• Q2 net sales up 8.2%
  • Net earnings leap 319%
  • Full year net sales may reach $737m

Shoe Carnival has benefited from strong sales growth and a boost to its profit margins to post a huge rise in second quarter earnings.

The company said that net sales for the second quarter of 2010 increased 8.2% to US$165.4m. Comparable store sales for the thirteen-week period ended 31 July 2010 increased 8.3%.

Net earnings, meanwhile, leapt 319% to $4.1m. Diluted earnings per share for the quarter increased to $0.32 compared to $0.08 in the prior year second quarter.

The gross profit margin for the second quarter increased 1.5% to 28.%3compared to 26.8 percent for the second quarter of the prior year. The merchandise margin increased 1%. The company's buying, distribution and occupancy costs decreased 0.5%, as a percentage of sales, due to the leverage associated with comparable store sales increases.

Selling, general and administrative expenses for the second quarter increased $1.7m to $40.8m; however, as a percentage of sales, these expenses decreased to 24.7% compared to 25.6% in the second quarter of 2009.

Mark Lemond, president and chief executive officer said: "I am pleased to report that in the second quarter we were able to take advantage of consumer demand across each broad merchandise category and in every operations region. Our strong quarterly sales performance, when combined with a higher gross profit margin and controlled expenses, resulted in record second quarter earnings. While toning footwear was a key driver of our sales for the quarter, our non-athletic footwear, particularly sandals and other types of casual footwear for the family were also significant drivers of our sales increase."

Lemond continued: "Our continued strong financial performance and today's positive footwear industry trends give us the confidence to remain optimistic about our outlook for the back-to-school sales season, which is traditionally our most important sales and earnings period. Comparable store sales for the first three weeks of August have increased approximately 6%, on top of an increase of 11% for the same period last year."

Net sales during the first six months of 2010 increased $34.7m to $354.9m as compared to the same period last year. This sales increase was driven primarily by a comparable store sales increase of 10.8%. Net earnings for the first half of 2010 were $13.4m, or $1.04 per diluted share, compared with net earnings of $5.1m, or $0.41 per diluted share, in the first half of last year.

The company said it expects third quarter net sales to be in the range of $196m to $202m and comparable store sales to increase in the range of 3% to 6%. Earnings per diluted share in the third quarter of 2010 are expected to be in the range of $0.63 to $0.66. Earnings per diluted share in the third quarter of fiscal 2009 were $0.59.

For the full year, the company expects net sales to be in the range of $728m to $737m and comparable store sales to increase in the range of 6.5% to 8%. Earnings per diluted share for fiscal 2010 are expected to range from $1.89 to $1.95. Earnings per diluted share for fiscal 2009 were $1.20.