Shoe Station Group (SHOE) Q4 2014 earnings summary

Executive summary

• FY2013 net sales reached a record $884.8M, up 3.5% YoY; comparable sales were flat, with growth driven by 63 stores opened since FY2012 began.

• Recurring unseasonable weather and consumer economic uncertainty pressured traffic and earnings; diluted EPS was $1.32, down from $1.43.

Financial highlights

• Net sales rose to $884.8M from $855.0M; gross profit increased to $259.3M from $257.5M, while operating income declined to $43.7M from $48.5M.

• Net income was $26.9M versus $29.3M; diluted EPS was $1.32 versus $1.43.

• Q4 FY2013 sales were $200.3M, operating income $1.0M, net income $0.6M and diluted EPS $0.03; Q4 FY2012 included 14 weeks versus 13 weeks in FY2013.

• Operating cash flow was $38.6M, up from $25.9M; capital expenditures were $31.0M.

• Excluding the $1.4M one-time retirement and severance payment in FY2012, incentive compensation was down $4.5M YoY in FY2013.

Outlook and guidance

• FY2014 plan: open 30–35 stores, including Buffalo, Detroit and Miami; relocate three stores and remodel approximately 30, subject to lease negotiations.

• FY2014 capital expenditures expected at $32M–$34M; $15.5M–$17.9M for new store construction and $7.5M for remodeling.

• FY2014 plans include fulfilling e-commerce orders through the distribution center and some stores, and a goal to double Shoe Perks membership from FY2013 year-end.

• Women's better-brand assortment expansion supports a long-term goal of women's products reaching 30% of sales.