ 297,000
Unrecognized compensation cost, recognition period				4 months 24 days
Weighted average grant date fair value of awards				$ 26.58
Restricted Stock Unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 4,300,000			$ 4,300,000
Unrecognized compensation cost, recognition period				10 months 24 days
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock appreciation rights expiration date				Mar. 31, 2022
Defined maximum gain			$ 10.00	$ 10.00
Exercise price			$ 24.26	34.95
Weighted average grant date fair value of awards				$ 5.56

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Stock-Based Compensation

9 Months Ended

Nov. 02, 2019

Share Based Compensation [Abstract]

Stock-Based Compensation

Note 5 - Stock-Based Compensation

At our 2017 annual meeting of shareholders held on June 13, 2017, our shareholders approved a new equity incentive plan, the Shoe Carnival, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which replaced our 2000 Stock Option and Incentive Plan, as amended (the “2000 Plan”).  We may issue stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to eligible participants under the 2017 Plan.  According to the terms of the 2017 Plan, upon approval of the 2017 Plan by our shareholders, no further awards may be made under the 2000 Plan.  A maximum of 1,000,000 shares of our common stock are available for issuance and sale under the 2017 Plan.  In addition, any shares of our common stock subject to an award granted under the 2017 Plan, or to an award granted under the 2000 Plan that was outstanding on the date our shareholders approved the 2017 Plan, that expires, is cancelled or forfeited, or is settled for cash will, to the extent of such cancellation, forfeiture, expiration or cash settlement, automatically become available for future awards under the 2017 Plan.

Stock-based compensation includes stock options, cash-settled stock appreciation rights, restricted stock awards, restricted stock units and performance stock units.Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our employee stock purchase plan. For the thirteen and thirty-nine weeks ended November 2, 2019, stock-based compensation expense for the employee stock purchase plan was $8,000 before the income tax benefit of $2,000 and $25,000 before the income tax benefit of $5,000, respectively. For the thirteen and thirty-nine weeks ended November 3, 2018, stock-based compensation expense for the employee stock purchase plan was $7,000 before the income tax benefit of $2,000 and $26,000 before the income tax benefit of $6,000, respectively.

Restricted Stock

The following table summarizes transactions for our restricted stock awards pursuant to our stock-based compensation plans:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock at February 2, 2019		825,281		$	23.94
Granted		13,548			26.58
Vested		(711,701	)		23.89
Forfeited or expired		(42,345	)		24.27
Restricted stock at November 2, 2019		84,783		$	24.62

The weighted-average grant date fair value of restricted stock awards granted during the thirty-nine week periods ended November 2, 2019 and November 3, 2018 was $26.58 and $32.74, respectively. The total fair value at grant date of restricted stock awards that vested during the thirty-nine week periods ended November 2, 2019 and November 3, 2018 was $17.0 million and $970,000, respectively.

As of November 2, 2019, approximately $297,000 of unrecognized compensation expense remained related to both our performance-based and service-based restricted stock awards. The cost is expected to be recognized over a weighted average period of approximately 0.4 years.

The following table summarizes transactions for our restricted stock units and performance stock units pursuant to the 2017 Plan:

	Number of Shares			Weighted- Average Grant Date Fair Value
Restricted stock units and performance stock units at    February 2, 2019		202,667		$	24.98
Granted		187,745			31.29
Vested		(92,759	)		24.55
Forfeited		(13,161	)		26.82
Restricted stock units and performance stock units at    November 2, 2019		284,492		$	29.20

As of November 2, 2019, approximately $4.3 million of unrecognized compensation expense remained related to both our restricted stock units and performance stock units. The cost is expected to be recognized over a weighted average period of approximately 0.9 years.

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards, restricted stock units and performance stock units:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the    recognized income tax benefit	$	1,655	$	4,193	$	5,043	$	7,037
Income tax benefit	$	412	$	1,085	$	1,055	$	1,706

Cash-Settled Stock Appreciation Rights

Our cash-settled stock appreciation rights (“SARs”) were granted during the first quarter of fiscal 2019 to certain non-executive employees and will vest and become fully exercisable on March 31, 2020. Any unexercised SARs will expire on March 31, 2022.  Each SAR entitles the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our stock on the date of exercise less the exercise price, with a maximum amount of gain defined.  The SARs granted during the first quarter of fiscal 2019 were issued with a defined maximum gain of $10.00 over the exercise price of $34.95.  

