Exhibit 99.1
Shoe Pavilion Reports Results for the Third Quarter
and First Nine Months of 2004
PINOLE, Calif.--(BUSINESS WIRE)--Nov. 4, 2004--Shoe Pavilion, Inc.
(Nasdaq:SHOE) today reported net income of $24,000 or $0.00 per share
for the third quarter ended October 2, 2004, compared to a net loss of
$1.2 million or ($0.18) per share for the third quarter of 2003. Net
income for the nine months ended October 2, 2004 was $1.1 million or
$0.16 per share, compared to a net loss of $2.8 million or ($0.40) per
share for the same period in 2003. The results for the third quarter
and nine month periods ended October 2, 2004 include the reversal of
$258,000 before taxes of a reserve recorded in the fourth quarter of
2003 for costs associated with the settlement of a wage and hour
lawsuit.
Net sales decreased 4.2% to $20.7 million for the third quarter
ended October 2, 2004, from net sales of $21.6 million for the same
period in 2003. Net sales for the nine months ended October 2, 2004
were $61.0 million, a 0.6 % decrease from net sales of $61.3 million
for the nine months ended September 27, 2003.
Comparable store net sales decreased 6.3 % for the third quarter
ended October 2, 2004 from the same period last year and increased 0.1
% for the nine months ended October 2, 2004 from the same period last
year.
As previously reported on October 7, 2004, the decline in
comparable store sales during the third quarter was due in part to the
reduction in advertising in the third quarter of 2004 as compared to
the same period in 2003. In the third quarter ended October 2, 2004,
advertising as a percentage of net sales was 5.8% compared to 10.9%
for the same period last year, a reduction of approximately $1.1
million. The Company also indicated on October 7, 2004 that although
comparable store net sales increased 4.7% in the third quarter of
2003, this increase was below the Company's expectations given the
amount of money committed to advertising during the third quarter of
2003. Based upon these results in the third quarter of 2003 the
Company reduced its advertising in the third quarter of 2004 as it
continues to focus on profitability.
The Company reported that inventory at October 2, 2004 was
approximately $37.0 million, an increase of approximately $10.0
million from January 3, 2004. The Company stated that the inventory
growth is in line with its seasonal expectations, is the result of the
recent opening of new stores, and the timing of inventory receipts in
anticipation of the holiday season.
During the quarter ended October 2, 2004 the Company opened three
stores in Arizona and closed two stores for which the leases had
expired. Since the end of the quarter the Company opened two stores,
bringing the total number of stores the Company operates to 86. The
Company plans to open five to ten new stores in 2005.
Shoe Pavilion is an independent off-price footwear retailer on the
West Coast. It offers a broad selection of women's, men's and
children's designer label and name brand footwear such as Converse,
Reebok, Skechers and Nine West, typically at 20% to 60% below
department store regular prices for the same shoes. The Company has 86
stores in California, Washington, Oregon and Arizona.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains certain
forward-looking statements that are subject to risks and uncertainties
that could cause the Company's actual results to differ materially
from management's current expectations. These factors include, without
limitation, competitive pressures in the footwear industry, changes in
the level of consumer spending on or preferences in footwear
merchandise, economic and other factors affecting retail market
conditions, the Company's ability to purchase attractive name brand
merchandise at reasonable discounts, the availability of desirable
store locations as well as management's ability to negotiate
acceptable lease terms and maintain supplier and business
relationships and open new stores in a timely manner. Other risk
factors are detailed in the Company's filings with the Securities and
Exchange Commission. The Company intends that these forward-looking
statements to speak only at the time of this release and does not
undertake to revise or confirm them as more information becomes
available.
Shoe Pavilion, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
October 2, January 3,
2004 2004
---------- ----------
ASSETS
CURRENT ASSETS:
Cash $969 $1,034
Receivables 17 130
Income tax receivables - 13
Inventories 36,924 26,960
Deferred income taxes 1,021 1,966
Prepaid expenses 1,751 1,521
---------- ----------
Total current assets 40,682 31,624
---------- ----------
Property and equipment, net 2,975 3,080
Deferred income taxes and other 1,553 1,605
---------- ----------
TOTAL $45,210 $36,309
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under credit agreement $8,600 $5,045
Accounts payable 10,917 6,720
Accrued expenses 3,526 3,674
Current portion of capitalized lease
obligations 124 6
---------- ----------
Total current liabilities 23,167 15,445
Deferred rent 1,874 1,767
Commitments and contingencies - -
STOCKHOLDERS' EQUITY:
Preferred stock - $.001 par value; 1,000,000
shares authorized; no shares issued or
outstanding - -
Common stock - $.001 par value: 15,000,000
shares authorized; 6,801,021 and 6,800,000
shares issued and outstanding 7 7
Additional paid-in capital 13,969 13,967
Retained earnings 6,193 5,123
---------- ----------
Total stockholders' equity 20,169 19,097
---------- ----------
TOTAL $45,210 $36,309
========== ==========
Shoe Pavilion, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts and number of stores)
Thirteen weeks Thirty-nine weeks
ended ended
------------------- -------------------
Oct. 2, Sept. 27, Oct. 2, Sept. 27,
2004 2003 2004 2003
Net sales $20,672 $21,581 $60,974 $61,326
Cost of sales and related
occupancy expenses 13,948 15,444 40,279 44,820
--------- --------- --------- ---------
Gross profit 6,724 6,137 20,695 16,506
Selling, general and
administrative expenses 6,591 8,077 18,680 20,878
--------- --------- --------- ---------
Income (loss) from
operations 133 (1,940) 2,015 (4,372)
Interest expense (102) (66) (244) (215)
Other income 10 - 10 -
--------- --------- --------- ---------
Income (loss) before taxes 41 (2,006) 1,781 (4,587)
Income tax benefit (expense) (17) 803 (711) 1,835
--------- --------- --------- ---------
Net income (loss) $24 ($1,203) $1,070 ($2,752)
========= ========= ========= =========
Earnings (loss) per share:
Basic $0.00 $(0.18) $0.16 $(0.40)
Diluted $0.00 $(0.18) $0.16 $(0.40)
Weighted average shares
outstanding:
Basic 6,800 6,800 6,800 6,800
Diluted 6,966 6,800 6,886 6,800
Stores operated at end of
period 84 84
CONTACT: Shoe Pavilion, Inc.
John D. Hellmann, 510-222-4405