Rogan’s Shoes Joins Shoe Carnival in Acquisition, Unveiling Preliminary Fiscal 2023 Full-Year Results

Shoe Carnival, Inc. (Nasdaq: SCVL) made a significant announcement today regarding its acquisition of Rogan Shoes, Incorporated (“Rogan’s”), a well-established family and work footwear company with 28 store locations across Wisconsin, Minnesota, and Illinois. The purchase, valued at $45 million, was fully financed with cash on hand.

Anticipated to immediately enhance the Company’s fiscal 2024 earnings, the acquisition is projected to generate approximately $84 million in sales and around $10 million in operating income. The Company has outlined an 18-month integration plan, expecting to achieve an additional $1.5 million in annual synergies, with half of the profit synergies realized by fiscal 2025 and the full amount by fiscal 2026. The integration plan includes incorporating Rogan’s into the Shoe Station growth banner, leveraging existing systems, and capitalizing on strategic and cost synergies.

This strategic move aligns with Shoe Carnival’s goal of becoming the nation’s foremost family footwear retailer. The acquisition positions the company as the market leader in Wisconsin and establishes a foothold in Minnesota, paving the way for further expansion opportunities. Post-integration, combined banner sales are forecasted to exceed $200 million by fiscal 2025. The acquisition propels the Company’s store count to a record high of 429, keeping it on track to achieve its target of operating over 500 stores by 2028.

Mark Worden, President & CEO of Shoe Carnival, emphasized the focus on organic growth initiatives and M&A activities to expand the company’s geographic footprint and customer base. Pat Rogan, CEO of Rogan’s, expressed excitement about the opportunities the acquisition presents for Rogan’s within the Shoe Carnival family.

In terms of fiscal 2023 preliminary results, the Company reported net sales of $1.176 billion, meeting the high end of management’s expectations. Diluted earnings per share are expected to range between $2.65 – $2.75. The inventory optimization plan exceeded expectations, reducing inventory levels by over $40 million compared to the prior year. The Company ended fiscal 2023 with over $110 million in cash, cash equivalents, and marketable securities, a year-over-year increase of over $45 million.

These preliminary results are subject to normal quarter and year-end accounting procedures and closing adjustments. The Company plans to provide guidance for fiscal 2024 in March when it reports final audited financial results for fiscal 2023. Preliminarily, it expects to achieve low mid-single-digit growth in total net sales for fiscal 2024, driven by various factors, including the newly acquired Rogan’s business.

KPMG LLP and Faegre Drinker Biddle & Reath LLP served as financial and legal advisors, respectively, to Shoe Carnival in connection with the Rogan’s acquisition, while TM Capital served as exclusive financial advisor to Rogan’s.

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