Shoe Carnival Inc. (NASDAQ:SCVL) Q1 2019 Earnings Conference Call Transcript

May 22, 2019 • 04:30 pm ET

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Shoe Carnival Inc. (NASDAQ:SCVL) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, and welcome to Shoe Carnival's First Quarter Fiscal 2019 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 earning 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.

Executive
Clifton E. Sifford

Thank you, and welcome to Shoe Carnival's first quarter 2019 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 a review of our updated fiscal 2019 outlook. Kerry will discuss the financial results in more detail. Then we'll open up the call and take your questions.

As those of you that have followed Shoe Carnival over the years know, like other retailers, our first quarter sales represented a shift in seasonal footwear from cold weather boots to more sandalized warm weather categories. In addition, the timing and size of tax refunds can also impact our rate of growth in the first quarter. This spring, we experienced a very cold and wet start to the quarter and a delay in tax refunds, which resulted in a high-single digit comparable store sales decrease in February.

That said, once our customers had a combination of warmer weather and tax refunds, we experienced some very positive change in sales from March and April. We believe the best way to view the Easter selling season is to look at the sales for March and April combined. With that in mind, March and April comparable store sales increased 3.6%, which compares to the first quarter's comp sales results which were essentially flat. Traffic for the quarter declined mid-single digits, while conversion increased low-single digits and average dollar per transaction were down low-single digits.

Average units per transaction were up low-single digits. We ended the quarter with inventories up 0.3% on a per store basis. Our merchants did a great job of controlling the seasonal inventory, which allowed us to keep merchandise margins relatively flat even though we were more aggressive in athletics due to the sales softness in February.

BD&O increased 50 basis points as a