SCVL - Earnings call transcript Q1 2018

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Operator

Good afternoon and welcome to Shoe Carnival's First Quarter Fiscal 2018 Earnings Conference Call. Today's call is being recorded. It is also being broadcast via Webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. cause those actual projected could materially to factors from different in risk the results Company's be These such statements.

or any risk be call any Shoe included as statements date. any contained SEC Mr. remarks. on these should to factors announce call of discussed Mr. Sifford, of on cautioned not press developments. may in today's statements considered statements, you of undue with release are to over conjunction Sifford, obligation Forward-looking forward-looking publicly reliance to the place the the release. Cliff or President to risk Investors revisions factors press now for events disclaims today's and which in or The filings reflect begin. Company's of and Carnival, forward-looking the Company to the update opening today's earnings in turn to Officer I'll Chief discussion speak conference future today's Executive only

Clifton Sifford

to quarter and you XXXX Carnival's call. welcome Thank conference earnings Shoe first

me is our results outlook. Chief financial call to highlights provide will first sales Senior operating the brief your On as Officer. well in overview results Jackson, today XXXX detail. call, a call today's take quarter Kerry the and open Financial more President, of up Operating and Vice updated our the Executive fiscal we'll as review Joining on Kerry I'll discuss Then, questions.

week resulted important in First, a XXXX that XXXX week XXrd fiscal our it is fiscal shift calendar. to the note one in of

sales sales if end the seasonal all quarter first quarter of basis. on dates. near ended comparison later a are year-over-year presented first compared the fiscal week XX-week as respective Comparable XXXX, one year. Our first quarterly impacted influences last store quarter there be may quarter for fiscal XXXX are to our In

warmer, winter the the review customers new which Easter turned reacted the positively start of at assortment. our from season. our operating very certain in sales Once selling and hot experienced weather performance. temperatures to through even affected a regions We Now, to to end cold quarter, quarter, I'll our the spring the wet

quarter, two-month happy with at and lower an strong are Sales on sales with basis for shoes the the year. percentage time for sales experienced single a increase little remarks. in last XX% of quarter deleveraged to XX on We entered both period Easter down Even up March for period, mid-single-digit digits. We the end product a store seasonal of we comparable basis. X.X% last door we give experience the low to up report per to as the comparable Kerry us mid-single-digits The produced of prepared and dollars up mid-single-digits EPS categories March were To increase and were the the months continued XX% inventory the clearance total were X.X%. same compared up down we share, inventory basis Athletic accelerated period. in on wetter a boots per one cooler $X.XX athleisure fashion basis while versus for tax the ended single April with XX transaction quarter combined We and detail and and trend. non-athletic sales while net a we first our and store declined units of Average first athletic in was a ended as SG&A quarter conversion lower quarter Easter reported quarter were result April. combined low per range. combined in up Traffic digits was though of merchandise average expense, increase of his in a year. a income, spring was transaction operating of which combined margin. add points when which BD&O more decrease per achieve diluted more per in have XX% store to a historically color X.X% a slightly. will improvement allowed merchandise, point and a

Focusing store and low sales on was in quarter our boots by last Women's comparable comparable down to on higher with quarter department, now non-athletic much margins basis much were first year. a first on a digits more women's up teens the compared basis. single inventory comparable at

This single basis. shows athletics, single digits slowing in warming no comparable were on the happy dress men's of basis comparable basis. digits the also from The was sandals. trend latter sign single single boots. single-digit up did and Children's and very increase the low comparable were driven with We up increase a athletic a although increase in performance low experienced weather quarter. down. in on low part low experience on also a digit digits on non-athletic comparable a sandals men's shoes children's primarily athletic a of store We comparable was The up Adult strong with athleisure was shoes department low basis. we up a of

can Shoe of the styles best have brands. know and they to season's customers top Carnival trust the Our assortment a tremendous

selection Our both store merchandise make of great to team family value. continues Carnival footwear and for help those job destination Shoe advertising do items and key identifying a to the

