Earnings Preview: DSW And Caleres

DSW
A DSW storefront.
Courtesy of DSW Inc.

One has undergone a recent name change and continues to soar in sales and profits; the other is riding the waves of an unexpected advantageous buying opportunity resulting from the West Coasts ports slowdown.

The opportunities for Caleres and DSW Inc. in the most recent quarters have been extensive and diverse. And in the week ahead, market watchers will get to see how it’s all been coming together as both companies release second quarter earnings.

Here’s what you need to know ahead of their releases.

DSW Inc.

When DSW reported its first quarter earnings on May 27, the company beat market watchers estimates for both revenues and earnings per share—the performance was bolstered by strength in the firm’s athletic footwear sales.

The Columbus, Ohio-based footwear-and-accessories retailer also saw its comparable store sales turn positive (up 5 percent) in Q1 compared to the prior year’s decrease of 3.7 percent.

The company has been a Wall Street favorite recently with many analysts setting high expectations due to its off-price channel positioning and expectations that the company will continue to benefit from its opportunistic buying during the West Coast ports fiasco.

“DSW is going to have four-to-six quarters of unimpeded product and pricing advantages relative to the department stores,” Cannacord Genuity analyst Camilo Lyon told FN during an interview in July. “Come holiday season and back-to-school, they’re going to be able to use these opportunistic buys at very attractive pricing to drive traffic through the stores.”

Earlier this month, the company also confirmed plans for extensive door expansions, announcing that it would add 22 stores over the next four months.

The company’s net income, for the quarter ended May 2, 2015, rose 23 percent year-over-year to $47.4 million; its diluted EPS share increased 26 percent to 53 cents; and net revenues for the first quarter were up 9.4 percent to $655 million.

DSW reports Q2 on Aug. 25.

Caleres

Caleres’ last earnings announcement came right before it made the big moniker-switch from Brown Shoe Co.

On May 27, the firm posted a solid Street beat and saw its net income rise 25 percent to $19.3 million, compared to the same year-ago quarter’s profits of $15.4 million.

Off the robust momentum of the first quarter, the company upped its guidance for the remainder of the fiscal year.

“We reported a very strong first quarter, which included a relatively uneventful untangling of the west coast port situation,” said Ken Hannah, Caleres’ CFO, back in May. “With the strong sales and margin performance we saw in the first quarter, we feel comfortable raising our diluted EPS guidance range for 2015 to $1.84 to $1.94.”

Analysts continue to be bullish on the company — whose brands include Famous Footwear, Via Spiga, DVF and LifeStride — and many have dubbed it their top back-to-school pick. It’s worth mentioning, however, that for many footwear and apparel companies, back-to-school traffic and sales have been down this year.

Market watchers will find out on Aug. 27, when Caleres reports Q2, whether the company and its popular children’s and young adult store chain, Famous Footwear, will follow suit.

In Q1, Caleres’ diluted EPS was 44 cents and its revenues totaled $591 million.