Shoe Pavilion, Inc. Announces First Quarter 2007 Results
May 08 2007 - 4:05PM
Business Wire
Shoe Pavilion, Inc. (Nasdaq:SHOE) today announced financial results
for the first quarter ended March 31, 2007. Net sales increased
32.6%, or $8.9 million, to $36.2 million from $27.3 million for the
first quarter ended April 1, 2006. Comparable store net sales for
the first quarter increased 7.8% from the same period in fiscal
2006. Sales from our new stores and relocated stores contributed
$10.0 million in the first quarter ended March 31, 2007. 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. A net loss of $1.2 million
was incurred in the first quarter, or $0.13 per diluted share,
compared to net income of $206,000, or $0.03 per diluted share, for
the first quarter of 2006. 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, we opened one new
store in Sparks, Nevada, and relocated two stores into larger
premises, those being in Emeryville and Portrero in Northern
California. We operated 109 stores as of the March 31, 2007.
Business Outlook In the second quarter of 2007, we expect to open
three new stores, relocate one existing store into larger premises
and close 4 stores. For fiscal 2007, we expect to open 16 to 18 new
stores and close 5 to 7 stores. We anticipate that our 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. We anticipate 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, we anticipate achieving net sales of $155.5
million to $160.5 million, an increase of 18% to 22% in net sales
over fiscal 2006. We presently expect that in the second quarter of
2007 we will achieve net income of $50,000 to $150,000, or $0.01 to
$0.02 per diluted share and for the 2007 fiscal year, we anticipate
that we will incur a net loss of $2 million to $2.5 million or
$0.21 to $0.26 per fully diluted share. Teleconference Shoe
Pavilion will host a conference call today, May 8, at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time) to discuss first quarter 2007
earnings results. To access the call, please dial 866-463-5401
(domestic) or 212-457-9857 (international) and enter pin code
402112# a few minutes prior to the call to establish your line. A
replay of the call will be available through June 7, 2007 and can
be accessed approximately one hour after the end of the call by
dialing 866-439-4554 (domestic) or 212-457-9844 (international);
pin number 327529#. About Shoe Pavilion Shoe Pavilion is an
independent off-price footwear retailer with locations in seven
Western and Southwestern states. We offer a broad selection of
women�s, men�s and children�s designer label and name brand
footwear, typically at 20% to 60% below department store regular
prices for the same shoes. Today, we operate 108 stores located in
California, Washington, Oregon, Nevada, Arizona, Texas and New
Mexico. More information on Shoe Pavilion can be found by visiting
our web site at www.shoepavilion.com. Business Risks and
Forward-Looking Statements This press release contains
forward-looking statements relating to, among other things, results
deemed to be achievable by management in 2007 and store opening
plans. Sales and earnings trends are also affected by many other
factors including, among others, the performance of existing and
newly opened stores, world and national political events, including
general economic conditions, the effectiveness of our promotions
and merchandising strategies, the efficient operation of our supply
chain, including the support of key vendors, our effective
management of business risks, including litigation, and competitive
factors applicable to our retail markets. In light of these risks,
the forward-looking statements contained in this press release are
not guarantees of future performance and in fact may not be
realized. Our actual results could differ materially and adversely
from those expressed in this press release. Further, the statements
made by us above represent our views only as of the date of this
press release, and it should not be assumed that the statements
made herein remain accurate as of any future date. We do not
presently intend to update these statements prior to our next
quarterly earnings release and undertake no duty to any person to
effect any such update under any circumstances. Investors are urged
to review carefully the discussion under the caption �Risk Factors�
in our Annual Report on Form 10-K for the year ended December 30,
2006, which has been filed with the Securities and Exchange
Commission and may be accessed through the EDGAR database
maintained by the SEC at www.sec.gov. Shoe Pavilion, Inc. Condensed
Consolidated Balance Sheets (Unaudited) (In thousands, except share
data) � March 31, December 30, 2007� 2006� ASSETS � CURRENT ASSETS:
Cash $ 542� $ 680� Receivables 2,103� 2,430� Inventories 74,797�
62,636� Deferred income taxes 1,034� 1,034� Prepaid expenses 4,555�
3,138� Total current assets 83,031� 69,918� � Property and
equipment, net 15,218� 14,413� Deferred income taxes and other
assets 2,638� 2,585� TOTAL $ 100,887� $ 86,916� � LIABILITIES AND
STOCKHOLDERS' EQUITY � CURRENT LIABILITIES: Accounts payable $
21,252� $ 9,753� Accrued expenses 5,135� 4,678� Borrowings under
credit agreement 24,244� 21,223� Current portion of capitalized
lease obligations 174� 156� Total current liabilities 50,805�
35,810� � Deferred rent 9,876� 9,580� Long-term portion of
capitalized lease obligations 328� 368� Total liabilities 61,009�
45,758� � Commitments and contingencies � STOCKHOLDERS' EQUITY:
Preferred stock- $.001 par value; 1,000,000 shares authorized; 0
(2007) and 0 (2006) shares issued and outstanding -� -� Common
stock- $.001 par value; 15,000,000 shares authorized; 9,540,629
(2007) and 9,538,552 (2006) shares issued and outstanding 10� 10�
Additional paid-in capital 30,212� 30,069� Retained earnings 9,656�
11,079� Total stockholders' equity 39,878� 41,158� TOTAL $ 100,887�
$ 86,916� Shoe Pavilion, Inc. Condensed Consolidated Statements of
Operations (Unaudited) (In thousands, except per share data) �
Thirteen weeks ended � March 31, April 1, 2007� 2006� � Net sales $
36,237� $ 27,269� Cost of sales and related occupancy expenses
25,795� 17,997� Gross profit 10,442� 9,272� Selling, general and
administrative expenses 12,060� 8,746� (Loss) income from
operations (1,618) 526� Interest expense (459) (179) (Loss) income
before income taxes (2,077) 347� Income tax benefit (expense) 864�
(141) Net (loss) income $ (1,213) $ 206� � (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�
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