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: our ability to control costs and meet our labor needs in a rising wage, inflationary, and/or supply chain constrained environment; the duration and spread of the COVID-19 pandemic, mitigating efforts deployed, including the effects of government stimulus on consumer spending, and the pandemic's overall impact on our operations, including our stores, supply chain and distribution processes, economic conditions, and financial market volatility; our ability to operate the recently acquiredShoe Station assets, retainShoe Station employees and achieve expected operating results, synergies, and other benefits from theShoe Station acquisition within expected time frames, or at all; risks that theShoe Station acquisition may disrupt our current plans and operations or negatively impact our relationship with our vendors and other suppliers; the potential impact of national and international security concerns, including those caused by war and terrorism, on the retail environment; general economic conditions in the areas of the continentalUnited States andPuerto Rico where our stores are located; 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; our ability to successfully navigate the increasing use of online retailers for fashion purchases and the impact on traffic and transactions in our physical stores; the success of the open-air shopping centers where many of our stores are located and its impact on our ability to attract customers to our stores; our ability to attract customers to our e-commerce platform and to successfully grow our omnichannel sales; the effectiveness of our inventory management, including our ability to manage key merchandise vendor relationships and emerging direct-to-consumer initiatives; changes in our relationships with other key suppliers; changes in the political and economic environments in, the status of trade relations with, and the impact of changes in trade policies and tariffs impacting,China and other countries which are the major manufacturers of footwear; the impact of competition and pricing; our ability to successfully manage and execute our marketing initiatives and maintain positive brand perception and recognition; our ability to successfully manage our current real estate portfolio and leasing obligations; changes in weather, including patterns impacted by climate change; changes in consumer buying trends and our ability to identify and respond to emerging fashion trends; the impact of disruptions in our distribution or information technology operations; the impact of natural disasters, other public health crises, political crises, civil unrest, and other catastrophic events on our operations and the operations of our suppliers, as well as on consumer confidence and purchasing in general; risks associated with the seasonality of the retail industry; the impact of unauthorized disclosure or misuse of personal and confidential information about our customers, vendors and employees, including as a result of a cybersecurity breach; our ability to successfully execute our business strategy, including the availability of desirable store locations at acceptable lease terms, our ability to identify, consummate or effectively integrate future acquisitions, our ability to implement and adapt to new technology and systems, our ability to open new stores in a timely and profitable manner, including our entry into major new markets, and the availability of sufficient funds to implement our business plans; higher than anticipated costs associated with the closing of underperforming stores; the inability of manufacturers to deliver products in a timely manner; an increase in the cost, or a disruption in the flow, of imported goods; the impact of regulatory changes inthe United States , including minimum wage laws and regulations, and the countries where our manufacturers are located; the resolution of litigation or regulatory proceedings in which we are or may become involved; continued volatility and disruption in the capital and credit markets; future stock repurchases under our stock repurchase program and future dividend payments. For a more detailed discussion of risk factors impacting us, see the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 .