key spend initiatives on our a XXXX. minutes few Now I'd update to you like for to

you exercise XX As the reducing of XX landlords, better terms have in time, close to later had improving stores we certain of we year. some many successful we the been that we with the range to a a range Through same patience the opening new stores. to this to to XX. store of performance combination of performance pleased in improved continue slated to XX know, of report of closures of are projected the I'm number and At with

closures. number goal work to the improving reducing on store metrics the continue each each stores, with of closing the in these list further We of diligently thus of store of the

range. in volume. openings XXXX overall will store Near-term, single-digit sales for reduces New the our low be this

realize a income improvement closing as operating However, and EPS and to of long-term increased expect store our result opening efforts. we

closings For past opportunities to we Rico. store We not as stores that us ahead believe retail consolidation have fiscal and of the over to specialty this again landscape, do several closures. are implementation first of estate level we states and believe ramp CRM the experienced us retail store in benefit years. the real better once look We evolving and from XXXX, We the we enable expect the growth. to including of with will quarter up our store strategy XX Puerto XXX continue ended

and openings. store we quarter, stories no new closed had the three During

strategy Our CRM nicely. is moving forward

by implementation This year. end a strategy who and of the in complete our them. understanding one-to-one the is key initial a We relationship expect our calendar with creating is to element be customer

our selection give the and Shoe this can growing the operations for the customer improve our improve real our our not about improve on holistic categories understanding from to store they in We stores our us basis. site a it Although loyalty. we data and team a brands they comes now Carnival how understanding just prefer, merchandise loyalty live, merchandise CRM By identifying approach in believe selection the along store our we large And where future. can is they journey, and of program, estate. customers will will and on high part shop, value pain and to clear brick-and-mortar customers' points the a online. runway By with by

make this launching to high close of to I'll those very that give more Gold. reward the designed loyalty but achieved are updated is program during Perks will our tier you our Shoe is goal offer The program who their of version for program, spend not This status We to top-tier their next to which simply our the more customers customers family them a incentivize next store Shoe detail often. those the program of choice rewards customers purchases. new footwear to call. to all new loyalty value not most, of shop Carnival encourage on have

We to program. ship our also drop very are close launching vendor

Our select second allow broader from style enhancement by the opportunity the currently ramped quarter. than and a the to of customers drop brand seamlessly at ship end up have goal shoecarnival.com. is and view offered This to will our selection vendor

styles, ownership. of the Shoe brands, we and risk to expand inventory get For test Carnival, sizes without

today. of we developments are the We we The retail order investments the have technology landscape ever-evolving changing important and of and great Carnival in next take a we Shoe to growth. as In to with engagement consumer, customer relevant going stay incredibly Carnival at making on innovate. must lot the and level continuously improve are Shoe

for an you on update expectations financial XXXX. our Finally, to fiscal I'd give like

in on now expect number $X.XX, $X. is begun, have to trend with factors, been the will of our exceeding work to also We our I the through to this digits. of XXXX. has plan from million, am with our which $X.XX of concludes happy happy in we fiscal spring also I turn and the XXXX this our for the our continue over share And the expect overview. inventory my our pleased store past of margin be We manage I be with to and prior the year. and range the and now both has Kerry. of to way raising That $X,XXX per years. the margin. $X.XX Based am quarter million are fiscal the earnings up reducing estate of back-to-school believe more expectation. real EPS sales call athletic effectively like close in to performance and categories sales the these stores range with continuation guidance done We conservatively in comparable we second slated fiscal team the time diluted $X,XXX least am business to over I XXXX trend net to period. up strong athleisure summer product sales with guidance order low single to we several at experiencing continue would to

