DSW's Earnings Surpass Estimates - Analyst Blog


Footwear and accessories retailer, DSW Inc . ( DSW ) posted better-than-expected first-quarter fiscal 2013 results. The adjusted quarterly earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 90 cents and rose by a couple of cents when compared with the prior-year quarter. 

Sales increased 7.7% year over year to $601.4 million and surpassed the Zacks Consensus Estimate of $598 million. However, comparable-store sales (comps) marked a decline of 2.4% during the quarter compared with a 7.6% rise witnessed in the prior-year quarter.

Following healthy results, the company now expects to post earnings in the range of $3.40 - $3.60 per share in fiscal 2013. Moreover, comps are expected to remain flat or rise by 2%.

Margins & Store Expansion

Gross margin contracted by 100 basis points to 33.5%, reflecting adverse sales mix and deleverage in the occupancy expenses. Operating margin declined 50 basis points to 12.2%.

Of late, DSW has been extensively using its cash flow to spread its reach throughout the United States. We believe that the company's aggressive store expansion plans signify its popularity among the customers.

Moreover, its wedding shop collection provides exclusive assortments for bridal parties and occasions and sets it apart from its peers Foot Locker, Inc ( FL ), J. C. Penney Company Inc . ( JCP ) and Macy's Inc . ( M ).

The company opened 12 new DSW stores during the quarter, bringing the total store count to 376. Moreover, it plans to add 25 to 30 stores during fiscal 2013. 

Besides offering a wide range of designer shoes at discounted prices for both men and women, DSW runs a free, award-winning loyalty program 'DSW Rewards,' which issues certificates to customers for future purchases at DSW. This initiative not only helps in retaining customers but also attracts new buyers.

Other Financial Details

DSW ended the quarter with cash and investments of $429.7 million, while inventories were valued at $395.3 million. Shareholders' equity totaled to $893.4 million. 

The company raised its quarterly dividend by 39% to 25 cents a share. The increased dividend is payable on Jun 28, 2013to the stakeholders of record on Jun 18, 2013. Alongside, DSW extended its current $100 million share buyback program.

Currently, shares of DSW hold a Zacks Rank #3 (Hold).

DSW INC CL-A (DSW): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

PENNEY (JC) INC (JCP): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DSW , FL , JCP , M



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