Shoe Pavilion, Inc. announced net income of $704,000 or 10 cents per diluted share, for the second quarter ended July 2, 2005 compared to net income of $694,000 or 10 cents per diluted share, for the second quarter of 2004. Net income for the six months ended July 2, 2005 was $1.1 million or 16 cents per diluted share, compared to net income of $1.0 million or 15 cents per diluted share, for the same period in 2004.
As previously announced, comparable store net sales increased 8.2% for the second quarter ended July 2, 2005 from the same period last year. Net sales for the second quarter ended July 2, 2005 increased 20.3% to $24.9 million from $20.7 million for the same period last year.
Comparable store net sales for the six months ended July 2, 2005 increased 9.5% from the same period last year. Net sales for the six months ended July 2, 2005 increased 19.7% to $48.2 million from $40.3 million for the same period last year.
Gross profit for the second quarter of 2005 was $8.8 million or 35.4% of net sales compared to $7.3 million or 35.4% of net sales for the same period last year. Gross profit for the six months ended July 2, 2005 was $16.8 million or 34.9% of net sales compared to $14.0 million or 34.7% of net sales for the same period last year.
Selling, general and administrative expenses for the second quarter of 2005 were $7.5 million or 30.3% of net sales compared to $6.1 million or 29.5% of net sales for the same period last year. Selling, general and administrative expenses for the six months ended July 2, 2005 were $14.8 million or 30.6% of net sales compared to $12.1 million or 30.0% of net sales for the same period last year.
The increase in selling, general and administrative expenses as a percentage of net sales for the second quarter and six months ended July 2, 2005 is primarily due to an increase in advertising. The increase in advertising in the second quarter is due in part to advertising in Arizona which is a new market for the company. The company opened its first two stores in Arizona in June 2004. As of July 2, 2005 the company operated six stores in Arizona. The increase in selling, general and administrative expenses as a percentage of net sales in the second quarter is also due in part to costs of approximately $180,000 recorded in the second quarter by the company associated with a wage and hour lawsuit settled by the company in August 2005.
During the quarter ended July 2, 2005 the company opened four stores and closed two stores in which the leases had expired, bringing the total number of stores the company operates to 87. The company plans to open six stores the remainder of 2005. Two of these stores are expected to be in Nevada which is a new market for the company.
Shoe Pavilion, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share
amounts and number of stores)
Thirteen weeks Twenty-six weeks
ended ended
----------------- -----------------
July 2, July 3, July 2, July 3,
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $24,929 $20,729 $48,228 $40,302
Cost of sales and related
occupancy expenses 16,106 13,383 31,389 26,331
-------- -------- -------- --------
Gross profit 8,823 7,346 16,839 13,971
Selling, general and
administrative expenses 7,543 6,120 14,777 12,089
-------- -------- -------- --------
Income from operations 1,280 1,226 2,062 1,882
Interest expense (125) (70) (236) (142)
-------- -------- -------- --------
Income before income taxes 1,155 1,156 1,826 1,740
Income tax expense (451) (462) (716) (694)
-------- -------- -------- --------
Net income $ 704 $ 694 $ 1,110 $ 1,046
======== ======== ======== ========
Earnings per share:
Basic $ 0.10 $ 0.10 $ 0.16 $ 0.15
Diluted $ 0.10 $ 0.10 $ 0.16 $ 0.15
Weighted average shares
outstanding:
Basic 6,805 6,800 6,803 6,800
Diluted 7,101 6,925 7,080 6,852
Stores operated at end of period 87 83
