Off-price footwear retailer Shoe Pavilion Inc swung to a first quarter net loss blaming slow consumer traffic and ongoing construction in many of the shopping centres where its newest stores are located.

The Sherman Oaks, California-based company said it incurred a net loss of $1.2m in the first quarter, or $0.13 per diluted share, compared to net income of $206,000, or $0.03 per diluted share, in the same period of 2006.

For the three months to 31 March, net sales increased 32.6% to $36.2m from $27.3m in last year's quarter. Comparable store net sales for the first quarter increased 7.8%.

Dmitry Beinus, chairman and CEO, said: "Most of the stores opened in 2006 were in new shopping centres where we have experienced slower than expected traffic due to ongoing construction in the centres as well as it taking longer than planned for other retailers to open stores at those centres.

"As a result of our first quarter performance we are taking a more conservative approach to our outlook for 2007."

The company now expects same-store sales to increase 3-4% for the year, but expects to incur a full-year net loss of $2m to $2.5m or $0.21 to $0.26 per fully diluted share.