Why Is DSW a Strong Sell? - Analyst Blog

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Zacks Investment Research downgraded DSW Inc. ( DSW ) to a Zacks Rank #5 (Strong Sell) on Jun 28, 2014, following the company's dismal first-quarter fiscal 2014 performance on May 28. Since then, the shares have nosedived 34.4%.

Why the Downgrade?

DSW witnessed sharp downward estimate revisions after reporting lower-than-expected first-quarter fiscal 2014 results. The quarterly earnings of 42 cents a share fell short of the Zacks Consensus Estimate of 48 cents and slumped 16% from the year-ago period.


Owing to an intense promotional retail environment and erratic weather, the top line slipped 0.4% to $598.9 million, with comparable-store sales (comps) declining 3.7% year over year. Sales also lagged the Zacks Consensus Estimate of $636.0 million.

This branded footwear retailer envisions earnings for fiscal 2014 to lie in the band of $1.45-$1.60 per share. Additionally, the company anticipates comps to decline by a low single-digit rate while expecting adjusted sales to improve at the same rate.

The Zacks Consensus Estimates has been portraying a downtrend as analysts became less constructive on the stock's future performance. Estimates for fiscal 2014 and 2015 dropped 20.1% and 17.1% to $1.51 and $1.80 per share, respectively.

Other Stocks to Consider

Some better-ranked retail stocks worth considering include Citi Trends, Inc. ( CTRN ), The Men's Wearhouse, Inc. ( MW ) and Foot Locker, Inc. ( FL ). While Citi Trends carries a Zacks Rank #1 (Strong Buy), both Men's Wearhouse and Foot Locker carry a Zacks Rank #2 (Buy).


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FOOT LOCKER INC (FL): Free Stock Analysis Report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

MENS WEARHOUSE (MW): 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 OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DSW , FL , CTRN , MW

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