Good afternoon, and welcome to Shoe Carnival's Third Quarter Fiscal 2016 Earnings Conference Call. Today's conference is being recorded. It is also being broadcast via webcast. Any reproduction or rebroadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements. Forward-looking statements should be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contained in today's press release to reflect future events or developments. I'll now turn the call over to Mr. Cliff Sifford, President and Chief Executive Officer of Shoe Carnival, for opening remarks. Mr. Sifford, you may begin.

Thank you, and welcome to Shoe Carnival's Third Quarter 2016 Earnings Conference Call. Joining me on the call today is Kerry Jackson, Senior Executive Vice President, Chief Operating and Financial Officer. On today's call, I'll provide a brief overview of our third quarter performance and an update on our 2016 guidance. Kerry will review the financial results, and then we'll open up the call to take your questions. We continue to better position Shoe Carnival for growth over the long term. Our team has done an excellent job on our multichannel efforts as consumer shopping habits evolve. Over the past few years, we have enhanced our multichannel strategy by improving our digital store experience. We have implemented a shift from store strategy, improved our customers' journey in the mobile space, created an endless aisle experience with our SHOES2U program and, most importantly, we reenergized our loyalty program, Shoe Perks. During the third quarter, we strengthened our multichannel sales strategy even further with the launch of our buy online, pick up in store and our buy online, ship to store initiative. We are very pleased with the early results of this program as our customers embrace this opportunity in greater numbers than we anticipated. Now that buy online, pick up in store and buy online, ship to store has successfully launched, we look forward to our next sales enhancement strategy through the development of vendor drop-ship, which we will launch in 2017. This initiative will allow us to expand our assortment with key brands without the risk of inventory ownership. We continue to make solid progress on taking our Shoe Perks loyalty program to the next level. We had another great quarter of new member enrollment with approximately 1.1 million new members. This brings our total membership to over 12 million.…

Thank you, Cliff. Third quarter net sales increased $4.8 million to $274.5 million compared to the third quarter last year. The net sales increase was driven by a $7.4 million increase in sales from the 23 new stores opened since the beginning of the third quarter of fiscal 2015. This increase was partially offset by a $700,000 decrease in comparable store sales and a $1.9 million decrease in sales from the 8 stores closed since the beginning of the third quarter of fiscal 2015. Our gross profit margin for the quarter was 29.9% compared to 30.1% in the third quarter last year. This decrease was driven by a 30 basis point increase in buying, distribution and occupancy expenses as a percentage of sales, partially offset by a 10 basis point increase in our merchandise margin. We realized margin increases on sales of both our non-athletic and athletic merchandise for the quarter, which was mostly offset by an increase in expenses related to our multichannel sales initiatives. The increase in buying, distribution and occupancy expenses as a percentage of sales is due to deleveraging effect of lower same-store sales and an increase of expenses primarily due to new store growth. SG&A expenses increased $414,000 in the third quarter of fiscal 2016 to $66.6 million. As a percentage of sales, this expense has decreased to 24.3% compared to 24.5% in the third quarter last year. For the quarter, the increase in expenses for new stores was partially offset by expense reductions for stores that have closed, resulting in an $897,000 increase in non-comp store selling expenses. Other significant changes in SG&A for the quarter included increases in wages, depreciation and stock-based compensation expense and reduction in incentive compensation, employee healthcare and advertising expense during the third quarter of fiscal 2016 compared to…

[Operator Instructions] And we will take our first question from Jeff Stein of Northcoast Research.

I've got 2 questions, kind of looking ahead at the margin trends. I'm wondering, what percent of your footwear -- what percent of your shoes are being sold under the SHOES2U program compared to the prior year? And also, can you give us some indication of, is the Shoe Perks program a margin pressure, margin accretive or margin neutral to the company?

I'm not -- I don't have the answer. I don't have the answer for you on the SHOES2U program, what percentage of our shoes. I can tell you that, that program added in 2015 about 100 basis points to our conversion rate. And this year, our conversion rate continues to climb, and we attribute that to -- a lot of that to our SHOES2U program. When we talk about conversion, by the way, we're talking strictly brick-and-mortar stores. I want to be clear on that. So our conversion rate in our stores continue to climb. The second question -- again, the second question had to do with?

Shoe Perks. Margins on Shoe Perks.

We look at it as accretive to earnings because we were able to increase our sales with those customers. And the best way to say this, we're not giving them discounts at the register. They only earn those discounts based on hitting certain purchase goals, and then we send them a coupon to use, which we have a very low return rate on.

Okay. Do you know what kind of liability you have on your balance sheet with regard to future Shoe Perks redemptions compared to prior year? I presume that's in liabilities.

It is. It's not a significant amount, but I don't think we're going to give an actual amount on that for future reference.

Got it, got it. And, Kerry, any thoughts in terms of new markets for next year? And then one more for Cliff. Can you talk about some of the merchandise drivers that you see for spring of 2017, given that it sounds like canvas is beginning to weaken somewhat?

Right now, our intent is not to open any large new markets next year. We're going to continue to backfill. We will be entering into new smaller markets within our current geographic footprint, which has been a typical standard for us. We'll be looking at maybe entering a larger market in '18, but we're still evaluating that.

Got it.

And, Jeff, from a merchandise perspective, I'll talk in terms of what I mentioned in the conference -- in my prepared remarks, and that's that we still believe that the runway in athletic is getting stronger. We've personally been invited to a few of the pre-lines yes, that was a shot at Carl, but -- and I'm very excited about what I see from the lifestyle and retro standpoint -- casual, lifestyle and retro. So I'm real excited about the opportunity in athletic. And as you know, that's right at 50% of our total business. So if we can get -- if we can keep that momentum going, I feel pretty good about where we'll be. Our kids business continues to be strong and growing, and we're pretty excited about that. As far as the nonathletic categories, we're very pleased with the sandal selection that we have put together. And you got to remember that canvas is actually selling in the nonathletic categories. It's more of the skate canvas that has slowed down on us. Casual canvas has actually been pretty good.

