Columbus, OH—DSW Inc. today said its fourth quarter profit were up 3.5% as lower costs offset flat sales.
For the quarter ended Feb. 1, the footwear and accessories specialty store posted a net profit of $28.11 million or 30 cents a share, compared to prior year’s $27.15 million, or 30 cents a share. (Results include a net loss of $700,000, or 1 cent a share from its luxury test). Excluding one-time costs, adjusted net was $28.7 million, or 31 cents a share, ahead of analysts’ average estimate for 29 cents.
Potential for 550 Stores
Net sales decreased 3.7% to $572.27 million, missing analysts’ estimate for $588.53 million in sales. Comparable store sales were flat after a 3.6% increase in fourth quarter last year.
“Business was stronger in November and December and weaker in January when some of the weather hit,” said Mike MacDonald, president/ceo.
Operating expenses dropped to $115.11 million from $126.02 million last year, and its income tax provision was down to $17.52 million, compared to $18.82 million a year ago.
Gross narrowed to 28% from 28.9%, as product costs fell 2.4%.
“We marked our fifth consecutive year of double digit earnings growth in 2013, with adjusted earnings per share of $1.88 compared to the prior year’s results of $1.67,” noted MacDonald. “Effective inventory management and our new systems enabled us to expand full year merchandise margin to 45.1%, which is just 10 basis points shy of our record margin in 2011.”
Moreover, the company now sees potential for 500 to 550 full-size stores, MacDonald said. “Reflecting the confidence in the future success of the DSW business model, our board of directors has approved a 50% increase to our quarterly dividend.”
Looking ahead to its full fiscal year, DSW forecast sales to increase 6% to 7% with comp store sales up in the low-single digit range. Per share earnings should fall between $1.80 and $1.95 a share. Analysts had predicted $2.09 a share.
Also this year, DSW plans to spend $10 million on its omnichannel program which will allow customers access to DSW’s entire inventory—across all stores, warehouses and online fulfillment centers—on line or via mobile device.