Shoe Carnival Inc (SCVL) 2015 Q1 法說會逐字稿

Good afternoon, and welcome to Shoe Carnival's FY15 first-quarter 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.

The conference 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 today and today's 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 talked about during this conference call or contained in today's press release, to reflect future events or developments. I will now turn the call over to Mr. Cliff Sifford, President, Chief Executive Officer and Chief Merchandising Officer of Shoe Carnival, for opening comments. Mr. Sifford, please begin.

Thank you, and welcome to Shoe Carnival's first-quarter FY15 earnings conference call. Joining me on the call today is Kerry Jackson, Senior Executive Vice President, Chief Operating and Financial Officer. For today's call, I'll give a high-level review of the Company's first-quarter performance, along with a little color on the second-quarter and full-year guidance. Kerry will review the first-quarter financial results. Then we'll open the call to take your questions.

We are pleased with our record sales results for the first quarter, and our 3% comparable store sales increase. This strong performance came in spite of the fact we faced certain strong headwinds as we began the quarter, all of which we outlined on our last earnings call.

The momentum we gained in January with the earlier tax refund season did not continue into February. In addition, we experienced 400 closed or partially closed store days in February and early March, due to the harsh winter weather that affected the Midwest. And lastly, the delay of new spring product due to the West Coast port issues. These headwinds produced a 5% comparable store sales loss in February.

But once weather moderated and fresh spring product arrived in our stores, our customers responded, and our comparable store sales rebounded. The sales increase for the quarter was broad-based, with all merchandise departments producing positive comps. Store traffic for the first quarter was up slightly to the same time period last year, which is the second quarter in a row in which we have seen a reversal of the negative traffic trends most retailers have experienced over the past several years. Average dollar transaction, unit sales, and average unit retail all showed positive growth for the quarter on a comparable store basis.

We added almost 750,000 members to our loyalty program, Shoe Perks. Our Shoe Perks members spent, on average, almost 30% per transaction more than non-members, and accounted for approximately 49% of our first-quarter sales.

Gross profit margin for the Company remained flat at 29.5%, while SG&A as a percent of sales, improved to 22.8% from 23% in the first quarter last year. EPS for the quarter increased 15.6% to $0.52, versus $0.45 for the same time period last year. We ended the quarter with inventory down approximately 2.9% on a per-store basis, which was in-line with our expectations.

We continue to be very pleased with the performance of our online sales. Over the next several months, we'll add an additional 100 stores to the 250 stores currently capable of fulfilling online orders every day. This week we'll begin testing our [Shoes to You] initiative, which is the first step to creating an endless aisle experience for our customers. This is one of our most important initiatives for 2015. It will give our in-store customers access to the full breadth of our chain-wide assortment, which is far greater than the assortment available in any single store location.

We will continue to invest in our multi-channel initiative to not only meet or beat our customers' expectations, but to capitalize on our increasing online traffic and optimized conversion rate. Additionally, we'll make significant improvement to our mobile site, which has become a meaningful part of our overall online sales. Our customers expect a seamless shopping environment, with both a broad selection and depth of sizes, regardless of how they choose to shop. Our multi-channel strategy is making that possible.

Turning now to real estate. Over the past year, we have done extensive analysis on our existing store base. We are utilizing new technology to help us identify new trade areas for growth, as well as identifying current trade areas where we may have a low-volume store with limited opportunity for growth. We have decided over the next several years we'll take our non-contributing stores that have minimal opportunity to improve and either renegotiate lease terms, relocate or close the store.

As part of this initiative, we closed six stores in the first quarter of 2015. As of today, we have identified another four stores that will close before the end of the year. There are an additional four stores that could be closed by year-end, depending upon ongoing negotiations with landlords.

During the first quarter, we opened up seven new stores and relocated one store, ending the quarter with 401 stores in 33 states and Puerto Rico. For the remainder of the year, we'll open an additional 11 to 12 stores, all in existing markets we currently serve. Through these actions over the next few years, we should see improved operating margin and accelerated EPS growth.

Moving on to merchandise. As I said earlier in this call, the increase we reported for first quarter was broad-based, touching every major department. We are very pleased to see both units sold and average unit retails were up for the quarter. We believe this tells us our customers are pleased with our spring assortments.

The consistent performance across all departments was from canvas footwear. However, we are also excited to see that women's boots and sandals both performed very well. The women's non-athletic department led the way, with a mid-single-digit comp increase.

