Shoe Carnival Inc (SCVL) Q4 2018 Earnings Conference Call Transcript

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Shoe Carnival Inc (NASDAQ: SCVL)Q4 2018 Earnings Conference CallMarch 26, 2019, 4:30 p.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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

Clifton E. Sifford -- President and Chief Executive Officer

Thank you, and welcome to Shoe Carnival's Fourth quarter and fiscal year end 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 annual operating highlights and our fourth quarter sales results as well as an overview of our fiscal year 2019 guidance. Kerry will review the financial results in more detail. Then we'll open up the call to take your questions.

Shoe Carnival finished the year strong with a fourth quarter comparable store sales increase of 4.7% for the fiscal year comparable store sales increased 4.3% and we achieved record net sales of $1.30 billion, an increase of $10.5 million compared to fiscal 2017 which was ahead of our expectations. Our record sales were obtained through double-digit growth in digital sales and low single-digit increase in our brick and mortar stores. We also enjoyed increases in all major product categories in each geographic region throughout our chain. We reported record earnings of $2.45 per diluted share, a 64% increase over 2017's adjusted earnings of $1.49 a share and we surpassed the high-end of our guidance of $2.43.

Our merchant team continues to do a great job of identifying new trends, categories and key items of the season. They assume (inaudible) sufficient that -- so that we can take advantage of key shopping periods like back-to-school and holiday. We are also pleased with our inventory position at fiscal year-end, which was up 1.6% on a per store basis.

Inventory in our seasonal boot categories ended the year down double-digits. In addition, we returned a record $50 million to our shareholders during the year through share repurchases and dividends. This represents a 47% increase versus last year. We ended the year with $67 million in cash and cash equivalents and no debt.

Since 2015, we have returned over $155 million to our shareholders through stock buybacks and dividends. Our Board of Directors and management team remain committed to return excess capital to our shareholders. We are pleased our Board of Directors in December authorized a $50 million share repurchase program for 2019. Our customer centric initiatives, trend right product selection of the best brands and the latest fashion along with our exciting and unique in-store environment continues to make Shoe Carnival a store of choice for moderately priced footwear for the entire family.

2018 was a year of innovation for Shoe Carnival. We began the process of implementing that industry leading CRM initiative. This initiative gave us an unparalleled view into our shopper data, allowing us to more effectively communicate with our customer on a one-to-one basis. We are gaining tremendous insights to our customer's overall shopping journeys of where, when and how they shop our stores either online or brick and mortar. In addition, we are gaining a better understanding of the brands and categories by store location that our customers count on from Shoe Carnival. In addition -- in July, we began the initial phase of this program for a relaunch of our new and improved loyalty program Shoe Perks . We added a new gold level of rewards for our most active customers. On average gold level shoppers shop more often than non-gold members and spend approximately 20% more than non-gold members each time they shop.

Once we relaunched our new and improved program, they responded very positively to our targeted messaging. Our August comparable store sales increased 6.5% on top of the 7% comp store increase the previous August was proof that we were getting our back-to-school message directly to our high-value customers.

This positive sales trend continued throughout the second half of the year as each month posted positive comparable store sales increases, which led to a second half comparable store sales increase of 4.6%. The exciting news here is that the official launch of our CRM initiative is still months away. As I've stated previously there will be quick wins along this journey. We will be able to show positive results from better technology and a deeper understanding of who our customer is and how they respond to our message.

Before I walk you through our initiatives for 2019, I want to give a brief overview of our fourth quarter results for '18. I'm pleased that our comparable store sales increased each quarter during the fiscal year. This demonstrates the execution and strength of our ongoing strategic initiatives. For the quarter, traffic declined low single digits. Average transaction was flat while conversion and units per transaction increased low-single digits.

We ended the fourth quarter with 397 stores in 35 states in Puerto Rico. During the quarter, we closed five under performing stores for a total of 14 store closures for the year. Focusing on our fourth quarter comparable store sales by department. Our women's non-athletic department ended the quarter up mid-single digits on a comparable basis.

