Press Release

COLUMBUS, Ohio, Aug. 26 /PRNewswire-FirstCall/ -- DSW Inc. (NYSE: DSW), a leading branded footwear specialty retailer, announced net income of $7.6 million on net sales of $369.5 million for the quarter ended August 1, 2009, compared with net income of $11.0 million on net sales of $357.2 million for the quarter ended August 2, 2008. Same store sales decreased 2.9% versus a decrease of 6.9% last year.

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Diluted earnings per share were $0.17 for the second quarter of fiscal 2009 compared with diluted earnings per share of $0.25 last year.

Six Month Results

Net income was $14.7 million on net sales of $755.3 million for the six months ended August 1, 2009, compared with net income of $21.2 million on net sales of $723.4 million for the six months ended August 2, 2008. Same store sales decreased 3.8% for the comparable six month period versus a decrease of 6.2% last year.

Diluted earnings per share were $0.33 for the six months ended August 1, 2009, compared with $0.48 for the same period last year.

Fiscal 2009 Outlook

For the fiscal year ending January 30, 2010, the Company reiterated its estimate of a mid-single digit decrease in comparable store sales. Based on the performance through the second quarter reported today, annual 2009 diluted earnings per share are now estimated to be in the range of $0.37 to $0.45, updated from the Company's previously announced estimate of $0.30 to $0.35.

The Company will discuss its 2009 outlook more fully on its webcasted conference call to be held today.

Webcast and Conference Call

To hear the Company's live earnings conference call, log on to www.dswinc.com today at 8:00 AM Eastern, or call 1-866-362-4666 and reference passcode 57772818. To hear a replay of the earnings call, which will be available approximately two hours after the conference call ends, dial 1-888-286-8010, followed by passcode 43398914. An audio replay of the conference call, as well as additional financial information, will also be available at www.dswinc.com.

About DSW Inc.

DSW Inc. is a leading branded footwear specialty retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear for women and men. As of August 26, 2009, DSW operated 307 stores in 39 states and operated an e-commerce site, www.dsw.com. DSW also supplied footwear to 358 leased locations in the United States. For store locations and additional information about DSW, visit www.dswinc.com.

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 "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 opening and operating new stores on a timely and profitable basis; continuation of supply agreements and the financial condition of our leased business partners; maintaining good relationships with our vendors; our ability to anticipate and respond to fashion trends; fluctuation of our comparable store sales and quarterly financial performance; disruption of our distribution operations; the realization of our bankruptcy claims related to liquidating Filene's Basement and Value City Department Stores; impact of the disposition of Filene's Basement by Retail Ventures on the allocation of expenses pursuant to the shared services agreement with RVI; failure to retain our key executives or attract qualified new personnel; our competitiveness with respect to style, price, brand availability and customer service; declining general economic conditions; risks inherent to international trade with countries that are major manufacturers of footwear; the success of dsw.com; liquidity and investment risks related to our investments; RVI's lease of an office facility; our ability to secure additional credit upon the termination of our existing credit facility; and liquidity risks at Retail Ventures and its impact on DSW. 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)

                                                 August 1,      January 31,
                                                   2009            2009

    ASSETS
    Cash and equivalents                       $   39,279      $  54,782
    Short-term investments, net                   139,687        101,404
    Accounts receivable, net                        5,893          7,187
    Inventories                                   264,295        244,008
    Prepaid expenses and other current assets      21,404         24,790
    Deferred income taxes                          26,095         21,876
    Total current assets                          496,653        454,047

    Property and equipment, net                   220,573        233,366
    Goodwill                                       25,899         25,899
    Deferred income taxes and other assets          5,391          7,885
    Total assets                               $  748,516      $ 721,197

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable                           $  102,153      $  95,211
    Accrued expenses                               65,732         63,115
    Total current liabilities                     167,885        158,326

    Deferred income taxes and non-current
     liabilities                                   97,099         97,287
    Total shareholders' equity                    483,532        465,584
    Total liabilities and shareholders' equity $  748,516      $ 721,197

                                  DSW INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share amounts)
                                 (Unaudited)

                        Three months ended       Six months ended
                      August 1,    August 2,   August 1,    August 2,
                        2009         2008        2009        2008

    Net sales         $369,490    $357,175    $755,336    $723,439
    Cost of sales     (271,702)   (256,081)   (552,567)   (525,298)
    Gross profit        97,788     101,094     202,769     198,141
    Operating expenses (86,427)    (83,415)   (179,305)   (164,456)
    Operating profit    11,361      17,679      23,464      33,685
      Interest expense    (188)       (304)       (371)       (578)
      Interest income      766         724       1,203       1,721
    Interest income, net   578         420         832       1,143
    Non-operating income,
     net                   528                     133
    Earnings before
     income taxes       12,467      18,099      24,429      34,828
    Income tax
     provision          (4,900)     (7,142)     (9,717)    (13,583)
    Net income          $7,567     $10,957     $14,712     $21,245
    Basic and diluted
     earnings per share  $0.17       $0.25       $0.33       $0.48

    Shares used in per
     share calculations:
        Basic           44,074      43,999      44,046      43,983
        Diluted         44,420      44,242      44,355      44,195

SOURCE DSW Inc.

Investor Relations for DSW Inc., +1-614-872-1474