Since Easter is a key time period for the first quarter, I would like to address it separately. Because Easter moves year to year between March and April, we believe the best way to talk about sales is by combining the two months as one period.

For the two-month period of March and April, comparable store sales for the Company increased 6.7% versus the same time period last year. Women's non-athletic and kids' athletic were up high-single-digits on a comparable basis, with every other major department posting mid-single-digit comps.

Now I'd like to add some insight to our full-year guidance. We are pleased with the way our business trended for the first quarter, and in particular, the Easter season. Second quarter has started out with comparable store sales up significantly. However, as we look toward the end of the quarter and the start of the back-to-school season, there have been some major changes in tax-free dates. These date changes will shift approximately $7 million in sales out of the second quarter, into third quarter.

Let me explain. Last year in the market we serve, 13 states had tax-free holidays that celebrated or began at the end of July. This year, three of those states will continue their holiday at the end of July. Two states have either not announced or have cancelled their tax-free holiday. And eight states will shift their tax-free celebration to August. With these shifts, and tax-free in mind, we believe second-quarter comparable store sales will be flat to up low-single-digits.

As we look forward to the rest of the year, we'll continue to plan conservatively, but with the ability to react quickly to opportunities, as we did in the second half of last year. This strategy allows us to continue to control our inventory and expenses, which should result in double-digit growth in earnings.

Therefore, we still expect full-year net sales to be in the range of $977 million to $991 million, with comparable store sales increase in the range of 1.5% to 3%. Earnings per diluted share are expected to be in the range of $1.42 to $1.48. This represents an increase of 12% to 17% over FY14 earnings per diluted share of $1.27.

Now I'd like to turn the call over to Kerry Jackson for more details on our financial results.

Thank you, Cliff. Net sales were $252.8 million for the first quarter of FY15, as compared to net sales of $235.8 million for the first quarter of FY14. The $17 million increase in net sales was driven by an increase of $13.4 million from the 38 new stores opened since the beginning of FY14, and a $7.1 million increase in our comp stores. These increases were partially offset by a $3.5 million loss in sales from the 13 stores closed since the beginning of FY14.

Our gross profit margin for the quarter was 29.5%, and remained flat from the prior year. The merchandise margin increased 10 basis points from Q1 last year. While volume, distribution, occupancy expenses increased 10 basis points as a percentage of sales.

Selling, general and administrative expenses increased $3.3 million in the first quarter of FY15 to $57.7 million. As a percentage of net sales, SG&A decreased 20 basis points. The increase in SG&A was primarily due to a $3 million increase in expenses for new stores, net of expense reductions for stores that have closed since the beginning of FY14. Another increase in SG&A for the quarter was attributable to incentive and equity-based compensation expense, which increased $826,000 in the first quarter of FY15, compared to the same period last year.

Pre-opening costs included in both cost of sales and SG&A decreased $67,000 in the first quarter of FY15 to $717,000. Store closing and impairment charges included in both cost of sales and SG&A in Q1 this year were $169,000, compared to $63,000 in Q1 last year.

The effective income tax rate for the first quarter of FY15 was 38.8%, as compared to 39.7% for the same period in FY14. For FY15, we continue to expect our tax rate to be between 38.5% and 39%. Net earnings for the first quarter of FY15 were $10.4 million or $0.52 per diluted share. For the first quarter of FY14, we reported net earnings of $9.2 million or $0.45 per diluted share. Included in the earnings for Q1 this year is approximately $0.01 of additional distribution cost due to the West Coast port congestion.

Now turning to our cash position and information affecting cash flow. No purchases have been made this fiscal year under our share repurchase program. We currently have $25 million available under our existing repurchase authorization. Depreciation expense was $5.6 million in Q1. Depreciation expense is projected to be approximately $23 million for the full fiscal year.

Capital expenditures for FY15, including actual expenditures during the first quarter, are expected to be between $24 million and $25 million. Approximately $8 million of the total capital expenditures are expected to be used for new stores, and $7 million will be used for store relocations or remodels. Lease incentives are anticipated to be $5 million to $6 million for the year.

My final comment today will focus on adding a little color on our earnings expectations for the second quarter this year. As Cliff said earlier, we expect our Q2 comp store sales to be flat to up low-singles. Additionally, we expect our gross profit margin to increase nicely due to the improvement in our merchandise margin, and SG&A should leverage a little.

