For the quarter ended April 30, the subsidiary of Retail Ventures, Inc. reported net income of $38.40 million or 85 cents a share for the first quarter, higher than $30.18 million or 67 cents a share in the prior-year quarter.
Merger with RVI to Close May 26
The results for the latest quarter include charges of about 2 cents associated with the pending merger with RVI, which owned more than a 60% stake in DSW. On Thursday, the merger was approved by DSW and RVI shareholders and is expected to close on May 26.
Net sales for the quarter grew 12% to $503.59 million from $449.54 million in the same quarter last year. Comparable store sales increased 10.8% over the 16.2% growth reported in the year-ago quarter.
The quarterly results handily beat retail analysts’ forecast. Analysts’ average estimate expected first quarter earnings of 75 cents a share on sales of $486.54 million.
“We have had a strong start to the year, recording double-digit gains in net sales and comparable sales and a 29% increase in operating profit as compared to the first quarter last year, continuing our stellar performance from 2010,” Mike MacDonald, ceo, said.
During the quarter, MacDonald said the company achieved balanced growth across categories and genders with accessories and men’s leading the way. “Our new stores performed well and we were also pleased with the growth in our leased business division, which generated its highest quarterly sales in over four years,” he added.
Operating profit for the quarter grew 29% to $63.3 million, and operating margins expanded 170 basis points to 12.6% from last year, boosted by a 140 basis points gross margin growth to 34.2%
“This is an exciting time in our history as we complete the merger of RVI, which will simplify our corporate structure and increase our public float. We are optimistic about our business as we begin the second quarter and are pleased to raise our annual guidance,” MacDonald added.
Looking ahead for the full year, the company raised its adjusted earnings forecast to a range of $2.65 to $2.80 per share from the prior guidance of $2.60 to $2.75 per share. Analysts’ average estimate forecast Street full-year earnings of $2.70 per share.
The chain added seven stores in its first quarter, bringing its network to 318 in 39 states. The company said it expects to add 18 DSW stores this fiscal year. DSW also supplies footwear to 352 leased locations across the country.