Good afternoon, and welcome to Shoe Carnival's Fourth Quarter Fiscal 2015 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 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 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 comments. Mr. Sifford, you may begin.

Thank you, and welcome to Shoe Carnival's Fourth Quarter and Fiscal 2015 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 the company's fourth quarter and annual performance as well as an overview of our fiscal year 2016 guidance. Kerry will review the financial results, then we'll open up the call to take your questions. We had a strong finish to fiscal 2015. The initiatives we implemented over the past 3 years, including our multichannel sales initiative has led to the enrollment of nearly 9 million Shoe Perks members and helped drive our record annual sales and diluted earnings per share. The fourth quarter represents our sixth consecutive quarter of comparable store sales growth. We are particularly pleased with this result, as we have successfully operated our business in an economic environment that has negatively affected many retailers. Our store level associates executed our strategies with enthusiasm, and our merchant team did an excellent job of identifying key footwear trends in categories. We finished the year with a comparable store sales increase of 3% and diluted EPS of $1.45. Our diluted EPS improvement not only represents an increase of 14% from the previous year, but also is the highest earnings per share performance in the company's history. Today, I'll review the initiatives we have implemented in just the past 2 years that have led to this success. But first, I'd like to discuss our fourth quarter performance. As we discussed on our third quarter call, the fourth quarter got off to a slow start in November, with women's fashion boots comping down for the first time in several years. However, we experienced a strong mid-teens increase in the fashion…

Thank you, Cliff, and good afternoon, everyone. Fourth quarter net sales increased $6.0 million to $233.7 million compared to the fourth quarter last year. The net sales increase was driven by sales of $7.1 million from the 21 new stores opened since the beginning of the fourth quarter of fiscal 2014 and a $3.8 million increase in comp store sales. This net increase was partially offset by a $4.9 million loss in sales from the 20 stores closed since the beginning of the fourth quarter of fiscal 2014. Our gross profit margin for the quarter was 29.2% compared to 28.6% in the fourth quarter of fiscal 2014. This was driven by a 10 basis point decrease in our merchandise margin and a 70 basis point decrease in buying, distribution and occupancy expenses as a percentage of sales. For the quarter, we saw a 50 basis point decrease in distribution costs, primarily due to returning to more normalized costs after seeing significant increase in costs in Q4 last year due to the port issues. The remaining 20 basis point decrease resulted primarily from the leveraging of occupancy costs against the higher sales base. SG&A expenses increased $1.2 million in the fourth quarter of fiscal 2015 to $61.7 million. As a percentage of sales, these expenses decreased to 26.4% compared to 26.6% in the fourth quarter of fiscal 2014. For the quarter, the increase in expenses for new stores was mostly offset by expense reductions for stores that have closed since the beginning of the fourth quarter of fiscal 2014. The significant changes in SG&A for the quarter were increases in advertising, incentive and equity compensation and employee health care, partly offset by reduction in wages and earnings on our nonqualified retirement plan. Preopening costs, included in both cost of sales and…

[Operator Instructions] And we'll take our first question from Eddie Plank with Jefferies.

Cliff, I wonder if you can just give an update on your national advertising strategy? Maybe what else you've been learning from it? How are you thinking about it going forward into this year? And what the spend might be relative to the prior year?

I'll take the last part of that question first. The spend this year is going to be flat to what we spent last year, dollar-wise, not even percentage-wise. So as a percent, it will go down. It's very difficult to measure the results of national advertising, Eddie. We run focus groups -- not focus groups, but we do all kinds of research to see what the recall is and how well the customers are accepting or know the name Shoe Carnival. But it really is not an exact science. So that's the reason why we remain flat on our spend with national advertising. We're going to do further research to make a decision as to whether or not we want to increase that rate into '17.

Got it. And then, just touching on the comp for the fourth quarter. I think at ICR, you guys had said you were up 2.9% quarter-to-date. Is the decrease since then just as a result of the delay in tax refunds? Or was something else happening in January? Just any color there. And then, as the last question, I guess, Cliff, do you have a sense of how big the small market opportunity might be as you go forward with this? Or is still maybe too early to kind of gauge that?

On the comp store increase, we believe, it's really hard to quantify, but it's -- we believe that tax refunds moving out of the last 10 days of January into the middle of the second week of February had -- was the effect of ending the quarter at 1.8% up. But we were up 2.9%. You're correct on that. The -- your second question, remind me again?