During the first quarter of fiscal 2015, SARs were granted to certain non-executive employees, such that one-third of the shares underlying the SARs vested and became fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a five-year term from the date of grant, after which any unexercised SARs would expire.  Each SAR entitled the holder, upon exercise of their vested shares, to receive cash in an amount equal to the closing price of our stock on the date of exercise less the exercise price, with a defined maximum gain of $10.00 over the exercise price of $24.26.  During the second quarter of fiscal 2018, all remaining SARs granted during the first quarter of fiscal 2015 were exercised.

The following table summarizes the SARs activity:

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at February 2, 2019		0	$	0.00
Granted		43,900		34.95
Forfeited		0		0.00
Exercised		0		0.00
Outstanding at November 2, 2019		43,900	$	34.95		2.4

The fair value of these liability awards will be remeasured, using a trinomial lattice model, at each reporting period until the date of settlement. Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. The weighted-average fair value of outstanding, non-vested SAR awards as of November 2, 2019 was $5.56.

The fair value was estimated using a trinomial lattice model with the following assumptions:

	November 2, 2019
Risk free interest rate yield curve	1.53% - 1.58%
Expected dividend yield	1.0%
Expected volatility	50.03%
Maximum life	2.4 Years
Exercise multiple		1.29
Maximum payout	$	10.00
Employee exit rate	2.2% - 9.0%

The risk free interest rate was based on the U.S. Treasury yield curve in effect at the end of the reporting period. The expected dividend yield was based on our historical quarterly cash dividends, with the assumption that quarterly dividends would continue at that rate. Expected volatility was based on the historical volatility of our common stock. The exercise multiple and employee exit rate were calculated based on historical option data.

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirteen Weeks Ended November 3, 2018		Thirty-nine Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 3, 2018
Stock-based compensation expense before the recognized    income tax benefit	$	104	$	0	$	139	$	129
Income tax benefit	$	26	$	0	$	29	$	30

As of November 2, 2019, approximately $106,000 in unrecognized compensation expense remained related to non-vested SARs. This expense is expected to be recognized over a period of approximately 0.4 years.

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Fair Value Measurements (Tables)

9 Months Ended

Nov. 02, 2019

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on a Recurring Basis

The following table presents assets that are measured at fair value on a recurring basis at November 2, 2019, February 2, 2019 and November 3, 2018.  We have no material liabilities measured at fair value on a recurring or non-recurring basis.

	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Total
As of November 2, 2019
Cash equivalents - money market mutual funds	$	21,046	$	0	$	0	$	21,046
As of February 2, 2019
Cash equivalents - money market mutual funds	$	68,500	$	0	$	0	$	68,500
As of November 3, 2018
Cash equivalents - money market mutual funds	$	45,061	$	0	$	0	$	45,061

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Schedule of Future Minimum Rental Commitments for Operating Leases (Details) $ in Thousands	Feb. 02, 2019 USD ($)
Leases [Abstract]
2019	$ 60,807
2020	51,937
2021	50,687
2022	41,536
2023	34,035
Thereafter to 2031	56,437
Total	$ 295,439

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Lease - Additional Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Feb. 03, 2019	Feb. 02, 2019	Nov. 03, 2018
Leases [Abstract]
Operating Lease, Liability	$ 244,619	$ 251,700
Operating lease right-of-use assets	$ 222,148	25,800	$ 0	$ 0
Capital Lease Obligations		$ 2,600
Term of contract	15 years
Lease Expiration Year	2034

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Fair Value Measurements (Schedule of Assets Measure at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - money market mutual funds	$ 21,046	$ 68,500	$ 45,061
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - money market mutual funds	21,046	68,500	45,061
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - money market mutual funds	0	0	0
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - money market mutual funds	$ 0	$ 0	$ 0

