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DSW Inc. Reports Second Quarter 2015 Financial Results
-- Second quarter sales increase 6.8% to $627 million; comparable sales increase 1.8%
-- First six months sales increase 8.1% to $1.28 billion; comparable sales increase 3.5%
-- Second quarter EPS from continuing operations increases 13.5% to $0.42 per share compared to last year's $0.37 per share
-- Company reiterates full year outlook for EPS in the range of $1.80 to $1.90 per share
-- Board of Directors approves a quarterly dividend of $0.20 per share

COLUMBUS, Ohio, Aug. 25, 2015 /PRNewswire/ -- DSW Inc. (NYSE: DSW), a leading branded footwear and accessories retailer, announced financial results for the thirteen week period ended August 1, 2015, which compares to the thirteen week period ended August 2, 2014.

Mike MacDonald, President and Chief Executive Officer, commented, "We were encouraged with our accomplishments in the second quarter. Our double digit earnings growth over the prior period reflected a significant shift in favor of regular priced merchandise selling. This shift enabled us to achieve meaningful merchandise margin rate expansion and gross profit dollar growth. We also advanced our strategy of becoming a more customer-centric company by evolving our organization, systems, and processes to meet our customers' changing expectations. As a result of this financial and strategic process, we remain confident in our direction."

Second Quarter Operating Results

  • Sales increased 6.8% to $627 million compared to last year's sales of $587 million.
  • Comparable sales increased by 1.8% compared to last year's increase of 0.8%.
  • Gross profit increased 120 bps driven primarily by lower markdown activity.
  • Operating expense rate increased by 80 bps due to higher stock and incentive compensation.
  • Net income from continuing operations increased by 10.7% to $37.6 million.
  • Earnings per share from continuing operations increased by 13.5% to $0.42 per share compared to last year's $0.37 per share.

Six Months Ended August 1, 2015 Operating Results

  • Sales increased 8.1% to $1.28 billion compared to last year's sales of $1.19 billion.
  • Comparable sales increased by 3.5% compared to last year's decrease of 1.5%.
  • Net income from continuing operations increased by 17.0% to $85.0 million.
  • Earnings per share from continuing operations increased by 20.3% to $0.95 per share compared to last year's $0.79 per share.

Second Quarter Balance Sheet Highlights

  • Cash, short-term and long-term investments totaled $471 million compared to $465 million in the second quarter last year.
  • Inventories were $505 million compared to $415 million at the end of the second quarter last year. On a cost per square foot basis, DSW inventories increased by 14.2%. Excluding opportunistic buys, inventories on a cost per square foot increased by 6.3%.

Regular Dividend
DSW Inc.'s Board of Directors declares a quarterly cash dividend payment of $0.20 per share. The dividend will be paid on September 30, 2015 to shareholders of record at the close of business on September 18, 2015.

Fiscal 2015 Annual Outlook
For the fifty-two week fiscal year ending January 30, 2016, the Company reiterated its earnings outlook to range from $1.80 to $1.90 per share.

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 0043755 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 September 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 10070803. 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 August 25, 2015, DSW operates 449 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 372 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.

Q2 2015 SEGMENT RESULTS

 

Net sales by reportable segment

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

August 1, 2015

 

August 2, 2014

 

% change

 

August 1,
2015

 

August 2,
2014

 

% change

 

(in thousands)

     

(in thousands)

   
                       

DSW segment

$

592,583

   

$

553,814

   

7.0

%

 

$

1,204,794

   

$

1,112,680

   

8.3

%

ABG segment

34,623

   

33,282

   

4.0

%

 

77,898

   

73,363

   

6.2

%

DSW Inc.

$

627,206

   

$

587,096

   

6.8

%

 

$

1,282,692

   

$

1,186,043

   

8.1

%

 

Comparable sales change by reportable segment

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

August 1, 2015

 

August 2, 2014

 

August 1, 2015

 

August 2, 2014

DSW segment

1.9%

 

0.8%

 

3.5%

 

(1.7)%

ABG segment

0.7%

 

2.5%

 

3.1%

 

1.6%

DSW Inc.