For the past two years in Q2, our merchandise margins have declined due to tepid response by customers to our spring merchandise, and higher levels of clearance product. With better-positioned inventories this year, we expect to recapture a significant part of that two-year decline in our merchandise margins.

This concludes our financial review. Now I'd like to open up the call for questions.

(Operator Instructions)

We'll take our first question from Jeff Stein with Northcoast Research.

Good morning, guys. First, a quick one for Kerry. You mentioned that you think you can capture a significant portion of the margin you gave back last year. So you dropped roughly 90 basis points last year. Do you think you can get more than half of that back? Or how should we be thinking about the gross margin line?

Well, that 90 basis points is correct, but that was over a two-year period. For the past two years, that has been the decline. I'd rather stay qualitative and not quantitative, since we're only focused on giving annual guidance. We should be able to recapture a significant piece of that.

Got it, okay. And I'm wondering, given the fact that your loyalty program has been growing so dramatically, are you using it at all now for targeted personalization offerings to customers? That seems to be the trend in the industry right now.

Jeff, we're using it for marketing purposes, but we are not yet to the personalization standpoint. We will be there. We're working hard to get there, and we believe we'll be there very shortly. But trust me, we market to our loyalty members often. We're just not there from a personalization standpoint.

Is that an initiative, Cliff, that we could expect this year? Or is that probably 2016?

We're doing everything we can to make it this year, Jeff. We would like to be there by fourth quarter, but I'm not prepared to say that's going to happen.

Okay. And with respect to e-commerce, just curious. What percentage of returns are coming back to the stores?

Oh, that's a great question. Coming back to the stores. We're not tracking that. We are tracking what percentage are coming back to our DC, and that is remarkably low; in the very low double-digit range. The reason we don't track the returns to the stores is, our goal is, when they return them to the store is, to sell them something else. And we're pretty successful with that.

That's my point. I mean, it's a traffic driver.

Exactly.

Yes.

We actually charge to return to the DC. We charge a shipping to return to the DC. So it encourages our customers to bring the product back to the stores.

Got it, okay. And just with respect to average unit retail, for the balance of the season, do you see them continuing to move up relative to last year?

You know, I do. And that's not necessarily because of cost increases. That's because of the fact that any cost that's gone up is because we're bringing better product into the stores. So we expect to see average retail move up as we expand our better selection of women's product into more stores, and as that product takes a larger percentage of the inventory.

Okay. And if I recall, Cliff, you were at roughly 140 stores with the better women's product at fiscal year-end, and the plan was to get up to about 175 this year. Where are you at the moment?

We will hit the 175 for fall. At the moment, we're still at the 140. We felt that we have learned that the best time to add that better product for us and for our customer is in the second half of the year.

Okay. And one final question. Can you talk about your plans for ad spending this year, as a percent of sales? It was up about 20 basis points last year. Where do you see it trending if you hit your sales targets for this year?

Relatively flat to slightly down, Jeff.

Yes. That's exactly the answer I was going to give you, but he was looking at the report, so I wanted to make sure. Flat to slightly down.

Okay, great. Okay, guys, thanks a lot.

Yes.

We'll take the next question from Eddie Plank with Jefferies & Company.

Good afternoon, guys. Thanks for taking the question. Can you just remind us what your comp cadence was in the second quarter last year? Obviously it was down a couple percentage points. But was the worst month in June, July? I'm just trying to get a sense of the tailwind you might get into the third quarter due to this tax-free shift.

Kerry is looking it up by month. But May was tough, and June was tough. July got better. July was actually, if I remember correctly, very slightly positive.

In May and June, we were negative about the same amount.

Got it. And then thanks for the color on the margins, Kerry. For second quarter, I'm just wondering then, does that imply any change to the thoughts on the full-year merchandise margin, gross margin or SG&A, that you had outlined at the end of the quarter last March?

No, this was in line with our original expectations for the year. What we would intend to do is continue to focus on quantitative numbers on an annual basis. But as we approach each quarter, we will give a little qualitative information, so you can better-build your models and anticipate and firm up the coming quarter, for your guidance. That's why we're giving that. But that was in line with what we had thought about at the beginning of the year.