General
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") 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 endedJanuary 29, 2022 as filed with theSEC . This section of this Quarterly Report on Form 10-Q generally discusses our results for the second quarter 2022 and the second quarter 2021 and year-over-year comparisons between the second quarter 2022 and the second quarter 2021, as well as year-to-date results between the two periods. However, given the significant impact of the COVID-19 pandemic on our fiscal 2021 and fiscal 2020 results, we have included certain comparisons in this MD&A between the second quarter 2022 and the second quarter 2019 and respective year-to-date periods to provide further context regarding our second quarter and year-to-date 2022 results of operations. Referred to herein, the second quarter 2022 is the thirteen weeks endedJuly 30, 2022 ; the second quarter 2021 is the thirteen weeks endedJuly 31, 2021 ; and the second quarter 2019 is the thirteen weeks endedAugust 3, 2019 . Also referred to herein, year-to-date 2022 is the twenty-six weeks endedJuly 30, 2022 ; year-to-date 2021 is the twenty-six weeks endedJuly 31, 2021 ; and year-to-date 2019 is the twenty-six weeks endedAugust 3, 2019 . 14 --------------------------------------------------------------------------------
Overview of Our Business
Shoe Carnival, Inc. is one of the nation's largest family footwear retailers. After our acquisition of the physical stores and substantially all of the assets and liabilities ofShoe Station, Inc. onDecember 3, 2021 , we began operating under two banners:Shoe Carnival and Shoe Station. Our objective is to be the omnichannel retailer-of-choice for on-trend branded and private label footwear for the entire family. Our product assortment, whether shopping in a physical store or on our e-commerce platform, includes dress, casual, and work shoes, sandals, boots and a wide assortment of athletic shoes. Our typical physical store carries shoes in two general categories - athletics and non-athletics with subcategories for men's, women's, and children's, as well as a broad range of accessories. In addition to our physical stores, our e-commerce platform offers customers the same assortment of merchandise in all categories of footwear with expanded options through direct-ship arrangements with certain vendors. Our stores under theShoe Carnival banner combine competitive pricing with a high-energy in-store environment that encourages customer participation. Footwear in ourShoe Carnival physical stores is organized by category and brand, creating strong brand statements within the aisles. These brand statements are underscored by branded signage on endcaps and in-line signage throughout the store. Our signage may highlight a vendor's product offerings or sales promotions, or may highlight seasonal or lifestyle statements by grouping similar footwear from multiple vendors. Certain of ourShoe Carnival stores have athletic shops that highlight leading athletic brands, and we expect to continue growing our "athletic shop" in-store concept and other shop-in-shop concepts across our fleet in the years ahead. The addition of the Shoe Station banner and retail locations creates a complementary retail platform to serve a broader family footwear customer base across both urban and suburban demographics.The Shoe Station concept targets a more affluent family footwear customer and has a strong track record of capitalizing on emerging footwear fashion trends and introducing new brands. See Note 2 - "Acquisition of Shoe Station" to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q and Note 3 - "Acquisition of Shoe Station" to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of our Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 , for further discussion. We believe our distinctive shopping experiences give us 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.
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, accounting for business combinations, leases, and income taxes. The accounting policies that require more significant judgment are discussed in our Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 , and there have been no material changes to those critical accounting policies.
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(1) April 30, 2022 393 2 0 395 31,000 4,450,000 (10.6 )% July 30, 2022 395 0 0 395 0 4,450,000 (13.8 )% Year-to-date 393 2 0 395 31,000 4,450,000 (12.2 )% May 1, 2021 383 0 6 377 (46,000 ) 4,100,000 125.8 % July 31, 2021 377 1 0 378 12,000 4,112,000 11.4 % Year-to-date 383 1 6 378 (34,000 ) 4,112,000 48.8 % (1) Comparable store sales is a key performance indicator for us. Comparable store sales include stores that have been open for 13 full months after such stores' grand opening or acquisition prior to the beginning of the period, including those stores that have been relocated or remodeled. Therefore, all Shoe Station sales (physical store and e-commerce) are excluded from our comparable store sales. In addition, sales related to anyShoe Carnival bannered physical stores recently opened or closed are not included in comparable store sales. We do include e-commerce sales sold using the Shoe Carnival brand in our comparable store sales as a result of our omnichannel retailer strategy. We view these e-commerce sales as an extension of our physical stores. 15 --------------------------------------------------------------------------------