Kerry Jackson

Cliff. Thank you,

the and $X.X net XXXX. an first million ended the XX-week sales XXXX to closed X, to stores fiscal related The stores since $XXX.X increase from sales XXXX. $X.X period increase Our of $X.X for the in beginning was $X.X XXXX $XXX.X million base, first increased the of store May to beginning opened sales million store fiscal the by partially included million X, to compared May for increased XX in X, loss ended of $X.X million Comparable offset sales quarter the XXXX. ended XX, increase XX million net comparable from period the to in April primarily an due stores our X.X% million May of XX-week since XXXX ended sales the quarter new for compared

primarily last base. was reduction was due our in in Occupancy QX cost increase QX having primarily a in than expenses for stores The last distribution point SG&A quarter to carryover in driven our less merchandise was Our that of gross buying, $X.X at quarter distribution of expense due percentage $X.X in expense increase The and closed increased million lower than seasonal profit decrease sales. and to for basis a was as XX.X% in product leveraging merchandise prior close. we XXXX clearing margin in sales in and million. a increase XX.X% basis occupancy by quarter occupancy margin the buying, will a of was have for primarily higher occupancy compared in the and or expenses against the margin XX expenses year point X last margin to the a to This year. fiscal first year. million quarter higher $XX.X first a result occupancy a of percentage as sales more an

sales, a percentage XX.X% flat remained last first to these compared year. As of quarter at expenses the

in closing were fixed incentive asset compensation quarter of retirement reductions both and and closed, our assets earnings for expenses. income have this expense in Store closings in in in both were last sales of in fiscal compared Three QX SG&A stores five changes in expenses quarter were included million, of For along first compared $XXX,XXX. first decreases in tax in in QX stores and $X.X QX with included impairments year. year compared last recorded costs impairments. costs for new There this QX The rate savings by closed SG&A in store closing there to both closing expenses increase quarter $XXX,XXX same resulting year recorded that impairments in the stock-based for last no last no no pre-opening during QX this opened the been for There year. increases related of million store were included in sales selling was were asset decrease QX the the XX.X% stores cost Pre-opening in were new store period year. year sales which $X.X included Store SG&A year, non-comp year. stores $XXX,XXX to and fixed a cost cost for in have effective of period. seven last in year QX the on this of of this Significant offset this and fixed to and stores included XXXX XX.X% year plan. were the SG&A expenses

year fiscal the we to our of XXXX, For expect rate approximately tax XX%. full be

diluted a reminder, As reduced million quarter for XX%. XXXX Tax from U.S. December XX% rate of XXXX our Cuts per were was fiscal tax to Act which share. Net Jobs $X.XX corporate the in statutory the and earnings enacted, or first $XX.X

per $X.XX quarter For diluted of reported of earnings share. or million the XXXX, we first net $X.X

million, expenditures the our a on shares flow, in of adding prior $XXX,XXX are due the our $XX.X QX. or calendar this second remained for expected $XX accelerated My share of anticipated XXXX by sales significantly on full for period new ending first used next our shift comment was available expectation will to second a million during If stock $XX restated common quarter. for the Lease to be between to to August those including million with repurchase July very XX-week is million be year. projected $X Capital for our million actual million. under fiscal XXXX, in expenditures the our year focus into XXX,XXX end at the and approximately million the $XX turning remodels. authorization million first are on to for cash a affecting earnings $XX shift, XXXX significantly. quarter week Depreciation approximately cash color $X relocations, QX, QX. stores, repurchased week, be position our and little QX quarter, Now year the this approximately to $XX second incentives our on million to expense sales ended quarter today be year. final fiscal QX. we The back-to-school the compared total and being pulling affecting information is to of cost year, Depreciation sales quarter end year of this QX expense last out and last dates, million to QX. year. our calendar increase Last thereby was Due XXXX $XX reflect in the quarter calendar year in will year to the of and XX, the second QX sales earnings in the Xth, back-to-school would $X.X

our the leading result to will in leverage mid expect compared our we in a shift store in the expenses, but margin. year, Shifting on in be a last create effect QX, we will While due profit significant XX our in sales dollar This into The review. promotional should sales to single-digit to comparable against calendar back-to-school base. also our merchandise gross a to on leveraged increase single-digit the point shift and SG&A negative increase a our sales basis total in teens. our sales expect increase low margin buying, will QX occupancy increase still QX low concludes to the financial have spend distribution high higher to XX but

