Shoe Pavilion, Inc. saw second quarter net sales increase 19.5% to $37.5 million from $31.4 million for the same period last year. Comparable store net sales for the second quarter decreased 1.0% after increasing 3.9% last year. Sales from new stores and relocated stores contributed $9.1 million in the quarter, up 15.2% from $7.9 million one year ago. The company said that several of the new stores were not performing according to plan and that excluding the results of six stores opened in 2006 from the comp base shows the company with a quarterly same stores sales gain of 1.5% with a 19.5% jump in net sales.
Gross profit was 29.3% in the second quarter down 560 basis points from 34.9% in the same period last year. The decrease primarily reflects higher occupancy costs due to the rollout of new stores during the past year and a reduction in selling margins. The margin hit was compounded by an increase of 330 basis points in SG&A expenses for the quarter to 32.5% of net sales compared to 29.2% in the year-ago period. The expense increase was attributed to de-leveraging as a result of sales growth that failed to meet expectations.
A net loss of $1.1 million was incurred in the second quarter, or 11 cents per diluted share, compared to net income of $1.0 million, or 10 cents per diluted share, for the second quarter of 2006.