Okay, that's helpful. And then one last one. With respect to the real estate strategy and the analytics you're using, is there anything you can share there about the productivity or help of the locations that you've opened since you've been using this technology?

You know, it's been a learning experience. We brought the software in and we had our first model just over a year ago. So we're really too early in the process to declare victory and move forward. Having said that, we are pleased with the stores that we've been opening this past year. We feel like, with the small amount of information we have available, that we're seeing a higher level of success.

Having said that, it isn't all attributable to the software though. Part of it is our evaluation process. We have a committee that looks at the real estate. We've changed a lot of how we select real estate, in addition to using software to help us see things in the data that we may not see with our naked eye. So I think there's a series of changes that we feel are going to make our new stores more productive.

Okay, great. That's all I have for now. Thanks for the color. Good luck.

Thank you.

We'll take our next question from Sam Poser with Sterne Agee.

Good afternoon, gentlemen. All right, what does, up significantly, mean? You said you were down mid-single-digits quarter-to-date last year at this time.

We're up significantly. Here's the issue, Sam. As you build your model, we're up better than we were down this time last year. So on a two year average, our business is better than it was over a two-year average. So the issue is, as you build your model, as aggressive as you are, you'll build our comps at a higher rate for second quarter than we're going to hit. And you've got to remember that $7 million shift out of second quarter into third.

Even with my bad math, I can pull $7 million off -- (laughter)

That's the reason we spelled it out for you, Sam.

All right. And then just back to the gross margins for a second. In my model, your margins were -- your gross total was down 87 BPs last year in the second quarter. It was actually up slightly in -- you had some leverage in -- the fixed cost leverage in Q2 2013. But your merch margins were up, down over the last two years. Are we looking -- you start telling us parts of it here, and then we have to build it ourselves. I mean, are we looking at gross margins up 50? 60? 70? 20? 30? I mean, we don't need -- why be coy about this? You know what you want to tell us. Just tell us where you're thinking.

Well, Sam, I think we did. What we said is over a two year period, our merchandise margins have decreased in the second quarter 90 basis points.

Correct.

And we think we can recapture a significant portion of that. We also said in my remarks that all the gain in the gross profit line is going to come from the merchandise margin. So we're saying that buying, distribution and occupancy costs are going to be relatively flat on a year-over-year basis. I think we've given you quite a bit to build your model with.

All right. And then you flew through some of the -- you didn't go through the normal details on the categories that you did last -- and I couldn't tell l if you were talking about Easter time period when you mentioned some of the categories. Can we walk through women's, men's, and athletic and kids, as to where it was for Q2?

Well, what I think I -- for Q2 or Q1?

For Q1, I'm sorry, for Q1.

What I think I said was that every major departments was up, and that women's non-athletic led the way. And I'll tell you that men's was up low-single-digit, kids and athletic were up low, and women's was up mid.

And with your boots and sandal businesses, that was a late fall, and then when spring finally kicked in, it did quite well, based on that combined 6, 7 comp for April, May together?

This is going to be hard to believe, but our boot business was actually good for Easter. Explain that. But our sandal business did kick in as soon as it turned warm, and especially in the north, and was good throughout the first quarter, once we got past February.

And in the South, did you see -- I mean, did spring kick in well in your more southern stores earlier? Were you happy with that business, or was it still tough?

In actuality, our comps for spring product was better in the North for the first quarter than it was in the South. And the reason for that is, is that it was really cold in the first quarter for last year, and it was warmer this year, once the snows moved out of the Midwest. So we were going against easier comparisons in the North than we were in the South.

All right.

Volume was greater in the South. But the comp increases were greater in the North.

And have you seen -- when you're looking at this significant increase that you have so far, have you seen it follow that same path? Or is it more balanced out now that we're really in season?

Once you get to consistent warm weather across all categories for both years, across all geographic regions for both years, it balances out.

Okay. Thank you very much. Good luck, guys.

We'll go next to Scott Krasik with Buckingham.

Hi, everyone. Thanks, and good quarter.

Thanks, Scott.

Just going back, I was confused when you spoke last quarter. I'm just trying to parse out what happened on the call. Because I wasn't expecting February to be down 5, based on your comments. If you could go back, were you positive when you reported last quarter? And I just reread the transcript.

I would have to read my transcript again. But I think I actually said that February was down 5, and that we were negative -- we were actually negative at the time of the call. But I felt like that the recent change in our business, due to the warmer weather, that we would end the quarter with flat to low-single-digit comps. I believe that's what I said. Kerry's looking it up right now.