The following table sets forth our results of operations expressed as a percentage of Net sales for the periods indicated:
Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (including buying, distribution and occupancy costs) 63.8 59.1 64.1 59.7 Gross profit 36.2 40.9 35.9 40.3 Selling, general and administrative expenses 23.8 22.9 24.1 22.5 Operating income 12.4 18.0 11.8 17.8 Interest expense (income), net 0.0 0.0 0.0 0.0 Income tax expense 3.1 4.7 2.9 4.6 Net income 9.3 % 13.3 % 8.9 % 13.2 %
Executive Summary for the Second Quarter Ended
For the second quarter 2022, diluted net income per share was$1.04 , the second highest second quarter in our history and only surpassed by the second quarter 2021. The$1.04 per diluted share earned was more than double the amount earned pre-pandemic in the second quarter 2019, and the$1.99 per share earned year-to-date 2022 is greater than any full year earnings in our 44 years of operation except for last year. Net sales in the second quarter 2022 were$312.3 million and were also the highest second quarter Net sales in our history except for last year. In a challenging economic environment, our second quarter 2022 Net sales increased 16.4% and comparable store sales increased 8.0% compared to the pre-pandemic second quarter 2019. Our physical store comparable store sales increased 4.2% and e-commerce Net sales increased 75.3% compared to second quarter 2019. Our second quarter 2022 results were positively impacted by sustained higher gross profit margin compared to pre-pandemic results, new growth provided from the Shoe Station acquisition and growth in our customer base. Gross profit margin during the second quarter 2022 was 36.2%, a 560 basis point increase compared to the second quarter 2019, due primarily to enhancements to our customer relationship management capabilities and promotional strategies which increased average selling prices. This was the primary driver for the comparable store sales increase and was partially offset by increased transportation and fuel costs. Shoe Station bannered stores contributed Net sales of$27.2 million in the quarter and$53.4 million year-to-date. During the quarter we continued growing our Shoe Perks loyalty program members. The 29.7 million Shoe Perks members as ofJuly 30, 2022 represented an increase in new customers of 6.9% compared to the second quarter 2021 and 28.0% compared to the second quarter 2019. Compared to the second quarter 2021, Net sales were down 6.0% and comparable store sales declined 13.8% due to lower traffic and sales volume. This decrease was due primarily to fluctuations in our customer base's discretionary income as impacted by government stimulus in 2021 and inflation in 2022 and continued COVID-19-related manufacturing and supply chain disruptions decreasing the availability of athletic inventory in 2022. Lower athletic inventory levels contributed to the decrease in comparable store athletic sales in the quarter. Comparable store athletic sales were down 25.6% compared to 2021 and down 12.9% compared to 2019. On a comparable store basis, non-athletic sales decreased 1.9% compared to 2021 and increased 30.8% compared to 2019. Net sales attributed to athletic sales were 40% in the second quarter 2022, compared to 47% in the second quarter 2021 and 50% in the second quarter 2019. We also incurred higher transportation and fuel costs in the second quarter 2022 compared to the second quarter 2021 and the second quarter 2019. The higher transportation and fuel costs reduced our gross profit margin by 270 basis points compared to the second quarter 2021 and by 300 basis points compared to the second quarter 2019. We ended the second quarter 2022 with Inventory of$385.5 million , an increase of$48.6 million over the second quarter 2019. Approximately 59% of the increase is inventory for the Shoe Station stores acquired last year or opened this year. The 14.4% increase in Inventory is supportive of the 20.6% increase in Net sales year-to-date 2022 compared to year-to-date 2019 and the expectation of increases in Net sales compared to 2019 for the remainder of the fiscal year. We had no borrowings outstanding under our credit facility, which was amended and restated during the first quarter 2022, and we ended the second quarter 2022 with$62.6 million of cash, cash equivalents and marketable securities. Our new credit facility expires onMarch 23, 2027 . 16 -------------------------------------------------------------------------------- We are currently in the process of modernizing our stores and plan to have over 50% of our stores modernized by the summer of 2023 and the full program complete by the end of fiscal 2024.
Two new stores were opened in year-to-date 2022 and no stores were closed. Store count is on track to reach 400 stores by the end of fiscal 2022. No store closures during fiscal 2022 are anticipated.
Results of Operations for the Second Quarter Ended
Net sales were$312.3 million during the second quarter 2022 and decreased 6.0% compared to the second quarter 2021. The decrease in Net sales was primarily the result of a 13.8% comparable store sales decline due largely to fluctuations in the discretionary income of our customer base and reduced availability of athletic shoes in the second quarter 2022, partially offset by Net sales attributable to new stores, mostly the Shoe Station stores. E-commerce sales were approximately 9% of merchandise sales in the second quarter 2022, compared to 10% in the second quarter 2021.
