DSW Inc. (DSW) Down on Disappointing 2nd Quarter Sales

Shares of Columbus, Ohio, based DSW Inc. (DSW) fell on Tuesday, against the backrop of a down day in stocks accross the board. DSW's stock was down 11.40%, falling $3.52 per share, to close at $27.35, on volume of 8,027,453 shares. The company's revenues for the second quarter came in below analysts expectations, despite increasing significantly over the same quarter a year earlier.

Founded in 1969, DSW Inc. is a major branded footwear and accessories retailer, offering a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and children.
The company operates 449 retail outlets in 42 states, plus Puerto Rico and the District of Columbia. DSW also operates an e-commerce site as well as a mobile website. The company's stock trades on the New York Stock Exchange.

On Tuesday DSW reported net earnings of $0.42 per share for the fiscal second quarter ended August 1, which was in line with analysts expectations. However revenues came in below analysts expectations. Revenues were reported at $627 million for the quarter, below the $637 million in sales expected by analysts. Investors responded to the news by selling the company's stock and dropping it down to its low price of the past 12 months.

Apart from the lower than expected revenues for the second quarter, the news in DSW's earnings report was mostly good. The company's sales came in at 6.8% higher than the second quarter of 2014, while year-to-date sales were 8.1% higher than for the first six months of last year, rising to $1.28 billion from $1.19 billion. This included an increase in same store sales of 3.5% year-to-date. And while earnings per share were in line with analysts expectations, they posted a 13.5% increase over the second quarter of 2014, rising to $0.42 per share from $0.37 per share a year earlier.

Meanwhile, the Board of Directors approved a quarterly dividend of $0.20 per share, to be paid on September 30 to shareholders of record as of September 18. The company also reiterated its full year outlook for earnings per share of between $1.80 and $1.90 per share.

"We were encouraged with our accomplishments in the second quarter," said Mike MacDonald, DSW, Inc. President and Chief Executive Officer. "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."

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Published on Aug 26, 2015
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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