Shoe Pavilion (NASDAQ:SHOE)
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Shoe Pavilion, Inc. (Nasdaq:SHOE) today provided a business update for
its second quarter ended June 30, 2007.
Net sales for the second quarter of fiscal 2007 were $37.5 million and
comparable store sales decreased by 1.0%. The Company expects a net loss
for the second quarter of approximately $1.0 million to $1.2 million, or
$0.10 to $0.12 per diluted share. Previous guidance for the second
quarter of fiscal 2007 was for net sales to range between $37.0 million
and $39.0 million, for comparable store sales to increase 2% to 3% and
for net income to be approximately $0.01 to $0.02 per diluted share.
Results for the second quarter were negatively impacted by lower than
expected sales at the Company’s newest stores
opened in the last 12 months. The 24 stores opened in 2006 generated
sales that were below the Company’s
expectations for that group of stores. These new stores accounted for a
majority of the expected second quarter operating loss. Six of the 24
stores opened in 2006 were included in the comparable store base in the
second quarter and their inclusion resulted in the decrease in
comparable store sales. Excluding these six stores, comparable store
sales increased 1.5%. In addition, the Company exceeded budgeted
expenses by approximately $700,000, primarily due to higher than
expected legal and accounting fees, freight out, store supplies and
store payroll.
Dmitry Beinus, Chief Executive Officer, stated, “Our
results for the second quarter are lower than we initially anticipated
as a result of outside factors which continue to affect the 24 stores
opened in the last year. Most of the stores we rolled out in 2006 were
in new shopping centers where we have experienced slower than expected
traffic due to ongoing construction as well as it taking longer than
planned for other retailers to open stores at those centers. In
addition, several of the stores were in new regions where we lacked
critical mass. Our near-term goal is to open new stores only in existing
markets to boost the economies of scale and the leveraging effects of
our cluster strategy.”
“Despite the recent performance of our stores
opened in the last year, it is important to note that our core business
continues to perform well. While we experienced lower than planned sales
at our newer stores, we were able to achieve a 1.5% increase in
comparable store sales, excluding six stores opened in 2006, and a 19.5%
increase in net sales versus the second quarter of 2006. As a group
stores that were opened before January 1, 2006, met our expectations and
generated strong increases in both sales and operating income for the
quarter. Based on the results achieved across our store base, we
continue to be confident in our merchandise strategy and assortment. In
addition, we continue to believe our newer stores will ramp up to
generate sales growth and operating margin in line with our more mature
stores, just over a longer period of time than we had originally
expected.”
About Shoe Pavilion
Shoe Pavilion is an independent off-price footwear retailer. 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. We currently operate 108 stores in California,
Washington, Oregon, Arizona, Nevada, Texas and New Mexico. More
information on Shoe Pavilion can be found by visiting the Company’s
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 our 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 also 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.