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Stock-Based Compensation (Schedule of Stock-based Compensation Expense for Stock Options, Restricted Stock, Performance Stock and SARs) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Restricted Stock Units and Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense before the recognized income tax benefit	$ 1,655	$ 4,193	$ 5,043	$ 7,037
Income tax benefit	412	1,085	1,055	1,706
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense before the recognized income tax benefit	104	0	139	129
Income tax benefit	$ 26	$ 0	$ 29	$ 30

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018
Cash Flows From Operating Activities
Net income	$ 39,431	$ 36,776
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,652	16,551
Stock-based compensation	5,207	7,604
Loss/(gain) on retirement and impairment of assets	767	(1,412)
Deferred income taxes	1,944	(684)
Non-cash operating lease expense	30,932	0
Lease incentives	0	298
Other	1,111	(6,882)
Changes in operating assets and liabilities:
Accounts receivable	(1,251)	4,218
Merchandise inventories	(40,463)	(40,010)
Operating lease liabilities	(34,306)	0
Accounts payable and accrued liabilities	17,173	23,330
Other	(5,165)	(2,009)
Net cash provided by operating activities	28,032	37,780
Cash Flows From Investing Activities
Purchases of property and equipment	(15,081)	(5,021)
Other	8	1,489
Net cash used in investing activities	(15,073)	(3,532)
Cash Flows From Financing Activities
Borrowings under line of credit	20,000	0
Payments on line of credit	(20,000)	0
Proceeds from issuance of stock	148	148
Dividends paid	(4,466)	(3,593)
Purchase of common stock for treasury	(30,915)	(39,046)
Shares surrendered by employees to pay taxes on restricted stock	(11,040)	(312)
Net cash used in financing activities	(46,273)	(42,803)
Net decrease in cash and cash equivalents	(33,314)	(8,555)
Cash and cash equivalents at beginning of period	67,021	48,254
Cash and cash equivalents at end of period	33,707	39,699
Supplemental disclosures of cash flow information:
Cash paid during period for interest	155	113
Cash paid during period for income taxes	6,277	9,224
Capital expenditures incurred but not yet paid	510	397
Dividends declared but not yet paid	$ 151	$ 206

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Statement Of Financial Position [Abstract]
Common stock, par value per share	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000	50,000,000
Common stock, shares issued	20,527,244	20,529,227	20,529,227
Treasury shares, shares	6,338,584	5,154,243	4,958,854

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Schedule of Other Information Related to Leases (Details) $ in Thousands	9 Months Ended
	Nov. 02, 2019 USD ($)
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 34,306
ROU assets obtained in exchange for operating lease liabilities	$ 27,211
Weighted-average remaining lease term for operating leases (in years)	6 years 3 months 18 days
Weighted-average discount rate for operating leases	5.50%

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Recently Issued Accounting Pronouncements

9 Months Ended

Nov. 02, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recently Issued Accounting Pronouncements

Note 3 - Recently Issued Accounting Pronouncements

Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which replaced most existing lease accounting guidance. This guidance requires an entity to recognize leased assets and the rights and obligations created by those leased assets on the balance sheet and to disclose key information about the entity's leasing arrangements.  This guidance became effective for us on February 3, 2019 and includes interim periods in fiscal 2019.  We adopted the new guidance using the effective date as the date of initial application; therefore, the comparative periods have not been adjusted and continue to be reported under the previous lease guidance.  All of our retail store locations and our distribution center are subject to operating lease accounting under the new guidance.  As a result, the adoption of this guidance had a material impact on our condensed consolidated balance sheets but did not have a material impact on our condensed consolidated statements of income or our condensed consolidated statements of cash flow.  The adoption of the guidance resulted in the initial recognition of operating lease liabilities of $251.7 million as of February 3, 2019.  This amount was based on the present value of fixed lease payments using our incremental borrowing rate.  We recorded corresponding operating lease right-of-use assets based on the operating lease liabilities, reduced by net accrued rent, unamortized deferred lease incentives and prepaid rent totaling $25.8 million upon adoption.  Under the new guidance, companies may elect certain optional practical expedients.  We elected the practical expedient that permits us not to recognize right-of-use assets and related liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).  In the second quarter of fiscal 2019, we elected the practical expedient that permits us to account for lease and non-lease components as a single lease component for new and modified leases, effective upon adoption of the new guidance.  The impact of this election was not material to the first quarter of fiscal 2019.  We did not elect the transition practical expedient that permit companies to use hindsight when determining lease term and impairment of right-of-use assets. We also did not elect the transition package of practical expedients that is permitted by the guidance; therefore, we were required to reassess previous accounting conclusions regarding whether existing arrangements are or contain leases, the classification of existing leases and the treatment of initial direct costs.  As of the adoption date, we recorded $2.6 million of lease-related capitalized costs to beginning retained earnings, net of tax, that did not meet the definition of initial direct costs in accordance with the guidance.  See Note 7 for additional disclosures required as a result of the adoption of this guidance.