Small markets.

Oh, small markets? We're excited about small markets. We're going to open up approximately 6 small markets again this year. If we can get to more, actually open more. But we think -- we love the concept. We like the way the store looks, and we see that as a viable, in fact, a robust growth opportunity as we go forward over the next few years.

Basically, what we said is we think that we -- that the upward potential of that small market concept, might be 450 stores for us. So between our traditional stores and the small market, we now say that we think we'll have about 1,200 stores across the nation.

Great. Kerry, real quick if I can sneak one more in. Should we expect a similar amount of buybacks in 2016?

Well, we're having a very nice cash flow, and we have -- we showed a propensity to buy back in the second half, and we -- it depends on the stock price. We're not going to chase it and compete with shareholders who are driving the stock up. But if we see some opportunity, we will buy into it.

Okay, but it's not baked into the guidance right now?

There's a minimal amount built into the guidance. I think there's an average of 80,000 shares purchased per quarter built in that guidance, and that equates to about $0.01 worth of benefit of that high end of $1.65.

And we'll take our next question from Chris Svezia with Susquehanna Financial Group.

I was wondering if you could maybe talk a little bit about -- I mean, you gave some Q1 guidance in terms of comps, so you know what I am going to ask. But I'm just curious about where you are broadly at this point. Any color you can add about what happened as you stepped into February and refunds started pouring in, et cetera?

I'll tell you where we are. I just want to caution right upfront that we're entering into the Easter season, so Easter moved up a week. So that's going to make the comps look a little better than they may end up. But the tax refund season moving into February certainly helped fuel some sales growth and then the week-earlier Easter. So right now we're up high single digits.

Okay. And then, can you remind me what you were up against as we go through -- for March and April last year? Just what were comps in March and April of last year?

You have to combine them because Easter moved around on us. So we were up mid -- high mid-singles combined March/April.

Okay. So basically you're assuming -- basically low single-digit comp for the balance once you get through Easter?

Here's what we're concerned about, Chris, is that we had a very warm February, very warm February and a warmer-than-normal first part of March. Our sandal business is really strong, not only in dress sandals but in casual sandals. And we're concerned that maybe we moved some sales that would have happened in April earlier into the season, and we don't -- we want to be cautious about that.

Okay. Got it. Okay. And Cliff, you made some comment about declines from a category perspective in, you said, sport casual categories and something else when it came to women's. Can you maybe explain?

It was a sport casual category. That would be heavier -- I don't want to name any brands, but brands that -- traditionally bought in the fall time period worn with jeans. And I'm just not going to mention brands, but it's a more fall-looking casual product. It's non-flats. [ph]

Okay. And then, you made some comment on athletic. You had higher margins year-over-year in athletic in the quarter. Can you just explain, is that just mix?

Well, we're in a strong athletic trend. There's no question about that, as you know. And there is no reason to get too promotional on athletic as a way selling, so we didn't. And it was canvas product because, again, we had a warmer-than-normal fourth quarter. So canvas continued to comp up at a tremendous rate. Fashion athletic, including retro kind of classics and running, both fashion and performance.

And the guidance for 2016, I just want to understand. Could you just walk that one more time? On the gross margin, you're expecting it to be flat, where buying, distribution and occupancy is what -- could you just walk through that one more time?

Yes, sure. We expect -- I'm going to just read it back to you. The expectation that high end of our guidance gross profit margin will be flat with buying, distribution and occupancy slightly leveraging, offset by the growth of our multichannel initiatives. We expect SG&A to decrease slightly.

What happened -- I'm just curious on the product -- what happens with product margins? I mean, if you're getting better margins in athletic, which would technically, from mix perspective, maybe skew it down slightly, and you're still -- your inventories look pretty good. I'm just curious from a product margin perspective, how do we think...

We don't expect product margins to be down. We expect product margins to be maybe even slightly up. But what happens is we build in the shipping costs for our multichannel initiatives into that margin that I talked about.

We'll move to our next question from Jill Nelson with Johnson Rice.

A quick clarification just on 2016 SG&A. Do you plan to be up or down slightly?

2016, we expect we'll decrease slightly as a percent of sales.

Okay. And then, I know you talked about marketing spend leveraging. Could you just talk about kind of the wages you're looking, given we've got higher minimum wage across the board, retailers are increasing, just kind of that component of it?