up questions. the open to like I'd Now call for

Operator

Research. go Instructions] Kummetz first [Operator to with We'll Mitch Pivotal

Mitch Kummetz

a athletic I to well. you. with have guess I few. I'll start continues trend business The Cliff,

channel. To seeing low Adidas no? benefiting when to doing do the issue access just athletic in Puma about brands? particular of and said bit I become suspect family was you singles. that from I on that point the you're to the I what a some that, extent up same. are you talk guys Can or more at is you benefit singles you from focusing athletic point, the an does that better delta, quarter, and on that, kind for know get lap you is was low the you think it up little

Clifton Sifford

years. to four brand we've No, when even it category Mitch, call, we stronger. does the And the within change exactly at but seen for about the athletic That brand but what on and don't it? question, it's that question, brand last the anyway, and get brands to brand changes keep be you we talk us maybe three for positive brands top all world, continue great a the continues but lap to are least And two, happens trend to this getting positive.

Mitch Kummetz

Got better are an And for than then you heard which kind just quarter already for outlook. a full-year correctly, stronger comp, and the digit I on acceleration Is low seeing of think to or the you QX? in outlook it. QX, guidance, suggest Kerry, is posted you something the in of mid I to if baked your you kind comp single that your than there also comp something into said the

Kerry Jackson

said have we what at Cliff taking and in have remarks that seasonal and the warmed from of accelerate the quarter. the As seen the because saw product into was we products up into into probably are end of our quarter, spring his we that May account sales some weather we second seasonal shift continued

Mitch Kummetz

guessing lastly, would would you then thought the few of the gross that I guide, line. looks the came the fewer up have EPS down on margin EPS five went on like also sales range closing from million, the due a high went Okay. the And end the get benefit help partly full-year up. it that to I'm sales stores.

is on else the reconcile pieces? line that offsetting those sales that you how So, of just sort or is there something happening

Clifton Sifford

line, sales the have inventory. the stores. when close finish, Mitch, five had to you clear let literally We made the I'll accelerate to close not sales to We but those sales lower those jump the you all decision volume for because the stores. and stores, through on in Kerry

sales Kerry? part of that's guidance. why reason we top lowered So of or the end down brought the the

Kerry Jackson

for was based the the some of QX on in we – accelerating closing EPS. are right to But plus are closing fine-tuning not Because in fewer expectations the for increase margins, we those on you are are and The there quarter. just in we store liquidating what better able expenses year. we'll not have of rest, rest coming stores out we saw this the margins, the

help in first – the in increase help was that also, the margins along to us strong quarter. will and stronger with So, the margins attributable that and attribute the EPS

Mitch Kummetz

it. Got

thanks. guys, Okay luck. Good

Operator

We'll Sam to go Susquehanna. next Poser with

Renato Basanta

is for This actually Basanta on Renato Sam.

I guess I then question, thinking the should comps XQ and of be I to year the beyond the was balance start my because first So year, the I later guess XQ? about back-to-school. how strong last very of partly of hurricanes we think guess cadence for the

So shift for the cadence? that just get about or and here, takes we better anything a back-to-school thinking this terms should feel affect trying puts would that else anything in of year to be just

Kerry Jackson

the basis, basis, comp store sales week. a On comp we equivalent report

to So not the for QX expectations low of basis, shift primary like ago, the et that But marrying for of that on quarter and had was, product quarter. seasonal because on the end up. year single the up that. for all picked a not in shifts single cetera, end back-to-school, low a and have similar the going the tax you're quarter might we the selling a on we it's our singles low From said because guided we'd in that, low were That's point, each I it's digit for We [indiscernible] and digits comps to generally, of QX. moment little cause year on that a every to for move. that was have that till

Renato Basanta

last of Can can just the from last then about that's in e-commerce color fewer expected. you helpful. and clearing you more closing And little planning in on year, are really learnings year? any are of then, stores talk how how your versus improvements store closures some maybe terms inventory, that than a you Okay, given bit you some in efficient be