Not Yet Adopted

In August 2018, the FASB issued guidance that adds, removes, and modifies the disclosure requirements related to fair value measurements.  This accounting update is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. We are evaluating the impact of this new guidance and believe the adoption will not have a material impact on our condensed consolidated financial statements.

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Leases

9 Months Ended

Nov. 02, 2019

Leases [Abstract]

Leases

Note 7 – Leases

Effective February 3, 2019, we adopted Accounting Standards Codification Topic No. 842 – Leases.  This guidance requires us to recognize leased assets and the rights and obligations created by those leased assets on the balance sheet as operating right-of-use (“ROU”) assets and operating lease liabilities.  ROU assets and operating lease liabilities are calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or our incremental borrowing rate (“IBR”).  As the rate implicit in the lease is not readily determinable for our leases, we utilized our IBR, which was determined through the development of a synthetic credit rating and was based on the information available at the adoption date.  Adoption of the guidance resulted in the initial recognition of operating lease liabilities of $251.7 million as of February 3, 2019.  We recorded corresponding operating lease ROU assets based on the operating lease liabilities, reduced by net accrued rent, unamortized deferred lease incentives and prepaid rent totaling $25.8 million.  Moreover, as of the adoption date, we recorded $2.6 million of lease-related capitalized costs to beginning retained earnings, net of tax, that did not meet the definition of initial direct costs in accordance with the new guidance.    

Operating lease liabilities are increased by interest and reduced by payments each period, and ROU assets are amortized over the lease term.  Interest on operating lease liabilities and the amortization of ROU assets results in straight-line rent expense over the lease term.  If the operating ROU asset is impaired, we would amortize the remaining ROU asset in accordance with the subsequent-measurement guidance that applies to finance leases — typically, on a straight-line basis over the remaining lease term. However, in periods after the impairment, we would continue to present the ROU asset reduction and interest accretion related to the operating lease liability in selling, general and administrative expenses on the income statement.  We record variable lease expense primarily associated with contingent rent and reduced rent due to co-tenancy violations when incurred.

For new leases, renewals or amendments, we make certain estimates and assumptions regarding property values, market rents, property lives, discount rates and probable terms.  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 ROU assets.  The amount of depreciation and amortization, interest and rent expense would vary if different estimates and assumptions were used.   

We lease all of our retail stores and our single distribution center, which has a current lease term of 15 years, expiring in 2034.  We also enter into leases of equipment, copiers and billboards.  All of our leases are operating leases.  Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of November 2, 2019.  

Our leases typically provide for fixed minimum rental payments, and certain leases provide for contingent rental payments based upon various specified percentages of sales above minimum levels.  In addition to rental payments, we are required to pay certain non-lease components, such as real estate taxes, insurance and common area maintenance (“CAM”), on most of our real estate leases.  Such non-lease components are typically variable in nature and are not included in the measurement of the lease liability, ROU asset or straight-line operating lease expense.  Certain real estate leases also contain escalation clauses for increases in minimum rentals, operating costs and taxes.

Our real estate leases typically include one or more options to renew, with renewal terms that typically extend the lease term for five years or more.  The exercise of lease renewal options is at our sole discretion.  When determining the lease term, we include option periods that are reasonably certain to be exercised.  Many of our leases also contain “co-tenancy” provisions, including the required presence and continued operation of certain anchor tenants in the adjoining retail space.  If a co-tenancy provision is triggered, we could have the right to terminate the lease early or to a reduction of rent.  In addition to co-tenancy provisions, certain leases contain “go-dark” provisions that allow us to cease operations while continuing to pay rent through the end of the lease term.

