Press Releases
 
Press Releases


Subscribe to News Alerts
DSW Inc. Reports Third Quarter 2015 Financial Results
-- Third quarter sales decrease 0.6% to $666 million; comparable sales decrease 3.9%
-- First nine months sales increase 5.0% to $1.95 billion; comparable sales increase 0.9%
-- Third quarter EPS decreases 20.0% to $0.44 per share compared to last year's $0.55 per share
-- Full year EPS guidance of $1.40 to $1.50, as previously announced
-- Board of Directors approves a quarterly dividend of $0.20 per share
-- As announced on November 3, Board of Directors approved new $200 million share repurchase authorization

COLUMBUS, Ohio, Nov. 24, 2015 /PRNewswire/ -- DSW Inc. (NYSE: DSW), a leading branded footwear and accessories retailer, announced financial results for the thirteen week period ended October 31, 2015, which compares to the thirteen week period ended November 1, 2014.

Mike MacDonald, President and Chief Executive Officer, stated, "Our third quarter performance was disappointing. Unseasonably warm temperatures, cautious consumer spending and slower tourism contributed to weak sales trends and a difficult retail environment. In response to these challenges, we took actions to manage inventories and canceled orders both within the quarter and for future periods, ending the quarter with total inventories nearly flat to the prior year on a cost per square foot basis. We remain cautious about the retail environment in the fourth quarter and are anticipating a highly promotional holiday season. As a result, we are intensifying our merchandising and marketing efforts to capture market share and drive traffic, while rigorously managing our expenses."

"Despite the challenging environment, we continue to make good progress on our omni-channel initiatives. During the quarter, we successfully implemented Buy Online Pick-up in Store and Buy Online Ship to Store, which provide our customers with  the easy convenience of stopping by a store to pick up their on-line footwear purchases. We are encouraged that DSW customers have embraced these new capabilities with minimal marketing efforts to date."

"As previously announced, Roger Rawlins, our Chief Innovation Officer will succeed me as DSW's Chief Executive Officer effective January 1, 2016. I am confident that we have the right plan in place and that under Roger's leadership, we will continue to execute the strategic initiatives crucial to driving DSW's future success," added Mr. MacDonald.

Third Quarter Operating Results

  • Sales decreased 0.6% to $666 million compared to last year's sales of $670 million.
  • Comparable sales decreased by 3.9% compared to last year's increase of 2.6%.
  • Gross profit decreased by 270 bps driven by markdown activity and a valuation reserve on a special inventory purchase.
  • Operating expense rate improved by 30 bps due to expense reductions related to lower incentive compensation, store expenses and overhead costs.
  • Net income from continuing operations decreased by 20.7% to $39.3 million.
  • Earnings per share from continuing operations decreased by 20.0% to $0.44 per share, in line with previously announced guidance for $0.41 to $0.44 per share. This includes a pre-tax charge of $10 million, or $0.07 per share, for a valuation reserve on a special inventory purchase.

Nine Months Ended October 31, 2015 Operating Results

  • Sales increased 5.0% to $1.95 billion compared to last year's sales of $1.86 billion.
  • Comparable sales increased by 0.9% compared to last year's decrease of 0.1%.
  • Net income from continuing operations increased by 1.7% to $124.3 million.
  • Earnings per share from continuing operations increased by 3.7% to $1.39 per share compared to last year's $1.34 per share.

Third Quarter Balance Sheet Highlights

  • Cash, short-term and long-term investments totaled $397 million compared to $427 million in the third quarter last year.
  • Inventories were $521 million compared to $486 million at the end of the third quarter last year. On a cost per square foot basis, DSW inventories increased by 1.8%. Excluding opportunistic buys, inventories on a cost per square foot basis decreased by 0.7%.
  • The company repurchased 2.1 million shares for $63.1 million, completing its prior $150 million share repurchase authorization. As previously announced, the Board approved an additional $200 million share repurchase authorization, which the Company expects to implement opportunistically.

Regular Dividend

DSW Inc.'s Board of Directors declared a quarterly cash dividend payment of $0.20 per share. The dividend will be paid on December 31, 2015 to shareholders of record at the close of business on December 18, 2015.