1.8%

 

0.8%

 

3.5%

 

(1.5)%

 

Gross profit by reportable segment

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

August 1, 2015

 

August 2, 2014

 

August 1, 2015

 

August 2, 2014

DSW segment

31.2%

 

30.0%

 

32.3%

 

30.9%

ABG segment

19.0%

 

17.5%

 

20.0%

 

21.2%

DSW Inc.

30.5%

 

29.3%

 

31.5%

 

30.3%

 

Stores and square footage data

 

As of

 

August 1, 2015

 

August 2, 2014

DSW stores open, end of period

449

 

410

DSW stores total square footage (in thousands)

9,529

 

8,924

 

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)

 
           
 

August 1, 2015

 

January 31, 2015

 

August 2, 2014

Assets

         

Cash and equivalents

$

151,007

   

$

59,171

   

$

87,406

 

Short-term investments

140,821

   

171,201

   

151,647

 

Accounts receivable, net

18,596

   

24,407

   

27,868

 

Inventories

505,170

   

450,836

   

414,988

 

Prepaid expenses and other current assets

31,599

   

43,108

   

52,515

 

Deferred income taxes

23,167

   

19,747

   

22,331

 

Total current assets

870,360

   

768,470

   

756,755

 
           

Property and equipment, net

354,477

   

337,903

   

331,269

 

Long-term investments

179,305

   

216,756

   

225,972

 

Goodwill

25,899

   

25,899

   

25,899

 

Deferred income taxes

8,944

   

11,332

   

12,466

 

Investment in Town Shoes

21,986

   

25,887

   

24,788

 

Note receivable from Town Shoes

44,627

   

43,304

   

47,755

 

Other assets

8,466

   

8,692

   

8,863

 

Total assets

$

1,514,064

   

$

1,438,243

   

$

1,433,767

 
           

Liabilities and shareholders' equity

         

Accounts payable

$

190,911

   

$

170,610

   

$

192,999

 

Accrued expenses

113,466

   

113,180

   

107,123

 

Total current liabilities

304,377

   

283,790

   

300,122

 
           

Non-current liabilities

144,029

   

143,333

   

142,479

 

Total shareholders' equity

1,065,658

   

1,011,120

   

991,166

 

Total liabilities and shareholders' equity

$

1,514,064

   

$

1,438,243

   

$

1,433,767

 

 

DSW INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

         
   

Thirteen weeks ended

 

Twenty-six weeks ended

   

August 1, 2015

 

August 2, 2014

 

August 1, 2015

 

August 2, 2014

Net sales

 

$

627,206

   

$

587,096

   

$

1,282,692

   

$

1,186,043

 

Cost of sales

 

(435,904)

   

(415,192)

   

(878,332)

   

(826,134)

 

Gross profit

 

191,302

   

171,904

   

404,360

   

359,909

 

Operating expenses

 

(131,721)

   

(118,582)

   

(271,207)

   

(245,336)

 

Operating profit

 

59,581

   

53,322

   

133,153

   

114,573

 

Interest income, net

 

752

   

659

   

1,672

   

1,650

 

Non-operating (expense) income

 

(7)

   

   

3,305

   

 

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

 

60,326

   

53,981

   

138,130

   

116,223

 

Income tax provision

 

(22,486)

   

(20,860)

   

(51,582)

   

(44,463)

 

(Loss) income from Town Shoes

 

(230)

   

849

   

(1,572)

   

849

 

Income from continuing operations

 

37,610

   

33,970

   

84,976

   

72,609

 

Income from discontinued operations, net of tax

 

   

358

   

   

358

 

Net income

 

$

37,610

   

$

34,328

   

$

84,976

   

$

72,967

 
                 

Diluted shares used in per share calculations:

 

89,693

   

91,126

   

89,660

   

91,618

 
                 

Diluted earnings per share:

               

Diluted earnings per share from continuing operations

 

$

0.42

   

$

0.37

   

$

0.95

   

$

0.79

 

Diluted earnings per share from discontinued operations

 

   

0.00

   

   

0.00

 

Diluted earnings per share

 

$

0.42

   

$

0.38

   

$

0.95

   

$

0.80

 

 

SOURCE DSW Inc.

For further information: Christina Cheng, 855-893-5691, christinacheng@dswinc.com

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