Kerry Jackson

In all is an a liquidating honesty, not store inventory process. on easy

out have door. You it force the to

the a time complete you it basically would inventory of do. out You turn and normally pushing are in taking half

that stores on plan take out those stores – we some in of didn't a you but that's markdown we the learnings to going QX stores inventory, hurricane walls. some last of from remember. standpoint cadences have XX did We compared that to going if closed year how ended seven when you're the of year This are the So, we think be many but year, we all plan large going is about to are the liquidate up to stores replenish year, year closing, hits help, some seeing to liquidating from hit. that we XX were liquidate we are of We this we to of where through affected that last that transferring stores, Last on our margins. we lost inventory. all XX to stores some forced we

So it's this year. margin going to be year a larger last hit was it than to

Renato Basanta

Okay, in again store confidence back are greater you seeing just store to I And et reaccelerate this cetera, you potential number slowdown in what that terms the to store then give after guys are really for year? you is of me, XXXX, guess helpful. potentially last growth seems you that a up rents, like economics, getting there that's look growth, as it we for – one out seeing

Clifton Sifford

doesn't we we in for the Right have won't stores mean XXXX, pipeline. have pipeline now that any new in nothing the

all for waiting are the going There are shakeouts. We us. still around on closures

and were just closures us. feeling we real Vegas store outrageous pain growth that there. found seeing the were the But literally, the discuss of the of from just them slowed landlords not all plan that what we got they reasons in of is back out one were the Las with Our back we our on rents down meeting week getting team around just the show to got and estate year next biggest ICSC

lot give week. smarter our team be to them on we wanted get real to opportunity next debrief we'll that we So, to a estate and an shake once out

Renato Basanta

Very luck. Thanks guys. Okay. Good helpful.

Operator

Christopher to with next Svezia Securities. Wedbush go We'll

Paul Nawalany

few for actually is on quarter. have Paul questions. Chris. on a Nawalany just the I Congratulations This

the of margin year color for and overall you XQ, terms In planning fall? you what on as might if you boots be inventory gross this could SG&A? in any how secondly, on of [indiscernible], provide channel And provide outside this Thank do have outlook, feel could you fiscal about and to how might the you. color touched then you

Kerry Jackson

I'll take your let a – finish profit first gross last year, of we margin our for standpoint margin slightly. From Cliff two. down expect to our part to the and margin gross the merchandise be with up be to flat

our We increase profit which expect our year, to occupancy costs slight leverage will buying, the to distribution lead margin. for a gross in and

We expect a to deleverage overall, margin increase our But SG&A operating slightly. should little.

Clifton Sifford

fall. that inventory believe boot going most on the I rest their move the And but like through inventory asked boot it personally the expect of an there that leadership boots not a of inventory concentrated I'll as levels family right in to you is about comment the really don't we competitive I channel. best reasons, inventory. channel of on our increase channel. family I'm this the channel footwear the I having really to but we to a for levels early From the we think on and comment don't footwear of footwear see the to say do you perspective, perspective, on that slight category We suffice very the from managed tell and out level comment of rest that think is

Kerry Jackson

for earnings was One earnings from make adjusted year. clarification on against the last outlook That to the I'd like year.

we remember, you several If that had had we used. adjustments

XXXX. are to bases used with that expectations for our We adjusting I compare the against

Paul Nawalany

Thank you very Great. much.

Operator

next go We'll Greg Pendy with to Sidoti.

Gregory Pendy

you that can typically comp range? bringing the X% and just I decrease real the mistaken, $X.X you about if BD&O, quarter, in your and comps a occupancy given down closings it think Kerry, I the to you've just you was Is historically. the wanted on leverage closer to quick get X% just needed store think to for year, X% that's it said BD&O the for for outlook not million I'm probably

Kerry Jackson

prior stores been lower larger The and it is. Yes, closing some were compares. have side stores the years the of been we've hits productivity to in occupancy to the

are store were not inefficient easier reduction because total closings, stores of So but an XXXX only are we in the therefore, we costs it bit a the in from reduction, able leverage because those to seeing occupancy little standpoint. occupancy

Gregory Pendy

That's Thanks lot. a helpful. it. Got

Operator

We'll Martin to go next Steven with Slater.