As expected, women's boot were the key driver of this increase. The strong demand in boots produced 90 basis point improvement in merchandise margin for the category while driving year end per door inventories down double digits versus last year. Our men's non-athletic department ended the quarter up high single digits on a comparable basis. We are very pleased with the performance of men's seasonal boots, which posted a low-double digit comparable store sales increase and 160 basis point improvement in merchandise margin for the category. Children shoes were up mid-single-digit on a comparable basis. Children's athletic increased mid-single-digit, while non-athletic was up high single-digits. Children's boots increased double-digits on a comparable store basis, while margin for the category increased 170 basis points. Adult athletic was up low-single-digits based upon a comparable basis, while the basketball category remain soft, we continue to be happy with the performance of the casual and running categories. Throughout 2018, we analysed customer data allowing us to identify each customer's unique identity. Our analyst team provided rich data to our marketing, merchant and real estate teams.

As we look forward into 2019, we seem to now utilize this data to better merchandise each individual store market to specific customers and find new store opportunities. As we move this project forward, we will leverage customer insights to better serve our customers and further differentiate the Shoe Carnival brand down to the individual store level. The opportunity for growth is great, as we segment our holiday customers through the data we have and then target a broader market of customers, who have the same characteristics. Also in 2018, we had strengthened our executive management team with the addition of Mark Worden, Executive Vice President, Chief Marketing and Strategy Officer. We immediately began the process of working through a comprehensive five-year strategy.

Our goals, which include building an incomparable brand, a unique customer experience that industry's best people and unmatched capabilities throughout our customer's journey will be critical as we look toward becoming a multi-billion dollar brand. Our first imperative was the hire and on board of world class marketing agents who have record for creative strategy and all media. We accomplished this imperative in 2018 with the hiring of McCann Detroit. Their job is to help Shoe Carnival become the most distinctive and compelling brand and a family footwear channel. Their vast and successful experience they bring to this important initiative include great companies such as General Motors, Chipotle and Pure Michigan (ph). We believe by combining the expertise of McCann with our unique and entertaining store environment, and our customer centric capabilities, Shoe Carnival continue to grow our comparable store sales and once again expand store count. Over the past two years, we are focused our real estate operations and merchandise teams on improving the metrics of stores that are not performing to our expectations. I have been very pleased with the success of these team -- that these teams have delivered so far. When we entered into the 2018 fiscal year, we've had identified 30 to 35 stores that we were going to close by year end. Through the hard work and dedication of these teams, we reduced the number of store closures from the high end of our expectation of 35 down to 14.

I'm happy with the performance of the stores we were able to save and I believe, it shows that our Shoe Carnival team working as one can and will deliver positive results. For 2019, we have identified, between seven and 10 stores for closure and for the immediate future there are no new stores, we plan to open.

However, with the great success we have had so far with the implementation of our CRM program, we have identified marketplaces where our core customer lives and we will be searching those markets for new store opportunities. That those opportunities present themselves for 2019 opening, we will react.

We have established a goal to open 10 new stores in 2020 utilizing the customer data, we are collecting through our customer analytic team. I am pleased with all of the decisive strategic actions our teams have taken to further differentiate Shoe Carnival for future growth. The investments we've made in technology and customer engagements are incredibly important as we take Shoe Carnival to the next level of growth with today's consumer.

We accomplished quite a bit in fiscal 2018 and believe our efforts will continue to yield benefits in fiscal 2019. Finally, I'd like to give a little color on our expectations for fiscal 2019. Since Easter shifted out of March and into April, I will not give quarter-to-date sales results. However, as I said earlier, I'm proud of the way our buyers continue to identify key items and categories. I feel very confident that we are well positioned with the right product and the appropriate depth that continue to drive comparable store sales increases.