Fiscal 2015 Annual Outlook

The Company reiterated its earnings guidance for the year to be in the range of $1.40 to $1.50 per share, assuming approximately 4% revenue growth and flat comparable sales performance for the full year.

Webcast and Conference Call

To hear the Company's live earnings conference call, log on to http://www.dswinc.com/ today at 8:30 a.m. Eastern Time, or call 1-888-317-6003 in the U.S. or 1-412-317-6061 outside the U.S. using passcode 7925585 approximately ten minutes prior to the start of the call. A telephone replay of this call will be available until 5:00 p.m. Eastern Time on December 8, 2015 and can be accessed by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 outside the U.S. and using passcode 10075962. An audio replay of the conference call, as well as additional financial information, will also be available at http://www.dswinc.com.

About DSW Inc.

DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and kids. As of November 24, 2015, DSW operates 469 stores in 42 states, the District of Columbia and Puerto Rico, and operates an e-commerce site, http://www.dsw.com, and a mobile website, http://m.dsw.com. DSW Inc. also supplies footwear to 379 locations in the United States under the Affiliated Business Group. For store locations and additional information about DSW Inc., visit http://www.dswinc.com. Follow DSW on Twitter at http://twitter.com/DSWShoeLovers and Facebook at http://www.facebook.com/DSW.

 

DSW INC.

Q3 2015 SEGMENT RESULTS

 

Net sales by reportable segment

 

Thirteen weeks ended

 

Thirty-nine weeks ended

 

October 31,
2015

 

November 1,
2014

 

%
change

 

October 31,
2015

 

November 1,
2014

 

%
change

 

(in thousands)

     

(in thousands)

   
                       

DSW segment

$

628,778

   

$

632,774

   

(0.6)

%

 

$

1,833,572

   

$

1,745,454

   

5.0

%

ABG segment

36,742

   

37,098

   

(1.0)

%

 

114,640

   

110,461

   

3.8

%

DSW Inc.

$

665,520

   

$

669,872

   

(0.6)

%

 

$

1,948,212

   

$

1,855,915

   

5.0

%

   

Comparable sales change by reportable segment

 

Thirteen weeks ended

 

Thirty-nine weeks ended

 

October 31, 2015

 

November 1, 2014

 

October 31, 2015

 

November 1, 2014

DSW segment

(3.9)

%

 

2.8

%

 

0.8

%

 

(0.1)

%

ABG segment

(3.0)

%

 

0.3

%

 

1.0

%

 

1.2

%

DSW Inc.

(3.9)

%

 

2.6

%

 

0.9

%

 

(0.1)

%

   

Gross profit by reportable segment

 

Thirteen weeks ended

 

Thirty-nine weeks ended

 

October 31, 2015

 

November 1, 2014

 

October 31, 2015

 

November 1, 2014

DSW segment

30.4

%

 

33.5

%

 

31.6

%

 

31.9

%

ABG segment

21.9

%

 

18.0

%

 

20.6

%

 

20.2

%

DSW Inc.

29.9

%

 

32.6

%

 

31.0

%

 

31.2

%

   

Stores and square footage data

 

As of

 

October 31, 2015

 

November 1, 2014

DSW stores open, end of period

465

   

431

 

DSW stores total square footage (in thousands)

9,785

   

9,280

 

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements in this release that are not historical facts, including the statements made in our "Fiscal 2015 Annual Outlook," are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's current expectations and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: our success in executing our omni-channel strategy; our success in opening and operating new stores on a timely and profitable basis; maintaining strong relationships with our vendors; our ability to anticipate and respond to fashion trends; disruption of our distribution and/or fulfillment operations; continuation of supply agreements and the financial condition of our affiliated business partners; fluctuation of our comparable sales and quarterly financial performance; risks related to our information systems and data; failure to retain our key executives or attract qualified new personnel; our competitiveness with respect to style, price, brand availability and customer service; our reliance on our DSW Rewards program and marketing to drive traffic, sales and customer loyalty; uncertain general economic conditions; our reliance on foreign sources for merchandise and risks inherent to international trade; risks related to our handling of sensitive and confidential data; risks related to leases of our properties; risks related to the realization of benefits related to our equity interest in Town Shoes, a leading branded shoe retailer in Canada; foreign currency exchange risk; and risks related to our cash and investments. Additional factors that could cause our actual results to differ materially from our expectations are described in the Company's latest annual or quarterly report, as filed with the SEC. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances.

