With doors shut due to the coronavirus, Shoe Carnival Inc. is taking stepping to preserve its financial flexibility.
In a Securities and Exchange Commission filing today, the Evansville, Ind.-based retailer revealed that it has exercised the accordion feature of its credit agreement with Wells Fargo Bank N.A. and Fifth Third Bank, National Association to further enhance its financial liquidity position. As a result of the exercise, which closed on April 16, the company’s line of credit has been bumped by $50 million, to $100 million from $50 million. It has no cash borrowings under the facility.
“As we have communicated, our strong financial position has been a key competitive advantage for us through various cycles. However, out of an abundance of caution in light of the prolonged uncertainty in the macro-economic environment driven by the COVID-19 pandemic, we expanded our line of credit to ensure greater flexibility as we navigate current market conditions,” said Cliff Sifford, vice chairman and CEO.
As an additional step to preserve liquidity while stores remain closed, Shoe Carnival announced earlier this month that its leaders and board have “substantially reduced” their respective base salaries and cash retainer fees. The cutbacks are to be effective until at least half of the company’s stores have reopened. (Store associates are continuing to be paid during this time, according to the company.) Further, Shoe Carnival is working with its supply chain partners to scale down inventories. It is also deferring nonessential projects and marketing activities.
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While Shoe Carnival’s 390 brick-and-mortar units are shut because of coronavirus, the retailer has ramped up its digital business to make up some sales. In late March, the company noted that digital sales had “grown significantly,” with a “steep acceleration” of online customer engagement driving triple-digit order increases on its site since the store closures.