As you all know, we plan sales conservatively and then react quickly to any emerging trend, which allows us to manage inventory and control margin. Our marketing plans are coming together nicely and we continue to expect great things from our CRM initiative. Based on this, we continue to expect fiscal 2019 net sales to be in the range of $1.35 billion to $1.43 billion with comparable store sales up low-single digits. We expect earnings per diluted share to be in the range of $2.60 to $2.70. This concludes my overview. I would now like to turn the call over to Kerry.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Thank you, Cliff. We have included in our earnings release today, a GAAP to non-GAAP reconciliation table illustrating and describing the adjustments that only affect the prior year fourth quarter and prior year full year earnings. Fiscal 2018 Q4 and fiscal year earnings have not been adjusted and are presented on a GAAP basis. Where appropriate, I will compare this year's earnings results first to the adjusted results from last year and then follow up with the prior year GAAP results.

In addition, Q4 of last year and the full fiscal year of 2017 included an additional week of activity compared to Q4 and full fiscal year end 2018, where it adds value to comparing this year's results with last year, I will identify the additional week of activity included in the prior year. We reported net sales of $234.7 million for the 13-week fourth quarter of fiscal 2018, compared to the net sales of $243.2 million for the 14-week fourth quarter of 2017.

Comparable store sales for the 13-week period ended February 2, 2019, increased 4.7% compared to the 13-week period ended February 3, 2018. The change in our fourth quarter net sales included increase in sales of $9.6 million in comparable stores and $2.8 million in new stores, offset by decreases in sales from closed stores at $5.7 million and $15.2 million due to the net effect of one less week in the quarter.

Our gross profit margin for the quarter increased 0.9% to 28.4% compared to adjusted gross profit margin of 27.5% in the fourth quarter of last year. The merchandise margin increased 0.5% while our buying, distribution and occupancy expenses decreased 0.4% as a percentage of sales. The increase in the merchandise margin was primarily driven by our non-athletic categories during the quarter. The decrease in our buying, distribution and occupancy expense as a percentage of sales was due to lower occupancy expense due to stores that have closed and the leveraging effect of the comparable store sales increase for the quarter. The extra week in the prior year fourth quarter had minimal effect on the margin comparisons between this year's Q4 and last year's. On a GAAP basis, our gross profit margin in Q4 last year was 28.9% and included a $3.3 million gain on insurance proceeds related to hurricane affected stores. SG&A expenses increased $446,000 in the fourth quarter of fiscal 2018 to $65.2 million compared to adjusted SG&A expenses of $64.7 million in the fourth quarter last year. An increase in incentive and equity compensation of $3 million in Q4 was partially offset by the reduction in expense of having one less week in Q4 this year.

As a percentage of net sales, these expenses increased to 27.8% compared to 26.6% in the fourth quarter of fiscal 2017. On a GAAP basis, SG&A in the fourth quarter last year was $70 million or 28.8% of sales. Included in the GAAP, SG&A expense, but not in the adjusted SG&A expense in Q4 2017, our non-recurring charges, including non-cash impairment charges of $3.4 million for 30 under performing stores and $1.9 million increase in stock-based compensation expense due to the enactment of the US Tax Cuts and Jobs Act of 2017 and its impact on the anticipated vesting of the Company's outstanding performance-based restricted stock.

Store closing cost included in both cost of sales and SG&A in Q4 this year were $487,000 compared to an adjusted $901,000 in Q4 last year. On a GAAP basis, store closing cost in Q4 last year were $4.3 million and included non-cash impairment charges of $3.4 million. There were no non-cash impairment charges incurred in Q4 this year. We close five stores in Q4 this year compared to closing 16 stores in Q4 last year.

Adjusted income tax expense increased $23,000 in Q4 this year to $456,000. On a GAAP basis, income tax expense decreased $3.6 million, income tax expense in Q4 last year included $4.4 million charge related to the remeasurement of the Company's deferred taxes due to the change in the tax laws.

The adjusted income tax expense excludes this additional charge to the income tax expense and excludes the tax effect of the gain on insurance proceeds. Non-cash impairment charges and additional stock-based compensation expense, I referenced earlier. We expect our effective tax rate in fiscal 2019 to be approximately 25% compared to 24.3% for fiscal 2018. Net income for Q4 this year was $1.4 million or $0.09 per diluted share compared to adjusted net income in Q4 last year of $1.7 million or $0.11 per diluted share.

