DSW Q1 Earnings Miss Spooks Wall Street

DSW storeColumbus, OH—Blaming bad winter weather and retail promotions, DSW Inc. reported Wednesday flat first quarter sales and a slide in comp store sales. Still, the footwear and accessories retailer posted a 12% increase in profit, but missed analysts’ estimates and lowered its forecast sending its shares down to their lowest point in three years.

For the quarter ended May 3, DSW posted a profit of $38.6 million, or 42 cents a share, up from $34.5 million, or 38 cents a share, a year earlier. Analysts’ average estimate was for 48 cents a share.

‘Challenging Quarter’

Net sales were up just 0.5% to $598.95 million, missing analysts’ estimate for $622 million in sales. Comparable store sales were down 3.7%.

Gross margin widened to 31.4% from 30.4%, as input costs fell 1.8%.

“We had a challenging quarter due to unseasonal weather and an aggressively promotional retail environment,” CEO Mike MacDonald said. “We sharpened our prices for key items while proactively managing our clearance levels during the quarter.”

He also noted that monthly sales trends were weak but showed improvement during the period.

DSW is amid an expansion strategy adding new stores and making deal. This month DSW closed its $68.7 million acquisition of a 49.2% stake in Town Shoes Ltd., of Canada.

DSW’s shares fell as it lowered its forecast. For its fiscal year, DSW expects adjusted earnings per share to range from $1.45 to $1.60 with comp store sales decline and adjusted sales growth in the low single digit range.

Analysts’ consensus calls for earnings of $1.90 a share on sales of $2.50 billion.



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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com