Gross Profit
Gross profit was$113.1 million during the second quarter 2022, a decrease of$22.6 million compared to the second quarter 2021. Gross profit margin in the second quarter 2022 was 36.2% compared to 40.9% in the second quarter 2021. Merchandise margin decreased 2.8 percentage points and buying, distribution and occupancy costs increased 1.8 percentage points as a percentage of Net sales compared to the second quarter 2021. These changes were primarily the result of the impact of inflation on transportation and fuel costs, other merchandise cost increases and the de-leveraging of other buying, distribution and occupancy costs due to lower Net sales in the second quarter 2022.
Selling, General and Administrative Expenses ("SG&A")
SG&A decreased$1.7 million in the second quarter 2022 to$74.3 million compared to$76.0 million in the second quarter 2021. The decrease was primarily attributable to reduced incentive compensation expense as a result of maximum performance achieved last year, partially offset by increased depreciation expense resulting from investment in property and equipment related to our store portfolio modernization plan. As a percentage of Net sales, SG&A was 23.8% in the second quarter 2022 compared to 22.9% in the second quarter 2021.
Income Taxes
The effective income tax rate for the second quarter 2022 was 25.6% compared to 25.8% for the second quarter 2021. Our provision for income taxes is based on the current estimate of our annual effective tax rate and is adjusted as necessary for quarterly events. For the full 2022 fiscal year, we expect our tax rate to be between 25% and 26% compared to the 25.3% effective tax rate recognized during the full 2021 fiscal year.
Results of Operations Year-to-Date Through
Net sales were$629.8 million in year-to-date 2022, a decrease of 4.7% compared to year-to-date 2021. The decrease in Net sales was primarily the result of a 12.2% comparable store sales decline due largely to fluctuations in the discretionary income of our customer base and reduced availability of athletic shoes in year-to-date 2022, partially offset by Net sales attributable to new stores, mostly the Shoe Station stores. E-commerce sales were approximately 10% of merchandise sales in year-to-date 2022, compared to 11% in year-to-date 2021.
Gross Profit
Gross profit was$226.0 million in year-to-date 2022, a decrease of$39.9 million compared to year-to-date 2021. Gross profit margin in year-to-date 2022 was 35.9% compared to 40.3% in year-to-date 2021. Merchandise margin decreased 2.0 percentage points and buying, distribution and occupancy costs increased 2.4 percentage points as a percentage of Net sales compared to year-to-date 2021. These changes were primarily the result of the impact of inflation on transportation and fuel costs, other merchandise cost increases and the de-leveraging of other buying, distribution and occupancy costs due to lower Net sales in year-to-date 2022. 17 --------------------------------------------------------------------------------
Selling, General and Administrative Expenses
SG&A increased$3.2 million in year-to-date 2022 to$151.8 million compared to$148.6 million in year-to-date 2021. The overall increase in SG&A during year-to-date 2022 was primarily attributable to continued investment in store level wages and advertising and increased depreciation resulting from investment in property and equipment related to our store portfolio modernization plan. The increases were partially offset by lower levels of incentive compensation. As a percentage of Net sales, SG&A was 24.1% in year-to-date 2022 compared to 22.5% in year-to-date 2021. Income Taxes
The effective income tax rate for year-to-date 2022 was 24.8% compared to 25.3% for year-to-date 2021.
Liquidity and Capital Resources
Our primary sources of liquidity are$62.6 million of cash, cash equivalents and marketable securities on hand at the end of the second quarter 2022, cash generated from operations and availability under our$100 million credit facility. While the effects of the COVID-19 pandemic and other economic uncertainty associated with inflation, constrained supply chains and the Eastern European conflict, among other macroeconomic uncertainty, make our operating cash flow less predictable, we believe our 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 normally for working capital, which are principally inventory purchases, investments in our stores, such as new stores, remodels and relocations, distribution center initiatives, lease payments associated with our real estate leases, potential dividend payments, potential share repurchases under our share repurchase program and the financing of capital projects, including investments in new systems. As part of our growth strategy, we may also pursue strategic acquisitions of other footwear retailers.