     

DSW INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 
           
 

October 31, 2015

 

January 31, 2015

 

November 1, 2014

Assets

         

Cash and equivalents

$

90,019

   

$

59,171

   

$

96,394

 

Short-term investments

   

171,201

   

128,381

 

Accounts receivable, net

18,264

   

24,407

   

26,610

 

Inventories

521,243

   

450,836

   

486,260

 

Prepaid expenses and other current assets

22,209

   

43,108

   

26,566

 

Deferred income taxes

25,365

   

19,747

   

23,486

 

Total current assets

677,100

   

768,470

   

787,697

 
           

Property and equipment, net

364,253

   

337,903

   

338,227

 

Long-term investments

306,483

   

216,756

   

202,259

 

Goodwill

25,899

   

25,899

   

25,899

 

Deferred income taxes

8,666

   

11,332

   

14,643

 

Investment in Town Shoes

21,229

   

25,887

   

24,838

 

Note receivable from Town Shoes

45,930

   

43,304

   

47,819

 

Other assets

8,468

   

8,692

   

8,850

 

Total assets

$

1,458,028

   

$

1,438,243

   

$

1,450,232

 
           

Liabilities and shareholders' equity

         

Accounts payable

$

169,166

   

$

170,610

   

$

185,931

 

Accrued expenses

117,895

   

113,180

   

125,885

 

Total current liabilities

287,061

   

283,790

   

311,816

 
           

Non-current liabilities

142,834

   

143,333

   

142,540

 

Total shareholders' equity

1,028,133

   

1,011,120

   

995,876

 

Total liabilities and shareholders' equity

$

1,458,028

   

$

1,438,243

   

$

1,450,232

 

      

DSW INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
   

Thirteen weeks ended

 

Thirty-nine weeks ended

   

October 31, 2015

 

November 1, 2014

 

October 31,
2015

 

November 1,
2014

Net sales

 

$

665,520

   

$

669,872

   

$

1,948,212

   

$

1,855,915

 

Cost of sales

 

(466,554)

   

(451,315)

   

(1,344,886)

   

(1,277,449)

 

Gross profit

 

198,966

   

218,557

   

603,326

   

578,466

 

Operating expenses

 

(135,637)

   

(138,720)

   

(406,844)

   

(384,056)

 

Operating profit

 

63,329

   

79,837

   

196,482

   

194,410

 

Interest income, net

 

952

   

737

   

2,624

   

2,387

 

Non-operating (expense) income

 

(107)

   

   

3,198

   

 

Income from continuing operations before income
taxes and income (loss) from Town Shoes

 

64,174

   

80,574

   

202,304

   

196,797

 

Income tax provision

 

(25,575)

   

(32,069)

   

(77,157)

   

(76,532)

 

Income (loss) from Town Shoes

 

696

   

1,049

   

(876)

   

1,898

 

Income from continuing operations

 

39,295

   

49,554

   

124,271

   

122,163

 

Income from discontinued operations, net of tax

 

   

   

   

358

 

Net income

 

$

39,295

   

$

49,554

   

$

124,271

   

$

122,521

 
                 

Diluted shares used in per share calculations:

 

88,369

   

89,810

   

89,229

   

91,014

 
                 

Diluted earnings per share:

               

Diluted earnings per share from continuing 
     operations

 

$

0.44

   

$

0.55

   

$

1.39

   

$

1.34

 

Diluted earnings per share from discontinued 
     operations

 

   

   

   

0.00

 

Diluted earnings per share

 

$

0.44

   

$

0.55

   

$

1.39

   

$

1.35

 

     

SOURCE DSW Inc.

For further information: Investor Relations, investorrelations@dswinc.com

print email rss