Shoe Pavilion, Inc. said first quarter sales increased 32.6% to $36.2 million from $27.3 million. Comparable store net sales for the first quarter increased 7.8% from the same period in fiscal 2006. The footwear chain posted a net loss of $1.2 million, or 13 cents a share, in the quarter, compared to net income of $206,000, or 3 cents, a year ago.
Gross profit was 28.8% in the first quarter compared to 34.0% in the same period last year. The decrease primarily reflects higher occupancy costs due to the rapid rollout of new stores during the past year and a reduction in selling margins. Selling, general and administrative expenses increased to 33.3% of net sales compared to 32.1% in the year-ago period primarily reflecting de-leveraging from the lower than expected net sales.
Dmitry Beinus, Chairman and CEO of the Company, stated: “Our performance in the first quarter was below our original expectations as a result of outside factors which affected the 24 stores we opened in 2006. Most of the stores opened in 2006 were in new shopping centers where we have experienced slower than expected traffic due to ongoing construction in the centers as well as it taking longer than planned for other retailers to open stores at those centers. As a result of our first quarter performance we are taking a more conservative approach to our outlook for 2007. We continue to be very pleased with the performance of our mature stores and overall core operations and we believe we are on the right path to increasing sales and improving returns at our new stores.”
During the quarter, the company opened one new store in Sparks, Nevada, and relocated two stores into larger premises, those being in Emeryville and Portrero in Northern California. It operated 109 stores as of the March 31, 2007.
In the second quarter of 2007, Shoe Carnival expects to open three new stores, relocate one existing store into larger premises and close 4 stores. For fiscal 2007, it expects to open 16 to 18 new stores and close 5 to 7 stores.
Shoe Carnival anticipates that comparable store net sales will increase 2% to 3% in the second quarter of 2007, and that comparable store net sales will increase 3% to 4% for the 2007 fiscal year. Shoe Carnival anticipates achieving net sales of $37 million to $39 million in the second quarter of 2007, an increase of 18% to 24% in net sales over the first quarter of 2006. For the 2007 fiscal year, it anticipates achieving net sales of $155.5 million to $160.5 million, an increase of 18% to 22% in net sales over fiscal 2006.
For the second quarter of 2007, Shoe Carnival expects income of $50,000 to $150,000, or $0.01 to $0.02 per diluted share and for the 2007 fiscal year, a net loss of $2 million to $2.5 million or $0.21 to $0.26 per fully diluted share.
Shoe Carnival operates 108 store located in California, Washington, Oregon, Nevada, Arizona, Texas and New Mexico.
Shoe Pavilion, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Thirteen weeks ended
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March 31, April 1,
2007 2006
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Net sales $36,237 $27,269
Cost of sales and related occupancy expenses 25,795 17,997
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Gross profit 10,442 9,272
Selling, general and administrative expenses 12,060 8,746
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(Loss) income from operations (1,618) 526
Interest expense (459) (179)
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(Loss) income before income taxes (2,077) 347
Income tax benefit (expense) 864 (141)
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Net (loss) income $(1,213) $206
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(Loss) earnings per share:
Basic (0.13) 0.03
Diluted (0.13) 0.03
Weighted average shares outstanding:
Basic 9,539 7,567
Diluted 9,539 7,801