Cash Flow - Operating Activities
Net cash generated from operating activities was$8.9 million in year-to-date 2022 compared to$79.8 million during year-to-date 2021. The change in operating cash flow was primarily driven by increased earnings in year-to-date 2021 and timing of inventory purchases. Working capital decreased on a year-over-year basis and totaled$287.7 million atJuly 30, 2022 compared to$298.7 million atJuly 31, 2021 . The decrease was primarily attributable to lower cash balances due to the acquisition of Shoe Station inDecember 2021 and share repurchases, partially offset by higher merchandise inventory levels. Our current ratio was 2.5 as ofJuly 30, 2022 andJuly 31, 2021 .
Cash Flow - Investing Activities
Our cash outflows for investing activities are normally for capital
expenditures. During year-to-date 2022 and 2021, we expended
We invest in publicly traded mutual funds designed to mitigate income statement volatility associated with our nonqualified deferred compensation plan. The balance of these marketable securities was$11.0 million atJuly 30, 2022 . Additional information can be found in Note 4 - "Fair Value Measurements" to our Notes to Condensed Consolidated Financial Statements contained in PART I, ITEM 1 of this Quarterly Report on Form 10-Q.
Cash Flow - Financing Activities
Our cash outflows for financing activities are typically for cash dividend payments, share repurchases or payments on our credit facility. 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 stock-based compensation awards that are settled in shares. Our cash inflows from financing activities generally reflect stock issuances to employees under our Employee Stock Purchase Plan and borrowings under our credit facility. During year-to-date 2022, net cash used in financing activities was$27.6 million compared to$10.3 million during year-to-date 2021. The increase in net cash used in financing activities was primarily due to the repurchase of$20.5 million of shares in year-to-date 2022, compared to the repurchase of$4.0 million of shares in year-to-date 2021, associated with our Board of Directors' authorized share repurchase program .
Capital Expenditures
Capital expenditures for fiscal 2022, including actual expenditures in year-to-date 2022, are expected to be between$63 million and$73 million , with approximately$53 million to$58 million to be used for new stores, relocations and remodels and approximately$10 18 -------------------------------------------------------------------------------- million to$15 million for upgrades to our e-commerce platform, various other store improvements, continued investments in technology and normal asset replacement activities. The resources allocated to these projects are subject to near-term changes depending on the impacts associated with COVID-19, ongoing supply chain disruptions, and other macroeconomic uncertainty. Furthermore, the actual amount of cash required for capital expenditures for store operations depends in part on the number of stores opened, the number of stores relocated, the amount of lease incentives, if any, received from landlords and the number of stores remodeled. The number of new store openings and relocations will be 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.
Store Portfolio
We opened oneShoe Carnival branded store and one Shoe Station branded store in year-to-date 2022. Increasing market penetration by adding new stores is a key component of our growth strategy. We are on track to achieve 400 stores by the end of fiscal 2022 and aim to add over 20 new stores in fiscal 2023 and over 25 new stores annually by fiscal 2024, across both banners. These store objectives will be accomplished through a combination of both organic and acquired store growth. We believe our current store footprint provides for growth in new markets withinthe United States as well as fill-in opportunities within existing markets. In the near term, we expect to pursue fill-in opportunities for store growth across large and mid-size markets as we continue to leverage customer data from our customer relationship management program. We believe more attractive real estate options will be available with the addition of the Shoe Station retail concept to our portfolio. However, our future store growth may continue to be impacted by the COVID-19 pandemic and other macroeconomic uncertainty. Over the last several years, we performed a store rationalization and performance improvement plan. As part of the plan, which is now complete, we identified underperforming stores and worked to address the performance of these stores through renegotiation of lease terms, relocation or closure. While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years.