Yes, it was a little bit confusing. So then you gave us Marple. Can you just, to make it a little easy -- was April negative or was --?

Well, March -- you've got to remember now that Easter moved to the first week of April. So most of Easter's business happened in the month of March. In fact, all of Easter's business happened in the month of March. So our business in March was up in the 30s, but that's because all our business happened during that month. And then April was negative, but that's because Easter moved out of April. That's the reason we say that the best way to look at this thing is to look at March and April as a combined total.

That makes sense, okay.

That was up 6.7%.

And then just a question. You obviously have opportunity with your margin in the second quarter. But I'm curious, because you said, number one, it was because you had your spring seasonal inventory planned better, or more in line. So I'm wondering, do you feel good that you can actually comp well with your spring seasonal goods? Or is it just that you bought less of it, so the potential for mark-downs is less?

I think there's two things, and you picked up on one of them. We obviously bought less, because we're on an inventory turn initiative over the next three to four years. So the inventories are going to continue to be lower. But, I'm going to also tell you that I'm really pleased with the way that the current product mix looks, and the way that we bought into key items of the season heavily. And how we've identified -- I believe we've identified the strongest sandal categories to go after. So that business is good, and it's turning well. Our sell-throughs are strong. That's the reason we continue to believe that our margin is going to be up.

Okay. So it really is true sandal --

It's a combination of both things that you said.

Okay. And then in terms of athletic, any commentary there? Because you'd pull a lot of your canvas that's not actually in athletic at all, right?

It's hard for you to look at our athletic and compare it to anyone else's athletic. Because we move a lot -- if it can't be used in a sport, then it reports to the non-athletic department. So that's a little different than our competitors. But our athletic business is good. Our true athletic business is good. Our running business is good. Our basketball business in men's and women's is good. So I'm very happy with our athletic. In fact, our athletic business is running on plan.

And then, you obviously don't have to go through it in detail, but any changes in your promotional plans for back-to-school, year over year? Shifts early or later?

Other than the major shifts in -- we do two things, Scott. We look at the tax-free, because that's a very huge driver of large-volume weeks. So we look at tax-free, and we make the shifts based on when the states are going to run their tax-free. Then we look at every single market area's back-to-school dates, and we make our shifts there as well. So the natural -- and you look at Labor Day and when Labor Day is, to see if there's any major shift there. So back-to-school is always a shifting time period, year after year. It just happens to be a major shift this year because of tax-free.

Okay. And then just to the extent that you did buy summer or spring seasonal down, is there an opportunity to chase later in the season? Is that something you want to do? Or you want to just keep the inventory turns up?

Some of the biggest mistakes we've ever made as a Company is when we decided that we would chase spring goods later in the quarter. Those spring goods usually end up on a mark-down rack in August. So we're pretty excited about where we are. We think that we have plenty of inventory to get us through the spring season, and then to back-to-school. And then once we get to back-to-school, we want to be selling fresh merchandise.

Well, good luck, and nice talking to you guys.

Thank you, Scott.

We'll take the next question from Jill Nelson from Johnson Rice.

Good afternoon.

Hi, Jill.

If you could give us an update just on the delays that we saw throughout the quarter, port issues and what have you. If you could just update us on shipments. Are they all on track now? Or are we still looking for maybe a month of settling out disruptions, or what have you?

I think there's still some slight delays. It's definitely gotten better. As our quarter moved on, it got better and better. We've taken all the shoes that we deliver directly from the Far East, we've taken them and moved them to the East Coast ports. That naturally slows things down by about six or seven days, but that was a lot better for us than the three- to four-week delays that we were experiencing out on the West Coast. So we've mitigated our issue by going to the East Coast. That's number one.

Number two, some of the brands are still having issues. But the issues aren't huge -- maybe a week or 10 days. And we think that -- and the brands assure us that, that's going to mitigate by the time we get to June. So I think it's almost over.

Okay. And then just given the women's non-athletic initiative, you've had a good solid group of stores in this program for the second year now. If you could just talk about how they're comping on top of each other in year two? And are you still seeing a 200-basis point higher comp out of those stores?

