2016 Annual Report
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7500 East Columbia Street • Evansville, Indiana 47715 812.867.6471 • shoecarnival.com 2016 ANNUAL REPORT outer back cover outer front cover CONTINUED MULTI-CHANNEL EXPANSION In 2016, we continued our efforts to provide BUY customers with more convenient ways to shop through ONLINE... further expansion of multi-channel initiatives. PICK UP Buy Online, Pick Up In Store and Buy Online, Ship To IN STORE! Store allow customers the fl exibility to pick up shoes in-store that were ordered online. These initiatives also generate additional in-store visits. SHOE CARNIVAL’S SHOP WITHIN A SHOP CONCEPT SHOE PERKS Our Shoe Perks loyalty program grew by over 4 million members TEXT in 2016. Digital marketing programs were also established to PERKS acquire new members, retain existing members and reactivate to members who haven’t shopped with us in two years. 727375 Additionally, SMS messaging makes it easier (SCPERK) for customers to enroll in Shoe Perks, and enables us to deliver marketing messages to their mobile devices. REWARDS CLUB inner front cover inner back cover OFFICERS AND CORPORATE MANAGEMENT J. WAYNE WEAVER** DAVID A. KAPP CLINT R. PIERCE Chairman Senior Vice President Vice President Planning/Allocation Divisional Merchandise Manager, CLIFTON E. SIFFORD** Athletic Footwear President and Chief Executive Offi cer CHRISTOPHER A. ASKINS Vice President CHARLIE J. TOROK, JR. W. KERRY JACKSON** Loss Prevention Vice President, Distribution Senior Executive Vice President Chief Operating and Financial Offi cer MARC A. CHILTON KENT A. ZIMMERMAN and Treasurer Vice President Vice President, Digital Store Operations TIMOTHY T. BAKER** ANTHONY J. CAROSELLO Executive Vice President JOHN W. DODSON Assistant Vice President Store Operations Vice President Real Estate Store Operations LETTER FROM OUR CARL N. SCIBETTA** SARAH B. DAUER Executive Vice President TANYA E. GORDON Assistant Vice President Chief Merchandising Offi cer Vice President In-House Counsel Divisional Merchandising Manager PRESIDENT AND CEO TODD A. BEURMAN Women's and Children's Footwear JAMES W. JOHNSTON Senior Vice President and Accessories Assistant Vice President Marketing Infrastructure and Support DAVID M. GROFF YEAR IN REVIEW opportunity for growth, in both large and smaller Vice President CHERYL L. LINDADUER TERRY L. CLEMENTS Administration and Business Fiscal 2016 represented a signifi cant corporate markets, as we work together to achieve our next $1 Senior Vice President Assistant Vice President Development billion in sales. Chief Information Offi cer Application Systems milestone for Shoe Carnival as our net sales BRADLEY A. GUBSER exceeded $1 billion. We are very pleased with this JEFFREY N. FINK TUCKER R. ROBINSON Vice President From a merchandise perspective, our athletic footwear Senior Vice President Store Planning and Development Assistant Vice President accomplishment, which refl ects the hard work and Buyer Men’s Athletics Real Estate dedication of our over 5,100 store and corporate category was a key driver of sales throughout fi scal TARA J. KRULL SEAN M. GEORGES Vice President THOMAS G. VERNARSKY associates. 2016. Our merchants did an excellent job of offering a Assistant Vice President Senior Vice President Marketing broad assortment of athletic brands that appealed to Human Resources, In-House Counsel Buyer Men's Non-Athletics and Assistant Secretary ROGER D. ORTH Over the past several years, we have benefi ted from our customers on a consistent basis. Moreover, in the Vice President (**) Executive Offi cers Controller and Secretary the execution of key strategic initiatives, including a third quarter of fi scal 2016, we continued to strengthen disciplined store growth strategy, strong merchandising our management team by adding athletic footwear industry veteran, Clint Pierce as Vice President, BOARD OF DIRECTORS efforts, enhanced multi-channel sales capabilities, expanded digital and national marketing presence and Divisional Merchandise Manager for Athletic Footwear. JOSEPH W. WOOD 1,2,3 J. WAYNE WEAVER JEFFREY C. GERSTEL 1,2 an ongoing focus on our customer loyalty program. We are ver y pleased to have the opportunity to leverage Chairman of the Board Chief Marketing Offi cer Consultant Shoe Carnival, Inc. B&H Foto and Electronics Corp. St. Louis, Missouri These key strategic initiatives have helped us deliver Clint’s athletic footwear experience as we strive to New York, NY CLIFTON E. SIFFORD consistent growth as we have fundamentally changed maintain a strong position as the destination of choice President and Chief Executive Offi cer ANDREA R. GUTHRIE 2,3* (1) Audit Committee the way we communicate and interact with our for athletic footwear for the entire family. Shoe Carnival, Inc. Co-founder, Gyde & Seek (2) Compensation Committee Park City, UT (3) Nominating and Corporate customers to best serve their footwear needs. JAMES A. ASCHLEMAN 1,2*,3 Governance Committee During fi scal 2016, we also remained committed to Retired KENT A. KLEEBERGER 1*,2,3,4 (4) Lead Director Indianapolis, Indiana Consultant (*) Committee Chairman Our