Lease-related costs reported in our condensed consolidated statements of income were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 2, 2019
Operating lease cost	$	13,700	$	41,094
Variable lease cost		447		874
CAM, property taxes and insurance		4,935		15,119
Total	$	19,082	$	57,087

Other information related to leases, including supplemental cash flow information, consists of:

(In thousands)	Thirty-nine Weeks Ended November 2, 2019
Cash paid for amounts included in the measurement of    operating lease liabilities	$	34,306
ROU assets obtained in exchange for operating lease liabilities	$	27,211
	As of November 2, 2019
Weighted-average remaining lease term for operating leases    (in years)	6.3
Weighted-average discount rate for operating leases		5.5	%

The following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the operating lease liabilities on the consolidated balance sheet as of November 2, 2019:

(In thousands)	Operating Leases
2019 (excluding the first nine fiscal months)	$	20,214
2020		55,232
2021		55,167
2022		47,956
2023		41,335
Thereafter to 2034		87,019
Total undiscounted lease payments		306,923
Less: Imputed interest		62,304
Total operating lease liabilities		244,619
Less: Current portion of operating lease liabilities		42,481
Long-term portion of operating lease liabilities	$	202,138

Our future minimum lease payments for operating leases as of February 2, 2019, in accordance with legacy lease accounting guidance, were as follows:

(In thousands)	Operating Leases
2019	$	60,807
2020		51,937
2021		50,687
2022		41,536
2023		34,035
Thereafter to 2031		56,437
Total	$	295,439

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Revenue (Tables)

9 Months Ended

Nov. 02, 2019

Revenue From Contract With Customer [Abstract]

Schedule of Revenue Disaggregation by Product Category

Revenue is disaggregated by product category below. Net sales and percentage of net sales for the thirteen and thirty-nine weeks ended November 2, 2019 and November 3, 2018 were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019				Thirteen Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	61,126	22	%	$	59,510	22	%
Men’s		35,446	13			33,946	13
Children’s		14,713	5			13,155	5
Total		111,285	40			106,611	40
Athletics:
Women’s		46,742	17			47,409	18
Men’s		56,112	20			56,608	20
Children’s		46,081	17			45,264	17
Total		148,935	54			149,281	55
Accessories and Other		14,425	6			13,289	5
Total	$	274,645	100	%	$	269,181	100	%

(In thousands)	Thirty-nine Weeks Ended November 2, 2019				Thirty-nine Weeks Ended November 3, 2018
Non-Athletics:
Women’s	$	187,834	24	%	$	185,525	23	%
Men’s		111,417	14			107,633	14
Children’s		40,649	5			38,186	5
Total		339,900	43			331,344	42
Athletics:
Women’s		139,457	18			143,583	18
Men’s		166,253	21			170,453	22
Children’s		112,605	14			113,069	14
Total		418,315	53			427,105	54
Accessories and Other		38,461	4			36,543	4
Total	$	796,676	100	%	$	794,992	100	%

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Schedule of Lease Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 02, 2019	Nov. 02, 2019
Leases [Abstract]
Operating lease cost	$ 13,700	$ 41,094
Variable lease cost	447	874
CAM, property taxes and insurance	4,935	15,119
Total	$ 19,082	$ 57,087

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Leases (Tables)

9 Months Ended

Nov. 02, 2019

Leases [Abstract]

Schedule of Lease Related Costs

Lease-related costs reported in our condensed consolidated statements of income were as follows:

(In thousands)	Thirteen Weeks Ended November 2, 2019		Thirty-nine Weeks Ended November 2, 2019
Operating lease cost	$	13,700	$	41,094
Variable lease cost		447		874
CAM, property taxes and insurance		4,935		15,119
Total	$	19,082	$	57,087

Schedule of Other Information Related to Leases

Other information related to leases, including supplemental cash flow information, consists of:

(In thousands)	Thirty-nine Weeks Ended November 2, 2019
Cash paid for amounts included in the measurement of    operating lease liabilities	$	34,306
ROU assets obtained in exchange for operating lease liabilities	$	27,211
	As of November 2, 2019
Weighted-average remaining lease term for operating leases    (in years)	6.3
Weighted-average discount rate for operating leases		5.5	%

Schedule of Rental Expense Under Operating Leases

The following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the operating lease liabilities on the consolidated balance sheet as of November 2, 2019:

(In thousands)	Operating Leases
2019 (excluding the first nine fiscal months)	$	20,214
2020		55,232
2021		55,167
2022		47,956
2023		41,335
Thereafter to 2034		87,019
Total undiscounted lease payments		306,923
Less: Imputed interest		62,304
Total operating lease liabilities		244,619
Less: Current portion of operating lease liabilities		42,481
Long-term portion of operating lease liabilities	$	202,138

Schedule of Future Minimum Payments Under Operating Leases

Our future minimum lease payments for operating leases as of February 2, 2019, in accordance with legacy lease accounting guidance, were as follows:

(In thousands)	Operating Leases
2019	$	60,807
2020		51,937
2021		50,687
2022		41,536
2023		34,035
Thereafter to 2031		56,437
Total	$	295,439

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Fair Value Measurements

9 Months Ended

Nov. 02, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4 - Fair Value Measurements

The accounting guidance related to fair value measurements defines fair value and provides a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other guidance requires or permits the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels:

• Level 1 –Quoted prices in active markets for identical assets or liabilities;

• Level 2 –Observable market-based inputs or unobservable inputs that are corroborated by market data; and

• Level 3 –Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. Fair values of our long-lived assets are estimated using an income-based approach and are classified within Level 3 of the valuation hierarchy.

The following table presents assets that are measured at fair value on a recurring basis at November 2, 2019, February 2, 2019 and November 3, 2018.  We have no material liabilities measured at fair value on a recurring or non-recurring basis.

	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Total
As of November 2, 2019
Cash equivalents - money market mutual funds	$	21,046	$	0	$	0	$	21,046
As of February 2, 2019
Cash equivalents - money market mutual funds	$	68,500	$	0	$	0	$	68,500
As of November 3, 2018
Cash equivalents - money market mutual funds	$	45,061	$	0	$	0	$	45,061

The fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

From time to time, we measure certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. These are typically store-specific assets, which include property and equipment and operating right-of-use assets, which are reviewed for impairment whenever events or changes in circumstances indicate that recoverability of their carrying value is questionable. If the expected undiscounted future cash flows related to a store’s assets are less than their carrying value, an impairment loss would be recognized for the difference between estimated fair value and carrying value and recorded in selling, general and administrative expenses. We estimate the fair value of store property and equipment using an income-based approach considering the cash flows expected over the remaining lease term for each location. These projections are primarily based on management’s estimates of store-level sales, gross margins, direct expenses, exercise of future lease renewal options and resulting cash flows and, by their nature, include judgments about how current initiatives will impact future performance. External factors, such as the local environment in which the store resides, including store traffic and competition, are evaluated in terms of their effect on sales trends. Changes in sales and operating income assumptions or unfavorable changes in external factors can significantly impact the estimated future cash flows. An increase or decrease in the projected cash flow can significantly decrease or increase the fair value of these assets, which would have an effect on the impairment recorded.  We estimate the fair value of operating right-of-use assets using the market value of rents applicable to the leased asset, discounted using the remaining lease term.

During the thirteen weeks ended November 2, 2019, we recorded impairment charges of $561,000 on property and equipment related to three stores, which was included in selling, general and administrative expenses for the period.  Subsequent to this impairment, these long-lived assets were fully depreciated.  During the thirty-nine weeks ended November 2, 2019, we recorded impairment charges of $604,000 on property and equipment related to four stores, which was included in selling, general and administrative expenses for the period. Subsequent to this impairment, these long-lived assets were fully depreciated.  There were no impairments of long-lived assets recorded during the thirteen or thirty-nine weeks ended November 3, 2018.