Credit Facility
OnMarch 23, 2022 , we entered into a new$100 million Amended and Restated Credit Agreement (the "New Credit Agreement"), which replaced our existing credit agreement. The New Credit Agreement is collateralized by our inventory, expires onMarch 23, 2027 , and uses a Secured Overnight Financing Rate ("SOFR") as quoted by TheFederal Reserve Bank of New York as the basis for financing charges. Material covenants associated with the New Credit Agreement require that we maintain a minimum net worth of$250 million and a consolidated interest coverage ratio of not less than 3.0 to 1.0. We were in compliance with these covenants as ofJuly 30, 2022 . The New Credit Agreement contains certain restrictions. However, as long as our consolidated EBITDA is positive and there are either no or low borrowings outstanding, we expect these restrictions would have no impact on our ability to pay cash dividends, execute share repurchases or facilitate acquisitions from cash on hand. The New Credit Agreement stipulates that cash dividends and share repurchases of$15 million or less per fiscal year can be made without restriction as long as there is no default or event of default before and immediately after such distributions. We are also permitted to make acquisitions and pay cash dividends or repurchase shares in excess of$15 million in a fiscal year provided that (a) no default or event of default exists before and immediately after the transaction and (b) on a proforma basis, the ratio of (i) the sum of (A) our consolidated funded indebtedness plus (B) three times our consolidated rental expense to (ii) the sum of (A) our consolidated EBITDA plus (B) our consolidated rental expense is less than 3.5 to 1.0. Among other restrictions, the New Credit Agreement also limits our ability to incur additional secured or unsecured debt to$20 million . The New Credit Agreement bears interest, at our option, at (1) the agent bank's base rate plus 0.0% to 1.0% or (2) Adjusted Term SOFR plus 0.9% to 1.9%, depending on our achievement of certain performance criteria. A commitment fee is charged at 0.2% to 0.3% per annum, depending on our achievement of certain performance criteria, on the unused portion of the lenders' commitment. During year-to-date 2022, we did not borrow or repay funds under our prior credit facility or the New Credit Agreement. Letters of credit outstanding were$700,000 atJuly 30, 2022 and our borrowing capacity was$99.3 million .
The terms "net worth", "consolidated interest coverage ratio", "consolidated funded indebtedness", "consolidated rental expense", "consolidated EBITDA", "base rate" and "Adjusted Term SOFR" are defined in the New Credit Agreement.
Dividends
OnJune 23, 2022 , the Board of Directors approved the payment of a second quarter 2022 cash dividend to our shareholders. The quarterly cash dividend of$0.090 per share was paid onJuly 25, 2022 to shareholders of record as of the close of business onJuly 11, 2022 . In the second quarter 2021, the dividend paid was$0.070 per share. During the first half of 2022 and 2021, we returned$5.1 million and$4.0 million , respectively, to our shareholders through our quarterly cash dividends. 19
-------------------------------------------------------------------------------- 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, subject to restrictions as outlined above in the "Credit Facility" discussion. See Note 9 - "Debt" to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of our Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 for a further discussion of our credit facility. Share Repurchase Program OnDecember 16, 2021 , our Board of Directors authorized a share repurchase program for up to$50.0 million of outstanding common stock, effectiveJanuary 1, 2022 (the "2022 Share Repurchase Program"). The purchases may be made in the open market or through privately negotiated transactions from time-to-time throughDecember 31, 2022 and in accordance with applicable laws, rules and regulations. The 2022 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, share repurchases 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 and economic factors and are subject to restrictions as outlined above in the "Credit Facility" discussion. See Note 9 - "Debt" to our Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of our Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 for a further discussion of our credit facility. No shares were repurchased during the second quarter of 2022 under the 2022 Share Repurchase Program. During year-to-date 2022, we repurchased 682,886 shares of common stock at a total cost of$20.5 million under the 2022 Share Repurchase Program. As ofJuly 30, 2022 , we had$29.5 million available for future repurchases. Due to uncertainty related to the COVID-19 pandemic, share repurchases were limited in fiscal 2021. In year-to-date 2021, we repurchased 117,068 shares of common stock at a total cost of$4.0 million .
Seasonality
We have three distinct peak selling periods: Easter, back-to-school and Christmas. Our operating results depend significantly upon the sales generated during these periods. To prepare for our peak shopping seasons, we must order and keep in stock significantly more merchandise than we would carry during other periods of the year. Any unanticipated decrease in demand for our products or a supply chain disruption that reduces inventory availability during these peak shopping seasons in future periods could reduce our Net sales and gross profit and negatively affect our profitability.
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