In actuality, I don't have that number in front of me, so I hesitate to give that to you directly. I will tell you that they are comping better than our stores without the better brands. So I will tell you that. And I'm very encouraged by the fact that our women's non-athletic department, for the second quarter in a row, led the Company in comp store increases. So it is working.

Okay. And then just last one. Given the drop in oil prices and what we're hearing about Texas economy, could you just talk about how Texas performed for you in the first quarter, and if you think you felt any impact from that?

In actuality, we've been following Texas. We hear buzz about the fact that Texas business could get tough. But our business in Texas, as a whole, has not been widely affected.

All right. Thank you so much.

I'm not going to tell you there's not pockets of Texas that haven't. But Texas as a whole, has been good for us.

All right, thank you.

(Operator Instructions)

We'll go next to Chris Svezia with Susquehanna Financial Group.

Good afternoon, everyone.

Hi, Chris.

I just want to go back to Scott's earlier -- first question. Just could you -- I don't know, Kerry, if you're able to pick it up. But I vaguely remember, Cliff, you commenting that comps were strong initially in the first quarter, then weakened, I think, mid-February, into early March. And when you reported the numbers, I think you commented that business suddenly started to accelerate that week, or something along those lines. So were you, at that point --

That's exactly what I said. That's exactly right. The first week of February was incredibly strong, just like the last week of January was. And as we moved -- the second week of February was good, but not like the first. The third week of February and the fourth week of February, first week of March -- really don't like getting down to the week-to-week business, but since I mentioned it in the first quarter call, I guess I have to -- were not just bad, but they were awful. That was the three weeks where we lost 400 store close days.

We actually ended up February down 5%. And I believe -- Kerry's looking at the transcript now. I truly believe I said, either in a question-and-answer or in the script, that we were actually negative going into that call. Or slightly negative, I might have said, or close to flat. We felt, with the current trend at the time of our call, that things were going to be better, and we were going to end the quarter flat to up low.

Okay. At the time of the call, you were down, fair to say, low-single-digits in aggregate, so for quarter-to-date. Is that a fair assessment?

I think that we were slightly down.

Yes, it was closer to breakeven than anything else. But it was slightly down.

Okay, at that time. Okay. Then when you talk about traffic, I'm just curious, what do you -- I'm sure it's your compelling product assortment. But I'm just curious, what do you think is driving it? Is it what you're doing on your perks? Is it the advertising? What's driving the traffic to your stores specifically?

I think it's a combination. I personally believe that it's a combination of our advertising, of our Shoe Perks, which is not just national. It's what we do digitally. It's what we do to our Shoe Perks members. And the fact that over the past two-and-a-half years, we have added almost 6 million -- and I think I'm right on that -- 6 million new members. Which gives us 6 million new e-mail addresses to market to. So you got to take that in consideration.

And then our online presence. Our online presence has helped our business. The fact that once we went to ship-from-store last year, and our business escalated at the rate it did, people got to know who we were. And they bought product from us and they had good service and a good experience. And they came into our stores afterwards. So I believe it's a combination of all of that.

Okay. When you think about -- I just want to focus a second on this tax-free holiday. When you think about this $7 million shift out of Q2 and into Q3 -- call it 100 to 200 basis points, roughly, on the comp -- I just assume all else being equal, Q3 clearly benefits from that, all else being equal. Correct?

No question about it.

Okay. So then -- not to dig too deep into the weeds here -- but Q3, while -- it seems like Q2 is going to have the merchandise margin benefit, just given the two-year trend. Q3, maybe not as much. But it seems like the inventory trend line, the growth in the women's business, could still drive product margin improvement, coupled with potentially better leverage. Because you can get a much stronger comp, because of that shift and the timing of that shift. Is that fair? I'm not asking specific numbers, but I'm just --

You definitely could. August should get the benefit of that shift.

Okay.

If you remember, our last year's comps -- I think we talked about this in the call -- is that we had -- our August numbers were slightly up, our September and October numbers were very strong. But the reason our September and October numbers were very strong was because the weather cooperated 100%. Had a coolish September and a coolish October. And we launched our boot product very successfully. So you tell me how -- if I can figure out exactly what the weather patterns are going to be like for September and October, I can give you a better answer.

Okay. Just on product for a second. The boot business. What did you say again -- in the first quarter, it comped positive, you said, through Easter? Or up to Easter? I forgot what you said. You said something --

It comped positive for the quarter. It was up in the 30s.