Weighted average shares outstanding in Q4 this year decreased 590,000 shares or 3.7%. Total shares outstanding in Q4 this year were $15.375 million (ph). On a GAAP basis, including the effect of the previously discussed onetime and unusual items, we incurred a net loss in Q4 last year of $3.9 million or $0.24 per diluted share.

Now turning to our cash position and information affecting cash flow. We ended the year with $67 million in cash and cash equivalents and no cash borrowings on our $50 million line of credit. Cash generated from operations after purchase of property and equipment were $67 million. In fiscal 2018, we repurchased 1.5 million shares of common stock at a total cost of $46 million. During Q4, we repurchased approximately 197,000 shares at a total cost of $7 million. We currently have $50 million available under our share repurchase authorization, which runs through December 31, 2019.

In addition for fiscal 2018, we returned $4.8 million to shareholders through our quarterly cash dividend. Depreciation expense was $5.3 million in Q4 this year and 28 point (ph) -- $21.8 million for fiscal 2018. Capital expenditures for fiscal 2018 were $7.4 million, was $2.5 million used for new stores, relocations and remodel. Lease incentives from landlords were $634,000 for the year.

For fiscal 2019, capital expenditures are expected to be up $22 million. I should say up to $22 million. Approximately $9 million is to be used for relocation remodeling of certain of our existing stores. This concludes our financial review.

Now, I'd like to open the call for questions.

Questions and Answers:

Operator

(Operator Instructions) We will now take our first question from Sam Poser of Susquehanna. Please go ahead.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

Good afternoon, gentlemen. How are you?

Clifton E. Sifford -- President and Chief Executive Officer

Hi good afternoon, Sam. We are doing fine. Thank you. Yes please, Sam, can you hear us?

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

I can hear you guys. Thank you. Real quick, I know you're not guiding to the quarter because of the shift of Easter, but there is lot of talk about sort of the impact of the shifting tax refunds and everything. Did that -- how did that to this point net out for you? I mean, like, as expected, did it net, could you, give us some color there because of -- because there's lot of moving parts and we've heard a lot about that.

Clifton E. Sifford -- President and Chief Executive Officer

There are quite a bit moving parts, Sam. As you mentioned, the fact that Easter moved in to April, is a big shift. But I will tell you that -- what I am prepared is that we weren't disappointed in the sales for February and they came in a little below our expectation. However, we are pleased with so far sales for March, they are running ahead of our plan.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

Okay. And that's even with Easter being this Sunday -- this coming Sunday last year, so.

Clifton E. Sifford -- President and Chief Executive Officer

We plan for that, Sam. So that's built into the plan.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

So let me ask you this in general, have you caught up to your plan, when -- would you combine the two months thus far?

Clifton E. Sifford -- President and Chief Executive Officer

We don't -- like I said in my prepared remarks, we're not going to tell you where we are for the quarter. I gave you a bit more information. I should have -- tell you we were -- that we were not pleased with our February results.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Sam, one thing. We will say additionally is that, we took into account February and our expectation for March and the rest of the quarter, where we evaluated our previously stated guidance and we chose to remain where we -- with our -- our previous guidance after evaluating where we stood for the quarter.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

All right, thank you very much and then since the close of the quarter, I know, it's going to come out in the K, but since the close of the quarter, have you used any of that $50 million or have you been...

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

I stated in my remarks that we still have $50 million available. We've been in a closed period since the end of the fiscal year, since we had released earnings at that point in time, so we had not purchased any stock at that point.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

Okay and then Cliff, can you talk about how you're viewing sort of both in the short and long term, the impact of Payless going away?

Clifton E. Sifford -- President and Chief Executive Officer

Well, Sam, anytime a competitor goes away, as we have to look at from a human standpoint, I didn't mean with the employees, but from a business standpoint, I think is positive for us and others and (inaudible) family channel. The low end of our -- the bright part about Shoe Carnival is that we carry a broad range of product and a broad range of price points. So I think we -- I think, there is a benefit to be had for Shoe Carnival with Payless went away.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

And then two other things. Kerry, can you give -- or either one of you, can you give us the comps by month for the fourth quarter. And Cliff, could you talk about the athletic business. It was in the quarter, it sounded like it was -- it sort of eked out. But can you -- two of your larger brands had sort of been OK at best last year. Can you -- could you give us any color, any changes you may or may not be seeing there as well? Thanks.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Sam, we saw November being up high-singles and we saw December and January, both at low-singles.

