On March 20, 2014, Zacks Investment Research downgraded
), the branded footwear retailer, to a Zacks Rank #5 (Strong
Why the Downgrade?
Shares of DSW slipped 2.9% after the company released its
fourth-quarter fiscal 2013 earnings on March 18, 2014.
During the quarter, the top line disappointed as it slipped 3.7%
to $572.3 million. Sales also fell short of the Zacks Consensus
Estimate of $586 million as weak sales from a huge decline in
women's footwear sales were more than offset by the increase in
men's footwear sales.
Comparable store sales (comps) remained flat year over year,
compared to a 3.6% rise last year. The impact of increased store
conversion was completely offset by a fall in store traffic
leading to flat comps.
The company's women footwear business posted a 3% comps decline
during the quarter and the company believes that the changing
lifestyles will continue to be a big concern for DSW. During the
year, the company's focus on implementing omni-channel strategies
also led to higher costs for the company.
DSW's quarterly adjusted earnings of 31 cents a share tanked 8.8%
year over year. Moreover, gross profit declined 6.8% with the
gross margin contracting 90 basis points (bps). On the other
hand, operating profit inched down 1.8% to $44.8 million.
The company's dismal results triggered a downtrend in the Zacks
Consensus Estimates, as analysts become less constructive on the
stock's future performance. The Zacks Consensus Estimate for
fiscal 2014 and 2015 fell 9% to $1.91 and 1.7% to $2.33,
respectively in the past 7 days.
Other Stocks that Warrant a Look
Other better-ranked retail stocks that look promising and are
expected to continue with their upbeat performance include
Foot Locker Inc.
American Apparel, Inc.
Columbia Sportswear Company
), all sporting a Zacks Rank #2 (Buy).
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