team’s relentless focus on effi ciently managing our enhancing shareholder value by utilizing approximately Sanibel Island, Florida business in both favorable and challenging operating $48 million in cash to repurchase shares of our environments has served us well. As of our fi scal year- common stock under our stock buyback programs and CORPORATE INFORMATION end on January 28, 2017, we operated stores in 35 pay out cash dividends in each of our four quarters. We CORPORATE OFFICE CORPORATE COUNSEL INDEPENDENT AUDITORS TRANSFER AGENT states and Puerto Rico. We believe we have signifi cant are fortunate to have the fi nancial fl exibility, through 7500 East Columbia Street Faegre Baker Daniels LLP Deloitte & Touche LLP Computershare Trust Evansville, Indiana Indianapolis, Indiana Indianapolis, Indiana Company NA Chicago, Illinois (312) 360-5359 2016 Annual Report the strength of our balance sheet and consistent cash send offers and Shoe Perks-related information directly flow generation, to support our growth and return to our customer’s mobile devices. value to shareholders in fiscal 2017 and beyond. AN ENDLESS AISLE EXPERIENCE CUSTOMER CONNECTION As consumer shopping habits continue to evolve, we During fiscal 2016, we continued to make progress remain committed to the consistent evolution of our on our multi-channel sales initiatives. An important multi-channel efforts. Our team has done an excellent component of this strategy is our Shoe Perks loyalty job adapting to rapidly changing consumer behavior program. Shoe Perks members are our most loyal and we believe that our ongoing multi-channel shoppers and accounted for approximately 66% of our initiatives represent the cornerstone for our long-term annual net sales in fiscal 2016. Shoe Perks members growth. are not only loyal, they love footwear and they show it by spending on average 19% more per transaction It has been a priority for us to enhance our digital than non-members. Even with the success of our Shoe store experience over the past few years. As we have Perks loyalty program, we remain committed to finding discussed in recent quarters, we completed the launch ways to actively engage our most loyal Shoe Carnival of our buy online, pick up in-store and buy online, ship- customers. to-store initiative in the third quarter of fiscal 2016. We are pleased with the early results of this program as Digital media will become more prominent for us in our customers embraced this opportunity in greater fiscal 2017 as we expand our Customer Relationship numbers than anticipated. Management (CRM) to gain a better understanding of our customers and their buying habits. Our team We look forward to our next digital sales enhancement is focused on leveraging the wealth of customer data strategies in 2017. This includes the launch of our available to us through targeted communications enhanced Shoe Carnival mobile application in the that appeal to Shoe Perks members. We believe first half of fiscal 2017 and a new and improved we can increase shopper frequency, average sales digital storefront that will provide online shoppers with per transaction and overall financial performance the same surprise and delight they experience when by utilizing customer information in the areas of shopping at a brick-and-mortar Shoe Carnival store. marketing, merchandising, E-commerce and even real During fiscal 2017 we will also be focused on the estate. development of a vendor drop-ship program. This program will allow us to distribute product directly We are excited about taking our customer engagement from our vendors, which will provide the benefit of an activities to the next level. While we remain committed expanded assortment of key brands without the risk of to the acquisition of new Shoe Perks members, we inventory ownership. believe identifying our high-value customers, how they shop and how best to retain them will deliver increased STORE GROWTH sales and better margins on a long-term basis. In From a real estate perspective, we ended the year with addition, we are offering our customers the option of 415 stores in the U.S. and Puerto Rico. We opened 19 enrolling in Shoe Perks through SMS. This allows us to stores, closed nine stores and relocated three stores during fi scal 2016. Our store growth plan continued to key initiatives implemented over the past three years focus on strong trade areas within our current footprint. which have helped us achieve positive operating and STOCK PRICE PERFORMANCE GRAPH It was just a year ago that we discussed our opportunity fi nancial results. These initiatives have created a strong to open stores in key small markets across the U.S. foundation for the future and have positioned us for The performance graphs set forth below compare the cumulative total shareholder return on the Company’s Common Since then, we have opened nine stores in smaller the opportunities that lie ahead as we continue to Stock with the Nasdaq Stock Market Index and the Nasdaq Index for Retail Trade Stocks for the period from January markets which are running well ahead of our fi rst-year return value to shareholders in 2017 and beyond.