Jill, our operations team has done a heck of a job looking at wages on a door-to-door basis, based on sales for each store, and actually putting together schedules in each store for minimum coverage -- or not minimum coverage, but appropriate coverage. And we're going to be able to leverage payroll.

Okay. And then just e-commerce, if you could update us. Is it still tracking kind of around 1% penetration to total sales? And if you segmented that, is it a profitable business yet? Or when can we get to that?

We don't talk about e-commerce as a percent of sale at all. I'm not even sure where the 1% came from. We don't talk about that at all. It's just another store to us.

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

Just real quick. Most of my questions have been answered. Do you expect the comps to be up each quarter during the year? Or I mean, you had 1 big quarter last year. Is it sort of going to go from low mid- to low singles, getting to the 3 that way? Or could it be down 1 quarter?

We are not looking to have a decrease in any quarter, although we don't give quarter guidance. And the reason we had 1 quarter that was higher than normal last year was, remember, back-to-school and tax-free days moved into August out of July.

Got you, and that's just sort of a crapshoot going forward?

Well, no. It's -- we don't anticipate a move back into July until we have another 53-week year.

Which is next year.

That's correct.

And we'll take our next question from Jeff Stein with Northcoast Research.

This is Housum calling in for Jeff. What do you guys expect to be the key drivers of comp store sales growth of next year in the areas of units per transaction, conversion rates and price? And also, if you can talk a little bit more about your CapEx plan for the year? Talk about maybe your key areas of focus? What do you guys expect to have achieved in the year as far as capital spend and focus there?

As far as drivers, we do -- as I said in my prepared remarks, we do expect to see a continuation of the athletic trend that we've seen so far. We're really pleased with the early results of our sandal category. And we think that we're going to have another decent year in the boot category with what we've seen our merchants put together. Kerry, if you want to talk about the CapEx.

Yes. CapEx total is supposed to be $19 million to $20 million. You're going to see it heavily weighted to a standpoint of store openings, relocations and remodels. So it accounts for the majority of that $19 million to $20 million. Outside, we don't really have any unusual projects this year outside the normal store growth, remodels, relocations and just upkeep of our stores.

[Operator Instructions] And we'll take our next question from Steven Martin with Slater.

Kerry, just a quick ministerial question. Can you give us the shares outstanding at year-end? And whether you've bought shares quarter-to-date so far?

You're talking about the actual shares outstanding, not the weighted average shares?

Yes. The actual shares outstanding.

I don't have my finger on that. And obviously, we've been in a closed period since year-end. We do have a 10b5 plan that's out there. And we've bought a few shares back through that, but the stocks been reacting well. So it hasn't been a significant number of shares.

Okay. And on your store openings, 12 is sort of a lowest number you guys have had in a while. Is that sort of a minimum signed number? Or is that sort of what your real target is? Is there upside to that if sites become available?

Are you saying the 20 stores is on a low of our historical level?

I'm sorry, 20. I was looking at the net. But 20 is sort of about where you've been, and I know you've been talking about where you want to head. So...

We do want to accelerate our growth. We've made some additions to our real estate team, and we've got them out working on it. Their fruits of their labor may not come in until next year, until fiscal '17 where we would expect to accelerate our growth in '17 if the economy supports that kind of a growth level. But there may be a little upside to the 20 stores. They're out there working hard to get us to more. But right now, that's our best guess on the 20.

Let me ask you in a different way. How many of the 20 are signed and sealed?

It's still very early, and we've allocated the sites, but having -- there's probably only 1/3 of them that have actual signed deals on them. And I'm not worried about that because that's not unusual at this stage.

Okay. Going in 2016, you've talked about the categories you expect to drive comp. Where do you expect that to come from? Or is it a continuation of the dress area?

Well, I think the driver of the comps, we've shifted dollars out of other categories. And you know what, for competitive reasons, Steve, we really don't want to tell everybody that's listening where the exact dollars are coming from. But we've shifted to dollars to fund the categories I have just talked to you about, that I mentioned in my prepared remarks, along with a couple of other categories. But the ones I've just talked about in my prepared remarks is where I really believe it's coming from.

Where do you expect ASPs in 2016?

We expect ASPs to be up low singles.

And we have no additional questions in the queue. I'll turn the call back to Cliff for closing remarks.

Okay. I want to thank each of you for your interest in Shoe Carnival, and I look forward to speaking to you again in May as we announce our first quarter results. Thank you, again.

And that does conclude today's conference. Thank you for your participation.