Steven Martin

the and don't ask going you for outstanding this forward for both share I quarter, calculation, can us purchase fully Kerry, you shares? diluted more every count almost any give assuming So you

Kerry Jackson

We haven't been giving we our into Steve, it it's that built guidance. but think way,

you expect we So have I'll through have we year. planned give and the based purchased on purchase, and to what

fully We share with the have end to don't diluted count are I slightly shares. the count, share XX our of million the outstanding expecting at And year just me. be over total

Steven Martin

Okay.

will the be year-over-year again a solid that the of to inventory quarter end down end week include that second later going on a of your QX Given and is anticipate a basis? August week back-to-school, at we should

Clifton Sifford

believe going on and Week be Steve, and the and not will two me, is – this size deal. are in they're slightly then basis, three equal very I but largest to lower. a down large inventory one down is so Cliff. of one excuse week far, weeks year-over-year by great have back-to-school, slightly be week we not three a far fairly week by is that

Steven Martin

Okay. XX a a solid based possibility further Can is you on comment is that number – to store reductions, us, now? down given you the go have negotiations current that will XX for that or the there

Clifton Sifford

that to down. please that We more on number there than wouldn't are and would day take anything be every that me number working

I would I'm going for year. But lower. end I that's today I of like that solid not is know number. only tell the for number Steve, the by right. going a to you to So, that know to what be number today, be the

Steven Martin

is and some store just a it okay, still late we you it you tomorrow give or and late? for that landlord to [indiscernible]? extra ordered I it is meant say, too reduction, Like is keep came going cave are it rent because Right, to you to too if open haven't

Clifton Sifford

but late, a a not there Not that's will it's it question when because great come Steve, too be time yet. there yet. will

Steven Martin

status yet, it's whole there I you of Puerto a in issue talk yours. Rico the okay. this know about of favorite stores? subject Can Not of

Clifton Sifford

We not reopen. permanently hurricane. was had nine One stores before damaged the and store will

reopened more We point year. over yet. haven't later doing that us have those this that to anticipating at in two this are the landlords They stores time haven't and turned

Steven Martin

market, is now been there you And competition, as little doing, a had Puerto a because know a better it is how is and that a little I market? less disappointed, Rico that

Clifton Sifford

It any call, always unfortunate market this long bump going talk remains that had. for are market positive. the that suffered, afterwards. to as normally of in don't sales devastation they the point There devastation seen on But We how it's like they right kind just suffers kind of market be that's a you last. now, this any but in market to sales that to where at have is

Steven Martin

drop one up to the second and running end of going will And by you mean that so ship, you last Okay. back-to-school? one quarter. have the related you'll Does said have it that for

Clifton Sifford

a it vendor this discussed Yes, it's my to is and input. system you of as earlier, that requires done but a cooperation before complicated call, and I goal have lot

back-to-school. solid, it I running So, we but back-to-school. anything we normally have will before running will have it And don't that before up and say

Steven Martin

will there be Or lower headcount?

Clifton Sifford

will No, [indiscernible] we

Kerry Jackson

on number your outstanding. the got I've shares

Steven Martin

ahead. go Okay,

Kerry Jackson

XX,XXX,XXX.

Steven Martin

All of quarter that's right. And end? as

Kerry Jackson

of end. As quarter

Steven Martin

Okay, much. very thank you

Operator

additional call the hand will Cliff to I remarks. time, this any for over closing At back Sifford or

Clifton Sifford

have quarter weekend. each about I participating our an look We to Memorial you Thank today. forward talking of August. second enjoyable in to Thank you results for you. hope you Day

Operator

conference. That your for does We participation. thank you today's conclude

Shoe Carnival (SCVL) 24 May 182018 Q1 Earnings call transcript