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DSW Downgraded to Strong Sell - Analyst Blog

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Zacks Investment Research downgraded DSW Inc. ( DSW ) to a Zacks Rank #5 (Strong Sell) on May 31, 2014, following the company's dismal first-quarter fiscal 2014 performance on May 28. Since then, the shares have nosedived 23%.

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 an 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 13.8% to $1.51 and $1.87 per share, respectively.

Other Stocks to Consider

Some better-ranked retail stocks worth considering include Citi Trends, Inc. ( CTRN ), American Apparel, Inc. ( APP ) and Foot Locker, Inc. ( FL ). While Citi Trends carries a Zacks Rank #1 (Strong Buy), both American Apparel and Foot Locker hold a Zacks Rank #2 (Buy).

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FOOT LOCKER INC (FL): Free Stock Analysis Report

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

CITI TRENDS INC (CTRN): Free Stock Analysis Report

AMER APPAREL (APP): Free Stock Analysis Report

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Zacks Investment Research

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


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

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