Clifton E. Sifford -- President and Chief Executive Officer

And Sam, we -- as you know, we don't talk about brands. That's a policy we've had long-standing. I will tell you that our athletic business was positive for the quarter. I'm pleased -- very pleased with where we came out in the fourth quarter with athletic.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

And then as far as like mix of athletic, it's so important to you, just in the general sense looking ahead to this year. How do you feel about that?

Clifton E. Sifford -- President and Chief Executive Officer

We are still positive about athletic. In fact, we plan our athletic business low to -- low-single-digits. We consider low-single-digits anything under 3.5%.

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

Okay, well thanks very much. Let somebody else go -- have continued success.

Clifton E. Sifford -- President and Chief Executive Officer

Thank you.

Operator

We will now take our next question from Greg Pendy of Sidoti. Please go ahead.

Gregory Pendy -- Sidoti -- Analyst

Hey guys, thanks for taking my question. Just wanted to dig into that goal. I think you mentioned 10 new stores in 2020. You mentioned as you gather data on the CRM, but could you also share with us a little bit on what you're maybe seeing on the real estate lease environment out there and is that something you think will potentially get more favorable as some of the competitors go away and just kind of how you're weighing opportunities from a cost perspective? Thanks.

Clifton E. Sifford -- President and Chief Executive Officer

Greg, we are certainly hoping that the lease opportunities open up from a -- gets little better from a costing standpoint, but the fact is, we're really early in the process, so looking for sites for 2020. We've been at this now for about three or four months and I can't really give any more guidance from that. Look, like I did say, we are looking in our current footprint. We're really not looking to expand outside of the current footprint. There are markets that -- for better reasons I won't name the markets. But there are markets that we are in that we believe we have opportunity to grow store base and that's where we're concentrating our efforts.

Gregory Pendy -- Sidoti -- Analyst

That's helpful. And then can you just kind of give us a little bit color on how, what you're seeing in the Puerto Rico stores right now?

Clifton E. Sifford -- President and Chief Executive Officer

Puerto Rico as a territory is performing positively. However, today there are I believe five stores open whereas a year ago there were only two or three stores open from that we covered. There are six stores open today in Puerto Rico, year ago there were three or four. Can't remember exactly, but -- so the sales that we're experiencing in Puerto Rico are spread over more stores than the year ago. So our comps are not positive there and we find that happens sometimes after devastating hurricane like Puerto Rico had where the stores come back very strong for a year and then as the stores that weren't able to open up immediately come online, then the sales spread out, if that makes sense.

Gregory Pendy -- Sidoti -- Analyst

Yes. That's helpful, thanks a lot.

Operator

We will now take our next question from Chris Svezia of Wedbush. Please go ahead.

Christopher Svezia -- Wedbush Securities -- Analyst

Good afternoon, gentlemen and congratulations on a really -- on a great close to the year.

Clifton E. Sifford -- President and Chief Executive Officer

Thank you.

Christopher Svezia -- Wedbush Securities -- Analyst

You're welcome. So I got a bunch of questions. Sorry. So first

Clifton E. Sifford -- President and Chief Executive Officer

(inaudible)

Christopher Svezia -- Wedbush Securities -- Analyst

The first is just cadence comp Q1 last year, just walk through Kerry, February, March, April, what they were?

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

You know, March and April is really hard to describe because Easter moves around too much, but -- so we had a soft February or similar to this year, where it was cold and we -- and there it felt like the tax checks were a little delayed. We were down just into mid-single digits in February and then the combined March, April was up just in the mid-single-digits, which gave us a slight comp increase of 1.3% for the quarter. It was back loaded significantly with -- warmed up, we saw our sales take-off and people started responding. We saw some really good sandal sales when -- that actually occurred.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay, got it. When you think about low-single digit comp, is that basically the assumption every quarter. Is that fair to say?

