Shoe Station Group (SHOE) Q4 2011 earnings summary

Executive summary

• FY2010 delivered record annual comparable-store sales and earnings, with net income of $26.8M and diluted EPS of $2.05.

• Strong sales, higher gross margin and expense control supported results; consumer demand was particularly strong for sandals, boots and toning footwear.

Financial highlights

• Net sales rose 8.3% to $739.2M; comparable-store sales increased 8.2%, the highest annual growth in history.

• Gross profit increased 14.4% to $221.5M; operating income reached $42.4M vs. $25.1M, and net income was $26.8M vs. $15.2M.

• Diluted EPS was $2.05 vs. $1.20; Q4 diluted EPS was $0.33, the second-highest fourth-quarter result in history.

• Operating cash flow was $29.4M; cash and equivalents ended at $60.2M, with no interest-bearing debt.

Outlook and guidance

• FY2011 comparable-store sales expected to rise in the low single digits; positive free cash flow expected for an eighth consecutive year.

• FY2011 plan: open ~20 stores, relocate nine, close five and remodel ~10% of locations; e-commerce launch targeted for H2.

• FY2011 capital expenditures forecast at $21M–$23M; SG&A expected to rise moderately, primarily from store growth.