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Net Income Per Share (Tables)

9 Months Ended

Nov. 02, 2019

Earnings Per Share [Abstract]

Schedule of the Computation of Basic and Diluted Earnings Per Share

	Thirteen Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Net income available for basic common shares and    basic earnings per share	$	13,714			14,404	$	0.95	$	12,002			15,071	$	0.80
Diluted Earnings per Share:
Net income	$	13,726						$	12,046
Amount allocated to participating securities		(12	)						(44	)
Adjustment for dilutive potential common shares		0			152				2			741
Net income available for diluted common shares and    diluted earnings per share	$	13,714			14,556	$	0.94	$	12,004			15,812	$	0.76

	Thirty-nine Weeks Ended
	November 2, 2019							November 3, 2018
				(In thousands, except per share data)
Basic Earnings per Share:	Net Income			Shares		Per Share Amount		Net Income			Shares		Per Share Amount
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Net income available for basic common shares and    basic earnings per share	$	39,365			14,544	$	2.71	$	36,624			15,282	$	2.40
Diluted Earnings per Share:
Net income	$	39,431						$	36,776
Amount allocated to participating securities		(66	)						(152	)
Adjustment for dilutive potential common shares		1			282				2			262
Net income available for diluted common shares and    diluted earnings per share	$	39,366			14,826	$	2.66	$	36,626			15,544	$	2.36

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Fair Value Measurements (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Fair Value Disclosures [Abstract]
Long-lived assets, impairment charges	$ 561,000	$ 0	$ 604,000	$ 0

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Stock-Based Compensation (Summary of SARs Activity) (Details) - Stock Appreciation Rights (SARs) [Member]	9 Months Ended
	Nov. 02, 2019 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at February 2, 2019 | shares	0
Granted | shares	43,900
Forfeited | shares	0
Exercised | shares	0
Outstanding at November 2, 2019 | shares	43,900
Outstanding at February 2, 2019 | $ / shares	$ 0.00
Granted | $ / shares	34.95
Forfeited | $ / shares	0.00
Exercised | $ / shares	0.00
Outstanding at November 2, 2019 | $ / shares	$ 34.95
Outstanding at November 2, 2019	2 years 4 months 24 days

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	Aug. 03, 2019	Feb. 02, 2019	Aug. 04, 2018	Feb. 03, 2018
Statement Of Stockholders Equity [Abstract]
Dividends	$ 0.085	$ 0.250	$ 0.080	$ 0.235

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Current Assets:
Cash and cash equivalents	$ 33,707	$ 67,021	$ 39,699
Accounts receivable	2,470	1,219	2,322
Merchandise inventories	298,002	257,539	300,510
Other	10,868	11,534	11,762
Total Current Assets	345,047	337,313	354,293
Property and equipment – net	69,147	70,605	74,471
Deferred income taxes	7,678	9,622	8,866
Other noncurrent assets	3,692	459	389
Operating lease right-of-use assets	222,148	0	0
Total Assets	647,712	417,999	438,019
Current Liabilities:
Accounts payable	66,089	48,715	56,270
Accrued and other liabilities	22,052	22,069	28,094
Current portion of operating lease liabilities	42,481	0	0
Total Current Liabilities	130,622	70,784	84,364
Long-term portion of operating lease liabilities	202,138	0	0
Deferred lease incentives	0	22,171	23,478
Accrued rent	0	8,436	8,808
Deferred compensation	13,220	12,108	11,811
Other	984	67	806
Total Liabilities	346,964	113,566	129,267
Shareholders’ Equity:
Common stock, $.01 par value, 50,000,000 shares authorized, 20,527,244 shares, 20,529,227 shares and 20,529,227 shares issued, respectively	205	205	205
Additional paid-in capital	78,859	75,631	73,103
Retained earnings	393,497	360,443	360,335
Treasury stock, at cost, 6,338,584 shares, 5,154,243 shares and 4,958,854 shares, respectively	(171,813)	(131,846)	(124,891)
Total Shareholders’ Equity	300,748	304,433	308,752
Total Liabilities and Shareholders’ Equity	$ 647,712	$ 417,999	$ 438,019