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

It is, they're built into our guidance, yes.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. Got it. And I know it's going to be a little bit hard to calculate this, but I would assume normally March is a bigger month than February. Is that fair to say?

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Yeah because March is the five week month, so typically it is larger.

Christopher Svezia -- Wedbush Securities -- Analyst

Got it, OK, good. I'm curious, Kerry, just on cadence or any color, so just for the year in terms of your expectations. I mean, it's basically driven largely by the buyback or maybe any color you can give as it pertains to the margin, gross margin, SG&A, how we should think about those percent of sales as it pertains to the wherever you want to be, the midpoint, the high-end of your guidance. Just any color about that?

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

You're talking about little color around our guidance for fiscal '19.

Christopher Svezia -- Wedbush Securities -- Analyst

For the year as it pertains to gross margin and SG&A, yes.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Okay, so built into or the high-end of our expectations, we're looking at a flat gross profit margin and built into that is both the idea that merchandise margins relatively flat and the buying, distribution and occupancy is relatively flat. Remember in 2018, where in Q2 of this year we recorded $1 million benefit from two stores in Puerto Rico that didn't open and that reduced our occupancy cost in Q2 of this year and therefore for the full year of '18 that we're not seeing a repeat of it in '19 that was not included in the adjusted numbers I discussed today. So that's a little bit of headwinds for leveraging BD&O in '19. We expect to see some leverage on our SG&A line, particularly related to a decrease in our incentive and equity comp with -- because of the great performance we had in '19, we had above normal expense in those areas. We expect those return back to more normalized expense and that will create some leverage.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. And final two things. Do you anticipate earnings growth every quarter, I know there was a lot of certainly benefit in the first half of the year, which is a calendar shift, just how should we think about that? I know, Q2 is pretty high hurdle, but any color you could give there?

Clifton E. Sifford -- President and Chief Executive Officer

We expect -- we do expect a low single-digit increase each quarter of the year. We got tremendous plans for our back-to-school time period and so even though last year. Chris, you remember, we -- every conference call, we kept reminding everyone that we had to go against a 7% increase in August. And then we comped it with a 6.5% increase. So I believe that our concept is great when it comes to back-to-school time period. So yes, we have planned our sales up each individual quarter.

Christopher Svezia -- Wedbush Securities -- Analyst

I was actually talking more specifically about earnings, Cliff, not so much, not so much sales, but just from an earnings perspective and how we think about each of them.

Clifton E. Sifford -- President and Chief Executive Officer

Well then, I'll turn that over to my financial expert, Kerry.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

We really need to see how the rest of this quarter ends up, but aside from this quarter, we're looking for increases in our EPS in each of the additional quarters depending on the rebound and the continuation of the positive sales we're seeing in March. It could be closer to a flattish quarter in Q1.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay. So Q1 is the only one that could be sort of flattish, outside of that, you've got growth every quarter.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Correct, that's right. That's where we're guiding to, that's the high end of our guidance.

Christopher Svezia -- Wedbush Securities -- Analyst

All right, got it. All right, I'll get back in the queue. Thank you very much guys. And all the best.

Clifton E. Sifford -- President and Chief Executive Officer

Thank you, Chris.

Operator

(Operator Instructions) We will now take our next question from Steven Martin of Slater.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

Hi guys, and congratulations. It's a shame you weren't able to buyback stock during this depressed period. Cliff, I know it frustrated you. Kerry, your guidance -- go ahead.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

No, you go ahead.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

Kerry, your guidance is -- is based on what share count?

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

For next year, we're looking at diluted shares outstanding for the full year, just over 15 million shares.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

So you're assuming basically no incremental buyback in that.

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

We factor in a certain amount. We don't typically factor in initially becasue we can't, we don't know what the stock price is going to be throughout the year, but we do plan certain amount of buyback of the total $50 million.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

Got you. You commented on Payless earlier, but you've also had Sears close or not close but get out of the footwear and apparel business. You've had more JCPenney closings, you've had Shopko close, you had maybe the second half of Bon-Ton and now rumoured models (ph). Can you talk about any impacts you've seen or you expect to see positive or negative?