And we will take a question from Randy Konik of Jefferies.

Janine Stichter on for Randy Konik. We just have a couple of questions. I just want to drill down the performance of boots. Did you see any regional variance in the areas where the weather was maybe a bit more normalized? And anything to suggest it's more than just weather but maybe also a bit of a change in trend? And then with November boots sales down to teens, can you give us some color on how much was transaction versus ASP now that you're being forced to take some additional promotions on the category?

Okay. There were a lot of questions in there. We didn't really see a change difference in -- by region. The deep South, obviously, got hurt more in boot category because it was really warm there. But other than that, as far as the comp store trend, not that much of a difference between North and South. The ASPs for November in the boot category, give me 2 seconds and I'll do my best to answer that for you. We're -- somebody get that number in front of me because I don't...

We saw a decline in the average price in our women's, but our men's and our kids were relatively flat, where we saw most of the loss came in pairs sold. And we saw a decline in pairs sold on each of the 3, women's, men's and kid's boots.

Okay, great. And the guidance assumed that ASPs are under pressure in the category during the quarter? Or is it kind of flattish ASPs going forward?

The guidance anticipates a little lower ASP in the quarter.

And we will take a question from Greg Pendy of Sidoti.

Just, I guess, you gave guidance on where you expect merchandise inventory to end the year, which would be down. And just kind of wondering, where do you stand as far as inventory on women's boots, if it is sort of a buy now, wear now type customer? And then you also have a nice setup, I guess, on January with the tax rebates. Do you feel that you would end up maybe having to chase if there is a snap in demand about where you're expecting? Or do you feel that you're well prepared to meet that demand?

Greg, when you say chase, so you're talking about the athletic category, which is what -- the tax-free days really drive athletic, and we're in great position to tackle that business. As far as the boot category, the women's boots are up. We are in the high single digits on a comp basis.

Okay. So currently, you feel that right now, I guess, to meet, if there is sort of a buy now, wear now and a snap in demand, you have the inventory in place right now?

Yes. No question about that from a boot standpoint. In fact, if we give winter weather and it does require that to sell some of the categories that we have, then we're in great shape to maximize sales for that.

[Operator Instructions] And we will take our next question from Sam Poser of Susquehanna.

I have 4 questions only. So Shoe Perks, you talked about how happy you are to add people to the roster. How do you get those people to be even more productive? Because the comps, I know you comp well in some categories, but the comps haven't really jumped with those additional people that you're adding. You're adding some good percentages. That's number one.

Yes. Let me take that one by one, Sam. In my prepared remarks, I talked about the fact that we added a little over 1 million Shoe Perks members, but -- and even though we're still in the acquire mode, we're still looking to acquire new members, because we're still -- when you compare us to our competitors, we're still way behind. We are now data mining that -- our Shoe Perks members so that we can more effectively talk to them and with the goal being to get them to shop more frequent and to add to their purchases. So it's important for us to know exactly who they are and what interests them so that we can more effectively talk to them. And we're in the process of doing that as we speak.

All right. And number two, on the gross margin in the fourth quarter, overall gross margin, Kerry, what were you -- I mean, you talked about -- I mean, can you give us sort of the high and the low end of your guidance on the total gross number?

Well, I stated in my prepared remarks, at the high end, typically, what we do is we're going to be slightly deleveraging our BD&O, and we expect to slight decline our merchandise margin. So we should -- we're going to see a slightly lowered gross profit margin percent for the fourth quarter. We really haven't defined specifically an actual number, but on the lower -- we see a little bit lower number on the low side -- if our sales end up on the low side of that, we'd expect to see even more of a decline in our merchandise margin and we deleveraged BD&O even further.

Sam, it's important to understand in the boot category, we said we're going to get -- we would be more promotional during the month of December to drive that -- and January to drive that inventory down. We buy our boots to be promotional. So we can be promotional and not have a terrible effect on our margins. So as long as we get some favorable weather, we'll be in good shape promotionally and from a margin standpoint.

But, I mean, with all due respect to that, the favorable weather has to come the next 4 -- 3.5 weeks or it doesn't matter. But January, [indiscernible].

That would definitely be my preference.

Okay. Well, that's good to know. Can we talk a little bit about the athletically inspired walking category and how you're doing over there? And do you see any changes in your pre-lines and whatnot?

We don't talk about individual vendors on the call, Sam.

I wasn't asking about individual.

Yes, no, but the way you phrase the question, although very -- I got to give you credit, it was creative. It was about an individual vendor. So we don't talk about that on the call.

All right. I'll withdraw that question. And then the last question is, Kerry, 53rd week next year, the fun begins. Can you give us any indication -- I mean, we did a little bit of -- can you give us any indication of what that's worth just by itself, that extra week and how to think about it next year?

Well, this is very preliminary numbers, but it might be about $15 million in sales roughly for the extra week. And it might be accretive to anywhere from $0.025 to $0.05. I mean, we're not really in a position to -- I'm sorry, EPS of $0.025 to $0.05. We're really not in a position yet to give that. We need to get through January because we build our model -- our comp increases based on the prior year comps. So we need to get through January and understand what is that baseline to project off of. But real rough numbers would be -- that would be real rough numbers.

And with no further questions in the queue, I would like to turn the call back over to Mr. Sifford for any additional or closing remarks.

Thank you for -- I just want to say thank you for joining us on the call today, and we look forward to talking to you again on the fourth quarter call in March. Thanks again.

And ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now disconnect.