Shoe Carnival Inc. (NASDAQ:SCVL) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 24, 2018 • 04:30 pm ET


Shoe Carnival Inc. (NASDAQ:SCVL) Q1 2018 Earnings Conference Call - Preliminary Transcript


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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. These risk factors could cause the Company's actual results to be materially different from those projected in such statements.

Forward-looking statements should be considered in conjunction with the discussion of risk factors included in the Company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. The Company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contained in today's press release to reflect future events or developments.

I'll now turn the call over to Mr. Cliff Sifford, President and Chief Executive Officer of Shoe Carnival, for opening remarks. Mr. Sifford, you may begin.

Clifton Sifford

Thank you and welcome to Shoe Carnival's first quarter 2018 earnings conference call. Joining me on the call today is Kerry Jackson, Senior Executive Vice President, Chief Operating and Financial Officer. On today's call, I'll provide a brief overview of our first quarter operating highlights and sales results as well as review our updated fiscal 2018 outlook. Kerry will discuss the financial results in more detail. Then, we'll open up the call to take your questions.

First, it is important to note that the 53rd week in fiscal 2017 resulted in a one week shift of our fiscal 2018 calendar. Our fiscal 2018 first quarter ended one week later as compared to first quarter last year. In fiscal 2018, all of our quarterly year-over-year sales comparison may be impacted if there are seasonal influences near the respective quarter end dates. Comparable store sales for the first quarter are presented on a 13-week basis.

Now, I'll review our operating performance. We experienced a very cold and wet start to the quarter, which affected sales through the Easter selling season. Once the weather turned from winter to warmer, even hot temperatures in certain regions at the end of the quarter, our customers reacted positively to our new spring assortment. We are happy to report a comparable store sales increase of 1.3%.

Sales of our spring product categories accelerated as we ended the quarter and we continued to experience a strong athletic and athleisure trend. Traffic for the quarter declined mid-single-digits while conversion and average dollars per transaction were up low single digits. Average units per transaction were up at the lower end of mid-single-digit range. We ended the quarter with inventory down 1.6% on a per store basis.

We entered the first quarter with lower per door inventory in fashion boots and seasonal clearance merchandise, which allowed us to achieve a 70 basis point improvement in merchandise margin. BD&O was down 80 basis points