Clifton E. Sifford -- President and Chief Executive Officer

Not sure how -- I'm not sure how to measure it unless we talk to you about stores on a location-by-location basis. But I can tell you that we have 4.3% increase in the -- for the quarter and our sales were up mid-single-digits for the quarter and mid-single-digit for the year and some of that had to be effected. There were less -- that was less competition. So I don't want to get down to the specific area or geographic region where our competition is closing, but we've always talked about the fact that the US is over retailed and today is less, so.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

Okay. You said you were very anticipatory of back-to-school. Can you tell us what about the second half of the year and back-to-school has you enthused?

Clifton E. Sifford -- President and Chief Executive Officer

Well, back-to-school as you know is our strongest time period. And we plan for it, we plan for it all year. Back-to-school and holiday are very, very important to us. We spent the entire year. I am very excited about the product we've seen. I don't want to give too much insight because just like we listen to our competitor's calls, our competitors listen to ours. So I'd just tell you that we are excited about what we've seen and the plans that we put in place.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

Okay. And some of your other besides Puerto Rico, you had some newer markets that were underperforming that had got a little better. Can you talk about some of your other markets?

Clifton E. Sifford -- President and Chief Executive Officer

I'm not sure.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

So without the Detroit, Houston?

Clifton E. Sifford -- President and Chief Executive Officer

Again, Steve, I don't really want to get down in a conference call talking about individual markets. It really sends a signal to people we compete with every day.

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

All right not a problem. Thanks a lot.

Clifton E. Sifford -- President and Chief Executive Officer

All right, thanks, Steve.

Operator

We will now take our next question from Chris Svezia of Wedbush.

Christopher Svezia -- Wedbush Securities -- Analyst

Hey, I just have one follow-up here. Just on the CRM initiatives just real quick, I know you said Cliff, that you've got a couple more months to go before you really roll it out, but clearly, you're seeing things in the data and minings of the data that you are already utilizing in terms of your marketing, probably your inventory purchases and things of that nature. Just maybe talk about when, is this right before back-to-school, you really start to lever some of that benefit from the CRM initiative in totality, or just sort of how do I think about that?

Clifton E. Sifford -- President and Chief Executive Officer

We believe that Chris, I was going to answer that two ways. Our -- this is really took off in August of last year when we relaunched our Shoe Perks program that -- our customers are very excited about what they saw and excited about what we were doing and how we were messaging them. And that took off and continued throughout the fall season. So that -- that gave us great confidence that we were headed down the right path. So with CRM, we're getting improvements almost on a monthly basis. The entire program won't launch until, till -- won't be done until the second half of the year. Sometime after back-to-school but prior to fourth quarter. That's our goal at this point, but we are seeing benefit from what we're learning and how the customers are reacting to the messaging that we're using all the marketing initiatives that we've, utilized, under this program. So we expect to continue to see benefit from CRM even though the entire program won't launch until the fourth quarter.

Christopher Svezia -- Wedbush Securities -- Analyst

Okay, sounds good. I appreciate it and continued success.

Clifton E. Sifford -- President and Chief Executive Officer

All right. Thank you.

Operator

There are no further questions at this time. I would now like to hand the call back to Mr. Cliff Sifford for any additional or closing remarks.

Clifton E. Sifford -- President and Chief Executive Officer

I just want to say thank you for participating on our call today. We look forward to speaking to you again in May. Thank you again.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, you may now disconnect.

Duration: 45 minutes

Call participants:

Clifton E. Sifford -- President and Chief Executive Officer

W. Kerry Jackson -- Senior Executive Vice President, Chief Operating & Financial Officer and Treasurer

Sam Poser -- Susquehanna Financial Group, LLLP -- Analyst

Gregory Pendy -- Sidoti -- Analyst

Christopher Svezia -- Wedbush Securities -- Analyst

Steven Martin -- Slater Capital Management, L.L.C. -- Analyst

More SCVL analysis

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