So when you step back and you think about what you're going to do for the back half of this year, what are your general thoughts about your learnings -- just how you're positioning in that category, given the success you had last season?

I would have been disappointed had somebody not asked that question. (laughter)

Glad I did.

I'm glad you did. We still feel that we have opportunity in boots. As strong as our boot business was in the second half of the year last year, we believe that we left a little on the table. And we're planning our boots up in the high-single-digit range for second half.

Okay. And last point here, just on the marketing aspect. I know you didn't really start seeing the benefits from the national advertising, because you weren't tying it in with a specific product catalyst -- or reason to shop, I guess. Can you just remind us last year when that really kicked in? I know you're not going to tip your hat as to what you're doing for back-to-school. But I assume you've got your ducks all lined up for back-to-school, in terms of being able to drive that traffic. So any thoughts about how you think about national advertising? And the timing versus last year of when that really kicked in?

We actually believe it began to kick in, in September. But we know -- we can actually track it for kicking in, in October.

Okay. I'm trying to get at is for back-to-school. This time around, you'll be much more constructive and productive around the national advertising piece versus last year? I'm just trying to think about what else could drive -- I'm just trying to think about traffic drivers, that's all.

Right. We believe we have a strong marketing plan for back-to-school. I really don't want to go any further than that.

Okay. One more thing here, just on canvas. Everyone ad nauseam, is talking about canvas. I'm just curious, your comfort level with sustainability in that category, as we continue to move forward there?

You know, Chris, it gets stronger and stronger every month. We haven't seen any slowdown at all. Sustainability definitely through this year.

Okay, all right. That's all I had. All the best. Thanks, guys.

All right. Thanks, Chris.

We'll go next to Sam Poser with Sterne Agee.

A quick follow-up to Chris' question. Are you finding that probably the sandal business, theoretically, could go through the beginning of September? You could flow in boots then, and boots run through -- boots generally can run through February or March. Which means these seasons are all getting a little bit longer and overlap differently? How do you go about planning your business -- if I'm correct about that, how do you go about planning your business, not to get caught, I guess? Am I thinking about it right? Because it sounds like it --

You're definitely thinking about it correctly. Sandal business does expand into at least through the back-to-school season. And the boot business -- I think by telling you what my comps were you up, the first quarter -- expanded into the first quarter this year. So I personally believe that we'll continue to show comp increases in boots through the rest of this year. And as far as not getting caught, it's all based on the inventory control. And you got to be a pretty good student of the business and say -- okay, this is the number of pair we can sell, so this is all we're going to buy. And that's basically -- that's just retail 101, as you know.

No, I understand. My point is, though, can you make the business -- can you extend the seasons, and just say -- okay, we used to take our mark-downs in boots in January. Now we're going to mark down some, but we're going to keep a fresh thing rolling, and plan on extending the seasons of both boots -- of the more seasonal product. Because it seems like everything seems to be stretching out a little bit.

Exactly.

I know that's all done by managing inventory, but --

We have been doing that, and we will continue to do that. The customer buys closer and closer to need. When it's 100 degrees when they go back to school, they're probably going to be looking for canvas and sandals. So we don't -- there's no reason to take deep mark-downs for that time period.

Okay. And if you I can ask you a brand-specific question, where does Skechers fit into where you -- is it living in -- women's Skechers, is that mostly living in women's non-athletic?

It lives across all departments. Every department.

Thank you for that distinct verification.

Let me say it this way. You said women's Skechers or Skechers in total?

Women's Skechers in total.

Women's Skechers resides both in the women's non-athletic department and in the women's athletic department.

But the majority of it is in the women's non-athletic, I would believe, based on the way you mix product. Not much of it is absolute performance product.

I would believe you're not correct.

So you put walking in athletic or not in athletic?

No. If it can be used as a sport, in a sport, it's in athletic. If it can't be used in a sport, it resides in women's.

All right, this is going to take too long. Thank you for the sort of clarification. Yes.

That concludes today's question-and-answer session. At this time, I'll turn the conference back to Mr. Cliff Sifford for any final or additional remarks.

Okay. In closing, I want to thank our entire Shoe Carnival team, who worked hard to deliver great product and excellent customer service, which led to our record first-quarter sales. I want to thank you for joining us today, and we look forward to speaking to you about our second-quarter results on our next call in August.

This concludes today's conference. Thank you for your participation.